Case Studies

Case: High-Performance Relief at Ricola

Ricola is a Swiss-based, privately held company and the worldwide leader in providing natural herbal relief for coughs and sore throats. William D. Higgins joined Ricola three-and-a-half years ago, as president of the company’s U.S. business.

What are your key strategic objectives for Ricola U.S.A. over the next three years?

Ricola has had a solid track record of 9.6 percent compound annual growth for the past five years. My strategic objective is to continue—and accelerate—that growth by launching new products, continuing to build upon and improve existing product offerings, and creating an organization that can uncover and capitalize on growth opportunities more quickly.

What do you see as the biggest challenges in achieving those strategic objectives?

There are two big challenges. The first is external. Over the past five years, the total cough-and-cold- remedy category, of which we are a segment, has grown 3.4 percent. The Consumer Price Index has gone up 2.2 percent. However, the cough drop/lozenge segment has been roughly flat. So, our segment has lagged behind inflation and category growth. We have managed to grow our market share in a flat category, but it would be far more interesting and lucrative for us to increase our share in a growing segment. We need to find creative ways to reverse the slow decrease in household penetration of cough drops, despite being the number-two brand in the segment.

What about the second challenge?

We have already tapped many of the drivers of past growth, such as gains in distribution and optimization of the current business. My team and I need to uncover, prove, and implement new growth drivers. This requires clear alignment on our core values and goals, along with greater empowerment and flexibility on the part of our team to test and learn how to tap new growth opportunities.

What have you done to prepare your top team—and the organization—to meet those challenges?

We used a phased approach to drive up performance, not only of the senior team but throughout the organization. When I joined Ricola, we had a typical “Stage 2” culture, with lots of departmental tension, personalization of issues, attacking and blame-gaming, and a ton of control issues. First, we developed the listening, assertiveness, and conflict-management skills of our senior executives. We then cascaded these to everyone else. This gave us a common language, a sense of safety when disagreements arose, and a baseline of skills to move ahead. Next, we aligned the senior team and then continued the process right down to all levels of the organization. Every team has the foundation and skills training to perform as a “Stage 4,” high-performance entity. 

You mentioned the external challenge of growing in a flat market segment. How did the alignment process help here?

The fact that we were aligned helped us in the way we approach customers and other strategic partners. Our proprietary data shows that during cough and cold season 68 percent of consumers recognize the need for cough drops, but only 42 percent actually purchase them. There is great opportunity to increase household penetration. Rather than trying to solve the issue by sales-pitching retailers, we have taken a more strategic approach. We sit down with our larger accounts for a strategic session in which we explore both parties’ needs, clearly define goals, and then test for alignment. When we meet obstacles, we use the same approach that we use internally for resolving cross-functional conflict: “Let’s both understand what we each what to accomplish and then look for common ground where we both win.” In fact, I was in one such session where one of my folks actually pulled out a copy of the eight attributes of a high-performing team and shared it with the retailer, explaining, “Here’s what we’re trying to do.”
 

What was the retailer’s reaction?

At first he seemed surprised, but he quickly saw the value. When you take a high-performing approach, you show up differently with clients; even the dialogue changes. And, by the way, after each strategy session, we conduct a self-assessment with the retailer, similar to what we do internally. We jointly develop a scorecard that summaries everything we collectively committed to do: how we each will invest resources, actions to take, and results we both expect.

What result are you most proud of achieving?

The business results speak for themselves: steady, consistent sales growth of 9.6 percent over five years; market-share growth of more than four points over three years; and profit growth that exceeds sales growth. But, beyond these, what really excites me is when I see team members who are two levels down from me in the organization truly excited about the company’s opportunities and looking for ways to make a difference. The feeling in the office on a daily basis is probably the best indicator of results. People are excited, committed, and working together better to grow Ricola.

In looking back at your effort to build a high-performance team and organization, what, if anything, would you have done differently?

I wish I had been better able to articulate how “jazzed up” the team would be by the wins we would achieve by moving to the high-performance model. I could also have presented a clearer picture of how much everyone’s productivity would improve and how much fun they would have being part of a high-performing organization. 

What's your advice to other senior executives who might be contemplating making a similar journey?

I initially worried that the transition to a high-performing organization would detract from our business results in the short run—take our eye off the ball of growing sales, share, and profit as we focused on conflict management, influencing skills, decision-making processes and protocols. In hindsight, that should not have worried me. By removing restrictions on thinking and encouraging greater ownership and accountability, the team members became even more focused on a broader scorecard of sales, share, and profit and delivered better results.