Carlos M. Gutierrez: 1953—: Corporate executive

When Cuban-born Carlos M. Gutierrez ascended to the top spot at the Kellogg Company in 1999 he became not only the youngest chief executive officer (CEO) in company history but also the firm's first Hispanic CEO. According to Hispanic Online, the Hispanic Association on Corporate Responsibility stated that he was one of just 14 Hispanics wielding serious power in Fortune 1000 companies. Gutierrez's multicultural background has been a plus at Kellogg which has production facilities on six continents and distributes products to 160 countries. "It's been incredibly helpful," he told the Knight Ridder/Tribune Business News. "I must be the only CEO in the country who takes calls and writes letters in Spanish." While unabashedly proud of his heritage, Gutierrez told The Florida Times Union that he preferred to be recognized for his business acumen than as "the Hispanic CEO." Considering his track record at Kellogg, Gutierrez has nothing to worry about. When he took over Kellogg, the nearly century-old cereal giant was in trouble. Sales were down and shareholders were worried. Home of Frosted Flakes, Rice Krispies, and Raisin Bran, Kellogg had gone stale. Gutierrez didn't flinch. Through some very bold, and often unpopular moves, he prodded Kellogg back to life. By 2003 the company's profits had risen seven percent above the previous year, beating Wall Street's per-share forecasts by one cent. Though Gutierrez told the Battle Creek Enquirer, "To be able to turn in this type of sales and earnings performance is a real credit to our whole organization," business analysts all point to Gutierrez's gutsy leadership as the driving force behind the company's resurgence.

Carlos Miguel Gutierrez was born in Havana, Cuba, on November 4, 1953, to Pedro Gutierrez and Olga Fernandez. The elder Gutierrez owned a successful pineapple plantation which provided the family with a very comfortable life. While Olga minded their large home, Carlos and his older brother attended Catholic school. In a country run into poverty by the corrupt regime of dictator Fulgencio Batista, the Gutierrez's enjoyed a relatively idyllic life. Then, in 1959, Fidel Castro took power and within a year began to implement a fierce brand of communism. Private businesses such as the Gutierrez family plantation were seized by the government. During this tumultuous time Gutierrez's father was briefly jailed for alleged anti-government activities.

At a Glance . . .

Born Carlos Miguel Gutierrez on November 4, 1953, in Havana, Cuba; son of Pedro Gutierrez, (pineapple plantation owner), and Olga Fernandez; married Edilia Cabrera, mid 1970s; children: two daughters, one son. Education: Monterrey Institute of Technology, Queretaro, Mexico, early 1980s.

Career: Kellogg Company, 1975–: sales and marketing, 1975-82, supervisor of Latin American marketing services, 1982-83, manager of international marketing services, 1983-84; Kellogg de Mexico, general manager, 1984-89; Kellogg Canada Inc., president/CEO, 1989-90; Kellogg USA, vice president, product development, 1990, vice president, sales and marketing, 1990-93; Kellogg USA Cereal Division, general manager, 1993-94; Kellogg Asia-Pacific, president, 1994-96; executive vice president, business development, 1996-98, COO, 1998-99, CEO/president, 1999–, chairman of the board, 2000–.

Memberships: W.K. Kellogg Foundation Trust, co-trustee; Grocery Manufacturers of America, board member; Colgate-Palmolive, board member; Michigan Business Roundtable; University of Michigan Business School Advisory Board.

Addresses: Office— Kellogg Company, One Kellogg Square, Battle Creek, MI 49016-3599.

Upon his release the family fled to Miami to wait for Castro's ouster. It never came. Gutierrez's father realized they would have to begin a new life in a new country. The transition was a blow to the family, long used to both wealth and influence in their homeland. For a while they lived in a hotel in Miami. It was there that six year-old Gutierrez learned English from a bellhop.

Early Learned Work Ethic Paid Off

Gutierrez and his family soon embarked on a sort of nomadic existence, moving as his father's job dictated. By the time he reached high school, Gutierrez had lived in Fort Lauderdale, Miami, New York City, Mexico City, and Tampico, Mexico. Though the elder Gutierrez eventually became head of Heinz Company's Latin American fruit operations, the family never did regain the level of prestige it knew in Cuba. This loss has long inspired Gutierrez. He told The Detroit News, "It motivated me to know the worst that could happen and that I should always be ready for it. After losing everything, I wanted to create a better life."

While Gutierrez was in high school he began selling magazine subscriptions door-to-door, capitalizing on his natural sales ability. After graduating, he took a job with his father's company in Mexico City. However, when he heard of a sales position opening with Kellogg Mexico, he wasted no time in applying. He was hired in 1975 as a sales and marketing trainee and promptly began moving up the ranks, impressing both coworkers and supervisors. "He had a leadership quality that came out early," Bill LaMothe, a former CEO of Kellogg told The Detroit News. Gutierrez moved to Queretaro, Mexico, for the company and there began to study business administration at the well-respected Monterrey Institute of Technology. However, he would not be able to finish his degree. In 1982 Kellogg brass, impressed with Gutierrez's skill, brought him to company headquarters in Battle Creek, Michigan, and made him supervisor of Latin American marketing. Again, his hard work brought recognition and the following year he was promoted to manager of international marketing services.

In explaining his work ethic, Gutierrez told Hispanic, "I always felt I had to work a little harder or show a little bit more commitment than the average executive because I did have a different background." Unlike most other junior executives, Gutierrez did not complete college. He explained to Hispanic, "It was something that drove me perhaps to work harder, to read more, to be a bit more curious." In addition, when he arrived in Battle Creek there were no minorities in the company's top ranks. He knew if he were to earn a corner suite he would have to go above and beyond to prove himself. Fortunately Gutierrez loved to work, admitting to The Detroit News that working was his favorite pastime. That hobby nudged him further up the corporate ladder. In 1984 Gutierrez was promoted general manager of Kellogg Mexico and he moved back to Mexico City. There he found a company in dire straits. Sanitation levels at Kellogg's production facility were dangerously low, threatening product quality. At the same time costs were sky high, seriously impairing profitability. With a stroke of boldness that would come to characterize his management style, Gutierrez shut the plant down for 90 days to revamp operations. His move paid off. Upon reopening, the plant became one of the cleanest and most efficient of Kellogg's facilities worldwide. This ability to resolve a problem would also come to characterize his work. "His whole career has been one of many successes in almost any situation we threw him into," LaMothe told the The Florida Times Union.

Led Kellogg Divisions Worldwide

After his coup in Mexico, Gutierrez shot up the corporate ladder. In 1989 he became president and CEO of Kellogg Canada. The following year he returned to Battle Creek where he was made corporate vice president for product development. Six months later he was promoted vice president of Kellogg Company and executive vice president for sales and marketing of Kellogg USA. In 1992 he became general manager of Kellogg USA's Cereal Division. The following year he was sent back overseas, this time as president of Kellogg Asia-Pacific, based in Australia. In each position, Gutierrez was admired for his ability to implement changes that resulted in better profitability and increased efficiency. However, he also drew praise for his professional manner. "He's gentle, tactful, polite," a former Kellogg newsletter editor told The Detroit News. "When you're with him you get a feeling of his strength, but it's very quiet strength. He just knew how to get along with people." That included everyone from fellow executives to hourly factory workers. His demeanor also won respect outside the walls of Kellogg. The mayor of Battle Creek told Hispanic, "It would be very easy for him to be self-important or self-aggrandizing, but he doesn't do that."

After a lifetime spent moving, first as an exiled child of Cuba and then as a busy corporate executive, Gutierrez finally settled down in 1996 when he transferred back to Battle Creek and moved into the upper-echelons of Kellogg management. The title on the door of his corporate suite originally read executive vice president for business development. It was changed to chief operating officer in 1998, a position which had been vacant for six years. Gutierrez's name was soon splashed across the business press and industry analysts agreed that the post was Gutierrez's last stop on his way to CEO. Their predictions came true the following year. In April of 1999, after nearly a quarter of a century with Kellogg, Gutierrez took the helm of the cereal dynasty as CEO and president.

When Gutierrez inherited Kellogg, the company had annual sales of $7 billion and employed over 14,000 workers worldwide. However, the company was in trouble. The Financial Times wrote in 1998 that "Kellogg has been going nowhere for most of the last decade. Its market share has declined, profits have bobbed up and down, and its share price performance has been as soggy as a bowl of old corn flakes." Busy consumers wanting their morning meal on-the-run were opting for breakfast bars, bagels, and bagged donuts. In addition price wars between cereal manufacturers cut into what little profit remained. Gutierrez faced an uphill battle to turn around the company, but it was a challenge he was ready for. In an oft-quoted comment made at a press conference following his appointment as CEO, Gutierrez boldly promised to boost profits by at least ten percent a year. Business analysts and stockholders alike wanted to know how. Change was his answer. "I think what the board wanted to see was leadership from someone who can really put the institution first," he was quoted in The Florida Times Union. "They know I love this institution … but they also know I've demonstrated a willingness to change."

Took Bold Steps to Save Company

One of the first changes that Gutierrez implemented sent shock waves through the Kellogg empire. He decided to close down the original Battle Creek-based factory saying that it had become outdated and inefficient. The plant founded by W.K. Kellogg in 1906 was as potent a symbol of the company as Tony the Tiger. In addition in the close knit community of Battle Creek—nicknamed Cereal City—the closure would mean a loss of 550 jobs. It was a difficult decision as Gutierrez and his wife lived in Battle Creek and their three children attended its schools. "I care very much about this company and community," Gutierrez told The Florida Times Union. "These are painful but necessary decisions to make." However, they also brought him respect. "This is probably one of those decisions that should have been made years ago," a Michigan economist told The Florida Times Union. "But no one else had the guts to do it." Gutierrez's gutsy move resulted in an initial rise in profits by January of 2000. However, Kellogg was still in trouble as its sales slipped behind rival General Mills for the first time since the company's founding.

With over 75% of Kellogg's business dependent on downward-spiraling cereal sales, Gutierrez realized that the company had to expand beyond the cereal aisle if it wanted to survive. His solution would prove the most daring step of his career. In 2001 Gutierrez negotiated Kellogg's $4.4 billion purchase of snack food giant Keebler. "Carlos is betting his career on Keebler," a food industry analyst told Newsweek. "But if he'd relied on cereal alone, he was almost sure to lose." The purchase was costly for the ailing company and shortly after the deal was done Gutierrez announced that Kellogg was lowering its annual profit growth targets. However with Keebler, Kellogg's dependency on cereal sales dropped to 40%, a change that Wall Street liked. The general response was summed up by an analyst quoted in Hispanic: "These moves have inspired more confidence on my part that Kellogg's is now moving in the right direction."

By 2003 Wall Street's predictions had come true. Kellogg was back on an upward swing. Net earnings for the first quarter of the year were $163.9 million, a full seven percent above the first quarter of 2002. Cost per share of the company had increased by eight percent. The company had also achieved four percent in sales growth and amassed a $1 billion cash flow. Kellogg's board of directors were pleased and rewarded Gutierrez handsomely. His compensation package for 2002 totaled over $2.8 million dollars. Quite a difference from his days as a young Cuban exile living in a hotel with his displaced family. Some would say that Gutierrez's rise to the top of one of America's most respected corporations is an example of the American Dream come true. Gutierrez, with characteristic directness, might credit his achievement to something his father once told him. "Success is about results. Anything else is a bit fluffy," he recalled to The Florida Times Union. His drive for results has propelled his career since his eager days as a sales trainee and has resulted in Gutierrez becoming one of the most admired leaders—Hispanic or otherwise—in the business world.

Sources

Periodicals

Battle Creek Enquirer, April 26, 2003, p. A1; March 15, 2003, p. A1.

Cosmetics International, February 10, 2002, p.15.

Detroit News, January 28, 2000, p. 1; May 15, 2000 p. 1.

Financial Times, September 23, 1998, p. 31.

Florida Times Union, September 6, 1999, p. D1.

Hispanic Magazine, March 2002.

Knight Ridder/Tribune Business News, March 28, 2000.

Newsweek, November 6, 2000 p. 56.

On-line

"Thinking Out of the Box," Hispanic, www.hispanic online.com/magazine/2002/march/Features/kel loggs.html (May 15,2003).

"Carlos M. Gutierrez," Kellogg Company Official Website, www.kelloggs.com (May 19, 2003).

—Candace LaBalle

Carlos M. Gutierrez
1953–

Chairman and chief executive officer, Kellogg Company

Nationality: American.

Born: November 4, 1953, in Havana, Cuba.

Education: Attended Monterrey Institute of Technology.

Family: Son of Pedro (pineapple plantation owner) and Olga (Fernandez) Gutierrez; married Edilia Cabrera, c. 1975; children: three.

Career: Kellogg Company, 1975–1982, sales and marketing representative; 1982–1983, supervisor of Latin American marketing services; 1983–1984, manager of international marketing services; Kellogg de Mexico, 1984–1989, general manager; Kellogg Canada, 1989–1990, president and chief executive officer; Kellogg USA, 1990, vice president, product development; 1990–1993, vice president, sales and marketing; 1993–1994, general manager, cereal division; Kellogg Company, 1993–1996, executive vice president; Kellogg Asia-Pacific, 1994–1996, president; Kellogg Company, 1996–1998, executive vice president, business development; 1998–1999, chief operating officer; 1999–, president and chief executive officer; 2000–, chairman of the board.

Address: Kellogg Company, 1 Kellogg Square, Battle Creek, Michigan 49016; http://www.kelloggcompany.com/kelloggco.

■ Coming up through the ranks of Kellogg Company, Carlos Gutierrez repeatedly proved his ability to increase sales and output through innovative ideas. Wherever Kellogg assigned him, which was all over the world, Gutierrez corrected problems that prevented company growth, be they in manufacturing or marketing. General Mills was on the verge of becoming the leading cereal maker when the Kellogg board of directors appointed Gutierrez chief executive officer and president. True to his ethic Gutierrez quickly mapped out and set in motion a strategic plan to put the company on a new course. The successful implementation of the plan by this "charismatic and approachable executive," stated an article in the St. Louis Post-Dispatch, "has won the admiration in business circles for a flagging company" (April 7, 2004).

LEARNED WORK ETHIC FROM FATHER

Gutierrez was born into a Cuban family that enjoyed a comfortable lifestyle. His father, Pedro, owned and managed a pineapple plantation, and his mother, Olga, cared for Carlos and his older brother. Life changed suddenly in 1959 when Fidel Castro overthrew the regime of Fulgencio Batista, created a communist state, and confiscated businesses, including the Gutierrez plantation. The following year the Gutierrez family fled to Key Biscayne, Florida, believing they would soon be able to return home. For a time they lived as if they were on vacation; young Carlos learned English from the hotel bellhop. When it became apparent they would not be going home, Pedro uprooted his family numerous times as he pursued job opportunities. He eventually accepted a position with the Heinz Company in Mexico and later started his own business. Gutierrez worked in his father's business before a recession made him decide to leave. Gutierrez credited Pedro, whose work ethic was never to give up and always to deliver results, as being his mentor.

DELIVERED RESULTS

Gutierrez was studying business administration at the Monterrey Institute of Technology in Queretaro, Mexico, when a friend told him Kellogg was recruiting employees for sales and marketing positions. Gutierrez knew something about sales, having sold magazine subscriptions in high school. After he was hired as a sales representative for Kellogg de Mexico in 1975, Gutierrez dropped out of college without earning a degree and dedicated himself to delivering results for Kellogg. His outstanding performance in sales and marketing assignments drew the attention of corporate headquarters in Battle Creek, Michigan. Gutierrez was transferred there in 1982 and made supervisor of Latin American marketing services. The next year he was promoted to international services manager.

In 1984 the 29-year-old Gutierrez was given the opportunity to test his entrepreneurial abilities on a larger scale as general manager of Kellogg de Mexico. The plant in Mexico routinely finished last according to company standards. Gutierrez consulted with employees about work conditions and then shut down the plant. When the revamped plant reopened three months later, new production and cleanliness standards were in place. Within two years the plant was performing at peak standards and serving as a model for Kellogg's largest operations.

Recognized for the turnaround at the plant in Mexico and for other achievements, Gutierrez was appointed to a series of high-level positions. In 1989 he was named president and chief executive officer of Kellogg Canada. Back in Battle Creek in 1990 he served as corporate vice president of product development and then as vice president of the Kellogg Company and executive vice president of sales and marketing for Kellogg USA. He was promoted to executive vice president of Kellogg USA and general manager of the cereal division in 1993 and to executive vice president of the Kellogg Company and president of Kellogg Asia-Pacific in 1994. Two years later he became executive vice president of business development. Gutierrez attained the position of president and chief operating officer (the first COO in six years) in 1998. He became a member of the board of directors and president and chief executive officer in 1999.

REINVENTED THE COMPANY

Gutierrez, the youngest CEO in Kellogg history at age 43, faced the challenge of reversing the downward spiral in which the respected company found itself. Kellogg had been under-performing for more than five years and was losing out to its major competitor, General Mills, in volume of products—a position that previously had seemed impossible. Kellogg, the world's major cereal company, had not tried to counteract the two major factors contributing to its decline: the increase in sales of lower-cost generic and store brands of cereals that were knockoffs of Kellogg brands and the fact that because of busy lifestyles fewer people were eating a traditional breakfast of milk and cereal. The decline had a dramatic effect on stock prices, decreasing them 45 percent in 1999 alone.

Pledging to boost profits, Gutierrez developed a strategy that would effectively reinvent how Kellogg did business. First he sought to improve the balance sheet by scaling back operations and instituting a plan to reduce debt. Gutierrez remarked to Elizabeth Llorente in an interview in HispanicMagazine.com about closing Kellogg's oldest cornflake facility, a move that saved the company millions of dollars while laying off five hundred workers: "I was given the job to make difficult decisions. I felt it was my duty to do it. The worst thing I could have done for all the company's employees and the community was not to act" (January/February 2004). To reduce debt, the company began "managing for cash" so that "the amount of money tied up in inventory, accounts receivable and accounts payable" was reduced. When it could, Kellogg used its own assets for capital expenditures. The South Bend Tribune reported this approach "has freed up enough cash to pay down $1.6 billion in debt" (April 1, 2004).

Gutierrez increased Kellogg's presence in noncereal categories. In the wholesome snacks category, the company developed products such as Special K bars and made judicious acquisitions. The acquisition of Keebler in 2001 expanded Kellogg's lineup of snack foods and provided the company with a direct distribution system that helped implement Gutierrez's vision of selling products in places besides supermarkets so that anyone could have a breakfast bar anywhere. Gutierrez also steered Kellogg into offering healthful foods. The company acquired Worthington Foods, a maker of soy and vegetarian products, and Kashi, a brand of natural foods. Gutierrez told Supermarket News : "Most of all, we want to stay focused. Unlike other food companies, we are focused on key categories and capabilities instead of being a broad food conglomerate" (July 21, 2003).

Gutierrez directed the Kellogg toward brand building and launching new products to increase sales. Cross-functional teams of market researchers, food technologists, and engineers were charged with developing products that could not be easily converted into store brand products. They also were to consider health trends. In 2004 Kellogg planned selling low-carbohydrate and reduced-sugar cereals. Brand building also played an important part in product development. Many of the new products developed were spinoffs from current brands, such as Rice Krispies Treats snack bars and new varieties of Special K. To ensure Kellogg maintained its well-known and trusted name in its key categories, Gutierrez increased marketing efforts and entered into licensing agreements with leaders in children's entertainment, including Disney and Nickelodeon. The measure of company success ceased to be the volume (tonnage) of products sold and became the value of Kellogg products.

TURNAROUND

The new strategic plan executed by Gutierrez produced results. Between 1999 and 2003 sales increased 43 percent and earnings 131 percent. In 2004 analysts once again recommended investors buy the climbing Kellogg stock. Because of his success there was speculation Gutierrez might be lured by a larger company to bring about another turnaround.

See also entry on Kellogg Company in International Directory of Company Histories.

sources for further information

Fagnani, Stephanie, "SN's Power 50: Carlos M. Gutierrez," Supermarket News, July 21, 2003, p. 64.

Llorente, Elizabeth, "The Breakfast Champ," HispanicMagazine.com, http://www.hispaniconline.com/magazine/2004/jan_feb/CoverStory.

Martinez, Miriam, "Carlos Gutierrez: From Exile to Corporate Leadership," Latino Leaders, December 2003, http://articles.findarticles.com/p/articles/mi_m0PCH/is_6_4/ai_113053399.

Pande, Shamni, "It's Crunch Time for Kellogg," Brand Equity, March 24, 2004, http://economictimes.indiatimes.com/articleshow/577977.cms.

Prichard, James, "CEO Restored Kellogg's Snap: Gutierrez Seen as Catalyst to Company's Comeback," South Bend Tribune, April 1, 2004.

——, "He's Gr-r-reat!" St. Louis Post-Dispatch, April 7, 2003.

Taylor, Alex, III, "Kellogg Cranks Up Its Idea Machine: To Grow, the Company Needs New Products, but Will Fiber-Enriched Potato Chips Be a Hit?" Fortune, July 5, 1999, p. 181.

—Doris Morris Maxfield