Question

Father, Son and Gum; As other dynasties fade, a fourth-generation CEO shakes up Wrigley by tossing out his dad's rule book.

IN 1995, WILLIAM WRIGLEY JR. approached his father with a bold idea: The family-run company, after dominating the chewing-gum business for a century, should start selling mints. His father, who had successfully run Wm. Wrigley Jr. Co. for more than three decades, turned him down. "We know gum," the son recalls his father saying.

Family dynasties running big public companies over several generations are a vanishing breed. But William Wrigley Jr., who took over the business in 1999 after his father's unexpected death, has managed to turn around a company whose sales had stagnated and whose staff was steeped in doing things in the ultra-conservative manner of his father. At 35 years old, Mr. Wrigley set out to reinvent an iconic company while battling the legacy of his dad, a tough boss who had rejected many of his ideas over the years.

Since then, Mr. Wrigley has transformed the company from a cautious purveyor of Doublemint and Juicy Fruit into one of the fastest-growing publicly traded food companies. For the first time in decades, Wrigley is buying competitors, taking on debt and pouring money into research. After introducing few products in the 1990s, the company launched 72 last year alone, including cappuccino-flavored gum and sour gummy Life Savers. It purchased Altoids mints, is thinking about chocolate and patented chewing gum for dogs. "I don't rule anything out," says Mr. Wrigley.

While some of his ventures have flopped, Wrigley has performed well in the seven years since he took over. Sales have more than doubled, to $4.16 billion last year, profits have increased 68% overall and the company's stock has risen about 45%. Some analysts worry that the company's moves to diversify could shift its focus from the $15 billion world-wide gum market, where Wrigley is the top player.

Mr. Wrigley, now 42, has also hired outsiders for top positions, eased the dress code and encouraged employees to take risks -- things that didn't happen under his father. As long as his father was at the center of the company, "I was going to get stopped from getting any further into the center or we were going to collide like two neutrons or atoms in an accelerator," says Mr. Wrigley. "That is one of the biggest challenges for family businesses," he says. "When to step aside and how to step aside."

Ford Motor Co. and J.M. Smucker Co. are run by the great-grandsons of the founders, but many older family business dynasties are dying out as the third and fourth generations decide not to take over. Children don't feel as close to the founder as time passes, and increasingly independent boards are demanding broader sets of skills for leaders.

The Wrigley family helped build Chicago and remains one of its best- known dynasties. Wrigley's Michigan Avenue headquarters is one of the city's landmark buildings and the family's name is on everything from the Chicago Cubs baseball stadium to the Wrigleyville neighborhood to part of the new Millennium Park.

Yet growing up, Mr. Wrigley tried to conceal his identity, by introducing himself with just his first name. "Introducing yourself as Bill Wrigley was way more of a liability," he says. "Most people would think it's terrific. But people instantly look at you differently, judge you, and say, 'Oh here's this real wealthy person' or something, 'and he's going to be full of himself.' "

Although Mr. Wrigley shut down the company's 94-year-old gum plant on Chicago's south side last year, he simultaneously opened a $45 million research and development center in the city that's helped revitalize the Goose Island area and is bringing in white-collar jobs. Wrigley, which has had gum factories overseas since the 1920s, still makes gum at a facility in Yorkville, Ill.

Through trusts, Mr. Wrigley controls more shares of the company than any other investor, with about 15% under his beneficial ownership. The company won't say how many shares are held by the entire Wrigley clan. A divorced father of three, Mr. Wrigley is the only family member at Wrigley. His older sister and brother have never worked at the company. The family has been intensely private for decades, and Mr. Wrigley grants few interviews.

The first William Wrigley Jr. was 11 years old when, in 1872, he ran away from Philadelphia to New York, where he hawked newspapers and slept on the street, according to a 1920 article in American Magazine. Years later he went to Chicago to peddle soap, then baking powder, to shop owners. To entice them, he gave away two packages of chewing gum with each can of baking powder. When the gum became more popular, he started selling that instead. Soon he was making his own gum. Juicy Fruit hit shelves in 1893. To build sales, Mr. Wrigley twice gathered every phonebook in the country and mailed each person listed four sticks of chewing gum, according to the article, which the company cites. By 1920, he was making nine billion sticks of gum a year and had become the world's largest advertiser of a single product. In 1923, the company went public.

The Great Depression nudged the company in a more cautious direction under the founder's son, Philip Wrigley. (He was the company's only leader who wasn't named William.) When Philip's son, William Wrigley, took over as chief executive in 1961, he increased sales by pushing into Europe and Asia. But Wrigley stood by as Warner-Lambert Co. took the lead in sugarless gum with Trident in the 1960s.

The current William Wrigley Jr. grew up watching his father go to work at the company's white terra cotta headquarters in Chicago. When he was 5, his parents divorced. At 10, he moved to Arizona with his mother and siblings, where he swam competitively. He was a B student in private school. As a teen, he lived with his father during the summers and worked at the company, driving to the office with his father. On weekends, he water-skied with his dad at the Wrigley estate in Lake Geneva, Wis.

One summer, the younger Mr. Wrigley donned a white lab coat to mix test batches of Extra sugarless gum. At Duke University, where he studied economics, he read company memos mailed to him by his father. But he didn't go to work at Wrigley right away. He wanted to create something of his own. "I've always liked the idea of being an entrepreneur," Mr. Wrigley says. He'd grown up intrigued by the adventurous tales he heard about his great-grandfather, the company founder. "Those genes maybe skipped a couple generations and popped up again."

After graduating, he moved to Seattle to help a friend launch a three-person business selling stain remover. His father gave his reluctant blessing, Bill Jr. says. Bill Jr. set himself up in the frozen-foods aisle of supermarkets to demonstrate the stain remover on a carpet sample. Soon, working at Wrigley seemed more exciting. He returned to Chicago in 1985 as his father's assistant.

The elder Wrigley was a formal man whom nearly everyone, even friends, called "Mr. Wrigley." He was called that until he died, even though by the 1990s, many top executives were much more informal. Yet Mr. Wrigley warmed employees by remembering their birthdays and shaking hands with workers at factories, recalls Dushan Petrovich, Wrigley's chief administrative officer.

Fanatical about details, Mr. Wrigley once flew a Chicago designer to meet him at Wrigley's Prague office in order to match the shade of blue in the carpet there with the floors at headquarters. He insisted on screening casting tapes for the new Doublemint twins, to find actors with the right look. "He didn't get challenged a whole lot," Bill Jr. says. "It was sort of 'This is what Mr. Wrigley wants and so let's go find a character with a shorter haircut.' "

When the younger Mr. Wrigley took a top job at Wrigley's Canadian division in 1990, he set out to change the recipes and packaging for Juicy Fruit, Doublemint and Spearmint. Sales in Canada were falling and the formulas had hardly changed in decades. He also proposed launching a pellet-shaped sugarfree gum, which was selling well for Wrigley in Europe.

His father quickly nixed the packaging and recipe changes because he said they could alienate longtime customers, Bill Jr. recalls. The elder Wrigley balked at pellet gum, too, because it required costly new packaging equipment. Bill Jr. pressed, lobbying over lunch in his father's regular booth at the company's private restaurant. His father gave in. Excel pellets eventually became Wrigley's best- selling product in Canada. Bill Jr. doesn't recall his father congratulating him. "That just wasn't his style," he says.

In the mid-1990s, Altoids and other strong-tasting mints began gaining space in the candy aisle. Bill Jr. prodded his father to buy Frisk, a Belgian maker of zippy peppermints. Wrigley already had vast global merchandising and distribution. It could plug in the mints and increase sales, Bill Jr. figured. But his father thought "intense" mints were a fad. Besides, he told his son, there was still room to grow in gum. Italian competitor Perfetti Van Melle bought Frisk instead in 1995.

By the late 1990s, as the elder Mr. Wrigley reached his mid-60s, Bill Jr. began asking about his own future. The elder Mr. Wrigley didn't want to talk about succession. And he rarely commented on whether his son was doing a good job, Bill Jr. says. "I never felt that confidence from him." Frustrated, he began thinking about leaving Wrigley.

Howard Bernick, the departing Alberto-Culver Co. CEO who now sits on Wrigley's board, recalls the elder Mr. Wrigley thinking his son wasn't ready yet to take over and saying, " 'I just wish he was a little bit older.' "

Mr. Wrigley's father "had no doubt that he was going to be the next leader," says Richard Smucker, co-chief executive of jam maker J.M. Smucker and a Wrigley director. He just "leaned over backward a little bit not to express that" so people wouldn't think of his son as "the fair-haired boy." Mr. Smucker knows the issue of family business dynasties well, also being the great-grandson of a company founder. "Any family member has to work harder," he says.

The younger Mr. Wrigley was working in Europe in January 1999 when his father slipped on ice at the family estate in Wisconsin and broke his hip. Since his father was going through a divorce with his third wife at the time, Bill Jr. stepped in to take care of him, helping him run meetings from his home. What seemed a mild injury grew serious as his frail condition magnified other health problems. Nevertheless, the elder Wrigley insisted on running the annual shareholder meeting that March.

His condition took a turn for the worse. Bill Jr. sent the company jet to fetch his dad's doctor, who was away in Arizona. It was the first time anyone had dispatched the plane without his father's permission. "Don't worry," Bill Jr. told his father as he sat on his hospital bed. "I'm going to take care of everything." He says his father told him that he loved him.

By the next morning, the elder Mr. Wrigley had slipped into a coma. Terrified, Bill Jr. led the annual meeting for the first time. Days later, Wrigley's board named him acting president. He went to the hospital to tell his father, who was unresponsive in the coma. Mr. Wrigley died the next day, of complications from pneumonia. "Once he knew that I was going to run the company, I think he said, 'OK, now it's time for me to go,' " Bill Jr. says.

Ten days later, William Wrigley Jr. became the fourth chief executive of the company, following his father, grandfather and great- grandfather. Wall Street immediately questioned whether he had enough experience. Although the company had been largely successful during his father's tenure, when Bill Jr. took over, its U.S. gum sales had been flat for about five years.

Sorting through his father's office, Mr. Wrigley was shocked to find in his in-box a question on what color to make the carpet on the 12th floor. "I don't want to make this decision," Mr. Wrigley recalls thinking. "And I don't want anyone who reports to me to make this decision." He turned his father's office into a conference space.

He started making other changes. Some were little, like lifting the ban on using voice-mail during business hours and loosening the dress code from coats and ties to "business-appropriate" attire.

Other changes were bigger, like creating the company's first-ever strategic plan, and hiring top managers from Gillette Co. and Procter & Gamble Co., breaking a tradition of promoting from within. He also ordered the new packaging and recipes for Doublemint and other standards that his father had rejected.

Sitting in a church before a friend's wedding, Mr. Wrigley scrawled on a card: "Wrigley brands woven into the fabric of everyday life around the world." He says he intentionally left out "gum" so the statement would stay relevant as the company expanded into candy. Today, his scribbling has become the company's vision statement.

Mr. Wrigley says he isn't trying to change Wrigley's values -- or its emphasis on chewing gum, a retail standard in the checkout line. Gum accounts for 90% of Wrigley's sales. "We see great growth in chewing gum," Mr. Wrigley says. "But then it was also just logical to say 'Well, what else is up at the front end there? Who else are we competing with? And why can't we do some of that too?' "

When Mr. Wrigley took over, there was "an unleashing of a lot of energy," says Mr. Petrovich, who also worked for his father. But some employees bristled at the changes in style. Managers fumbled over the new dress code, some not exactly sure what kind of shoes were allowed. A company-described "breakthrough" training session, that emphasized stretching and drinking water, was dismissed by some employees as a new-age fad, executives say. In a meeting shortly after Mr. Wrigley took over, someone mentioned a new initiative he knew nothing about. The people "looked at me like I was on the moon," he recalls, "because in the past, anything that happened, the CEO knew about."

He sent workers an email that said, "If we never make mistakes, then we are most likely not being very innovative and not taking enough risks." He made his own mistakes. He thought gum could be a vehicle for medicine, so Wrigley invested more than $10 million to start a health-care division that launched Surpass, a chewing gum infused with antacid. Wrigley couldn't persuade stores to stock it at the checkout counter, and finally pulled it off the market in 2003.

What might have been his biggest gamble never materialized. In 2002, he says he got a message to call Richard Lenny, Hershey's CEO. Mr. Lenny said the trust that controls Hershey wanted to sell the candy maker. Would Wrigley consider a bid? Wrigley hadn't bought a company in half a century and didn't even carry debt on its balance sheet at the time. "Absolutely," Mr. Wrigley said.

Board members weren't so sure about a deal that huge. Mr. Bernick says he thought Mr. Wrigley should "hit singles" instead of swinging for homers. His father "wouldn't have done that deal," Mr. Smucker says. Mr. Wrigley eventually convinced the board, and Wrigley beat Nestle SA and Cadbury Schweppes PLC with its $12.5 billion bid. But the Hershey trust got cold feet amid community and political pressure and called off the sale at the last minute.

Getting so close to a big deal made Mr. Wrigley more determined to move into candy. He told workers to internally start calling the company the Wrigley Confectionery Co. In 2004, Wrigley expanded into lollipops and chewy candy by buying assets from the Joyco arm of Agrolimen, a Spanish food conglomerate. Later that year, Wrigley paid $1.48 billion for Altoids, Life Savers and other candy brands from Kraft Foods.

Wrigley is looking at more acquisitions and, at its new research center, scientists are searching for the next big candy. New products now account for 17% of sales, up from less than 6% during the late 1990s. Executives won't be specific about what is in the works, but "chocolate is within our playing field," says Surinder Kumar, Wrigley's chief innovation officer.

Some analysts say Wrigley may have overpaid for Kraft's brands and that weak sales of Altoids aren't a good sign. Mr. Wrigley says sales are within expectations. And some of Wrigley's new products haven't panned out. In addition to closing its health-care division, the company has pulled back on breath-freshening strips amid strong competition from Pfizer Inc.'s Listerine brand.

In his office, Mr. Wrigley keeps a picture of his father huddled with his dogs. In some ways, he says, it was better that his father wasn't there when he took over the company. "Maybe the silver lining in the whole thing is that maybe he realized it would have been difficult to coexist with different styles in the business," Mr. Wrigley says. His father's passing "was a graceful exit, although, to put it mildly, hugely unfortunate to lose your father at 66," he says.

He wishes his father were alive to see how he's made Wrigley grow. "My only regret is that I don't have my father side by side, or even off relaxing or retiring on some island, to be able to share it with."

While Mr. Wrigley says he never felt overt pressure from his dad to take over the business, "you kind of know there's a legacy there. You know your family's been in this business since 1891, and there's been a sequence of generations running the company." Mr. Wrigley says he "tried to push that into the background and leave options open to me in terms of what I might be interested in doing . . . .And at the end of the day, the reason I did come back to the business is because it was just darn interesting."

He isn't insisting that his children follow his career path. "You get so much influence from your parents," he says. "The important thing is for us to kind of get out of the way and make sure that we don't try and force them into doing something we wanted to do."

Questions:

1) What changes did he make after assuming leadership?

2) What were the challenges he faced as the new leader?

Answer 1

1)   What changes did he make after assuming leadership?

When Mr. Wrigly took over the business from his father, he initiated lots of bold steps which his father didn’t want to implement such as pumping more money for research, introducing more new flavours, recruiting outside employees for top positions, easing out the dress code, use of voice-mail etc.

He encouraged employees to try something new, make mistakes thus getting close with the employees. He helped cities to transform by helping the government build the necessary infrastructure. He entered into healthcare sector although he closed it later. He introduced lollipop and chewy candy and started acquiring new businesses. Unlike his father, he was very bold in making decisions. He also encouraged his employees to be bold enough to think innovative.

2) What were the challenges he faced as the new leader?

When he took over the business from his father, it was running at a loss, there were lots of competitors, employees were following the old methods and family run businesses were dying.