CHRIS FURMAN, CEO of Ventura Foods, and Sean Slovenski, former CEO of Care Innovations (Box 1), joined us for a recent webinar to share some of what they have learned in their combined 14 years running joint ventures. Chris has been in his role for seven years - more than double the median tenure for JV CEOs. Sean, with three JV CEO stints under his belt, and experience with an additional three JVs, has been in and around joint ventures for most of his professional life. Sean said that the opportunity for one plus one to equal three is the reason he keeps coming back to joint ventures. We are fortunate to work with Chris and Sean as part of our Joint Venture Advisory Group, and we thank them for their willingness to share their unique and valuable perspectives with other members of the Group.
As external hires, Chris and Sean are relatively unique – about 70% of JV CEOs come from an owner. They were both hired with a mandate to grow their new companies, and their Boards of Directors gave them significant latitude to reshape the companies as necessary to achieve growth. Both started by looking at their new company’s strategy and organization. While many joint ventures are designed to fulfill somewhat narrow purposes for their owners (and other customers), Ventura Foods and Care Innovations are both fairly unconstrained from a business scope perspective, and they have organizational models independent of their shareholders – this gave both Chris and Sean freedom to make changes that some CEOs do not have.
Box 1: Guest Speakers
WARNING: REALITY DISTORTION FIELD AHEAD
Sean commented that, when taking a JV CEO job, it can sometimes feel like you’re entering a “reality distortion field.” Shareholders may view the business, and it’s performance, growth potential, etc. very differently. Early interactions with Board members and others in the shareholder companies may not reveal these differences. Sean urged CEOs to look below the surface, to probe why each shareholder joined the JV in the first place, and to discuss why they are still involved in it today. He recommended starting by interviewing Board members, employees, and customers. Is there a shared view of reality? If so, get on with the job. If not, he recommended that you present the critical misalignments to the Board, and commence the hard work of trying to align the shareholders on what you, as CEO, are there to do for them.
Chris began assessing Ventura Foods’ reality as part of the interview process, and the work continued as part of his initial strategic review. Like Sean, Chris believes it is critical for the Board and management team to have a shared view of business performance, and of the strategic options available to improve performance. He also stressed the importance of aligning as early as possible on the role of the management team versus the role of the Board of Directors (and revisiting that issue, as needed). What decisions related to strategy, for example, can he and his team make, and what decisions are reserved for the Board to make?
Once aligned on reality, Chris and Sean turned their attention to the organization. Chris moved quickly to hire a management team able to execute the new strategy. Sean weaved some new team members in with the old. Both invested significant time thinking about company culture.
Chris and team spent nine months working with hundreds of employees to build a common mission, vision, and set of core values for Ventura Foods. They call it the Ventura Edge, and describe it like this: “Ventura Edge is an effort to encapsulate who we are. It is our identity, and as such, it expresses how we see ourselves, how we work individually and together, what we aim for, how we go after what we’re aiming for, and how we want our customers to view us.” If you are interested in learning more, click here.
In the joint ventures that Sean has been in, especially the newer ones, many employees came from the shareholder companies. He found that when addressing culture, there was usually one of two paths that employees wanted to take: 1) build a culture that captures the best of what each shareholder brings; 2) build a culture that is totally different from the shareholders. While both are easy to understand, he, like Chris, stressed the importance of building company culture from the ground up. He commented that it is not about looking backward to the shareholder companies, but about finding something that fits the needs of the joint venture as it moves forward.
KNOW THY BOARD
Board turnover was a common challenge Sean faced across the JVs he led. (He is not alone – the average tenure of a JV Board Director is under three years). Whether working strategy, organization, culture, etc. he felt like he would make progress, only to have go over the same ground again as new Directors cycled onto the Board. It got to the point where he asked new Board Directors to commit to the Board for at least two years. (He was not asking for much, given that the average tenure of a public company Board Director is nine years). His view is that it is better to have an imperfect Board Director committed to the JV for 2+ years then a perfect Board Director there for only a few Board meetings.
Sean’s preference is to use Board meetings to approve work that’s been done in advance of the meeting, as opposed to working issues in the Board room. However, he mentioned that without deep relationships with Board Directors (which take time to build), it’s hard to do the work necessary to position yourself to get (positive) decisions in Board meetings. Chris agreed. He views having deep relationships with his Board Directors and other stakeholders in the shareholder companies as a principal responsibility. In his first year, he visited Mitsui’s head office in Tokyo 4-5 times. And he continues to dedicate time on a weekly basis to relationship management, including understanding who the decision makers and who the influencers are for different initiatives that he’s working or planning to work with the Board. We have heard this approach described as “power mapping” (Exhibit 1), where a CEO determines who in the parent company has real “power” to make or influence decisions on different topics, and what key messages need to be conveyed to these individuals about the topic.
Exhibit 1: Power Mapping a JV Board Meeting
A key recent initiative at Ventura Foods was the approval of a new strategic plan that called for acquisitions. Chris and his team worked with the Board to refine the plan across three Board meetings, and believed that they had achieved alignment on the path forward only to learn that one shareholder thought the plan was not ambitious enough. They invested another six months into the effort. The story ends well, as Ventura Foods has made two important acquisitions within the last year.
As you have heard from us many times, being a JV CEO can be one of the most rewarding jobs you will find, and one of the toughest. The good news is that there are CEOs like Chris and Sean from whom to learn. The next chance to engage with them and other JV CEOs is at our June 8 and September 14 JV CEO Roundtables in Washington, DC and Zurich, Switzerland respectively. If you are interested in learning more about these events, please click here.