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Interview: Douglas Baker, Chairman of the Board & CEO, Ecolab Inc

 

– Douglas Baker, Chairman of the Board & CEO, Ecolab Inc., in conversation with Shanti Petiwala.

 

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Interview: Douglas Baker, Chairman of the Board & CEO, Ecolab Inc
 

You read about US multinationals expanding through acquisition, assimilating smaller companies to expand their capability to serve customers. And, you hear of CEOs who spearhead the companies – strategizing, planning and executing. Rarely do you think you would meet the CEO. Douglas Baker, Chairman of the Board & CEO, Ecolab Inc. was recently in the United Arab Emirates, and Clean Middle East grabbed the opportunity to interview him at Ecolab’s spanking new office premises in Jebel Ali. Baker talks about the global economy, Ecolab’s performance during his tenure as CEO and the future. Here are some excerpts.

Having been with Ecolab since 1989, how have you grown as a person? What would you say has been your biggest achievement till date?

I’ve been with Ecolab for more than 26 years now, and a time span of that length changes you. Some things I’ve done have worked, others haven’t. You often learn more from the things that don’t work than you learn from those that do. The company has changed, which is good. I’ve been CEO for the last 12 years, but it hasn’t been the same job. The job’s evolved a lot and as a consequence, I’ve had to change and grow. When it comes to achievements, I think I’ve been very lucky in all aspects – business and family. I’ve been a good father and husband – still married (he chuckles) – and have been successful professionally. The company has done well, but then many companies have – we are not the only one. I feel great about our potential moving forward. It is equally good today as it was when I started. If you just grow a company, you are eventually going to run out of room. And you are not setting yourself up for the future. We have done well in the past, and I believe we still have great growth opportunities in front of us. 

Ever since you became the CEO of Ecolab, the company’s revenue grew to $14 billion in 2015 from $4 billion in 2004. What has been your highlight in this journey?

We’ve made a lot of acquisitions. Obviously the Nalco acquisition, which significantly strengthened our water management capabilities, is by far the largest. It’s been four years since the acquisition and it has every reason to continue to be successful going forward. We want to continue harbouring a culture within all parts of our company where people know the priorities, principles and the focus. This is critical to our success, and work to ensure we’re continuing to drive this culture.

You have also been involved in more than 50 acquisitions since then. What kind of planning and strategy has gone into these?

Nalco started with a strategic plan we did in the early 2000s, which really underscored the fact that we believed we needed to be the leaders in water technology in our market. And, Nalco was a means to the end. We obviously evaluated the market as a consequence of that strategy and knew about Nalco, but at first, we didn’t believe that it would be possible to acquire the company given its size. But, going forward, that homework helped us move quickly when the opportunity arose. And you have to move quickly in such a scenario because these windows open and shut. The acquisition part is easy – it’s a strategic fit. It’s the culture fit, financials and future that are difficult to predict. Do you believe you can ultimately get the return for your shareholders? The goal is not to get bigger – it’s to get better to improve the business. Are you also improving your ability to grow in the future? Capable of meeting customer needs? Able to retain and attract talent? We spend as much time on the softer things such as culture, fit and what that means for our growth potential than just the financial numbers. It’s easy to be quick if you are prepared.

What is Ecolab’s most recent acquisition in the cleaning and hygiene segment? How has it added to the company’s portfolio and revenue?

We acquired Swisher Hygiene in the US in November last year. Swisher was a competitor that attempted a strategy of buying several small, regional competitors in the food service and hospitality industry supplying warewashing, laundry, housekeeping and hygiene-type programmes. It was backed by very serious money, but they could never make it work conceptually or financially. We ended up making an offer on the company, and it was quite an attractive deal. Our priority is to make sure we do a great job for the customers that come with such deals, and I believe that’s gone quite well in this case. It’s been a nice size acquisition and strengthens us in a couple of regions in the US.

When you take over a company, how much time does it take to get everything in place and then start working from there?

It all depends on the size and activities. For instance, in the case of Nalco, it was present in 150 countries – and we were present in 160. That meant merging 150+ organisations, which is complicated. That took around three years, and we still have work to do in a few smaller countries. In the case of Swisher, I would say six months. Our priority is a lot of back-end work, what we call ‘plumbing and wiring’. And the most important part is the people and customers. When you acquire a company, you are acquiring the know-how and customer relationships, and sometimes technology as well.

What is your perspective on the Middle East & Africa region?

Middle East and Africa – that’s a short name but it obviously has huge scope. It is a very diverse region with countries in very different states of development. I’d say we are quite bullish on this region. We have our eyes wide open. We have recently made a significant investment to bolster our executive and product supply capabilities in this region – and the reason we are making these investments, both in capital and GS&A, is because we see potential here and believe our technologies around water use reduction, hygiene, food safety and energy all fit incredibly well with this region’s natural strength and challenges. We believe this region is a great growth opportunity, and our plan is to continue to invest in it and make sure we bring in the right expertise and technology to meet its needs.

During your tenure, the global economy has gone through several downturns – how challenging was it for you to then continue to grow the company and stay afloat?

The biggest challenges were ‘08-‘09 economically. I would say we had a couple of advantages. Our business model is pretty resilient - food safety, clean water, energy needs and clean environments are needs even in the difficult times – we aren’t luxury goods that get turned on and off – so our business lends itself to doing better. But, you have to be thoughtful and react when necessary. No one can predict all the economic challenges. I think what’s important for management teams is to remain nimble – react and deal with the truth as quickly as possible, and nail it. Managing situations in a way that will benefit the company in the long run is key. The earlier you react, the less severe the consequences of the downturn. Time is your friend early and your enemy late, and if you’ve got the cost challenges, etc., doing 10 per cent right away prevents you from doing 20 per cent 6 months later. Organizations react much better to evolutionary changes than revolutionary changes.

What is your opinion of the global economy currently?

My perspective is not very unique if you read the financial press. The US is doing okay. Europe so far is hanging in there, but it’s under pressure. Middle East and Africa continue to be a great opportunity. Though we talk as if it’s one market in that name, it is many different markets, and our team is working hard to understand their specific opportunities. Asia is doing fine. China is not doing as well. Having said that, I’m still bullish on China in the long-term. It’s a huge market – it’s one of the three mega markets in the world. And, we believe that’s a market we have to succeed in if we want to remain global leaders. And in that view, while it’s uneven, I don’t believe the economy is going to dictate our success or failure. There are going to be opportunities for growth – companies that execute the best and have technologies that resonate with the market will succeed. Those who don’t, won’t.

Who or what would you say has been your inspiration throughout?

I don’t know if I would hold up a single individual, I have had a lot of great mentors and people who have helped me along the way. I would say, if it’s about inspiration, it probably came from my parents. Our responsibility to the world is to live up to our potential, and that’s our company’s responsibility and mine personally. And if that’s your goal, then you have to be willing to improve yourself every year. I tell our team that they should need me to be a better CEO next year than I was this year. And, I need every member of the team having the same attitude. I don’t care how good you are or how long you’ve been in the job, if you start thinking that there’s nothing left for you to learn or that you are unable to change or grow anymore, then that’s a major problem.

What are your future plans for the company?

Well, I believe the company is going be relatively similar in the next five years – only bigger. We have some adjacent markets that we plan to enter and some growth bets that I believe will succeed and add to the company’s capabilities. But clean water, safe food, healthy environments and abundant energy are going to be the dominant themes we’ll be talking about in five years. You asked earlier how we feel about the economy. Economies are always unsettled and uncertain. These are waves – we look for currents. The more the population is going to grow, there is going to be a need for more food. Food is going to have to be shipped great distances, food safety is going to be more important, which means more water and more energy. That’s why we are focusing on these themes. We believe that whatever the economy does, the need for clean water, safe food, abundant energy and healthy environments is going to be much more the long-term narrative than the ups and downs of the global economy.

Where do you see yourself in the next 5 years?

Well, right now I’m just trying to get through the week! I love my job, and I’m going to continue doing this job as long as it makes sense. For the foreseeable future, I want to continue to help the organization reach its potential. Someday, that’s going to be better done by someone else, and that will be a good thing.