Have you ever heard about “burning the ships” concept? That is what exactly Darwin E-Smith the CEO of Kimberly-Clark that kept the latter the world’s largest tissue manufacturer and one of the only 11 companies with average industry stock returns for 15 years, followed by 15 years of returns at least three times the market average. Darwin E-Smith was born in Garrett, Ind., He graduated with honors from Indiana University in 1950. He later attended Harvard Law School, graduating cum laude in 1955, and took a position with a Chicago firm, Sidley, Austin, Burgess & Smith. In 1958,
he joined the legal department of Kimberly-Clark at a salary of $15,000 a year, intending to stay only long enough to gain corporate experience. But he rose through the ranks and remained with the company for 34 years. Before 1970 Kimberly-Clark was going bankrupt and all the potential was indicating that they won’t continue because quoted papers marketing – which they were producing- declined badly. Not long after Darwin became the CEO, he had a genius totally impressive, and risky solution. He thought you cannot swim for new horizons until you have the courage to lose sight of the shore. Therefore, he applied burning the ship’s concept by selling most of the mills they had – for producing quoted papers- and invested the proceeds in other brands for instance:
Kleenex was the first and the most known throw-away tissues and stayed one of the market’s most used products for a while that people until today still call the tissues -even if it is from a different brand- Kleenex and some still don’t know that it’s not a generic name, its brand name
Huggies also was one of the most successful brands that he revamped. Huggies had become the nation’s leading disposable diaper and accounted for about 23 percent of
the company’s $7 billion in annual revenues. Which was a strong competitor to the
leading brand, Pampers of Procter & Gamble. Which is one of the biggest corporations
that have well-known and widely used brands such as Ariel, Crest, Always, Braun, and
After that Darwin strengthened the business’s consumer products segment, making it
less dependent on commodity goods and generating stronger returns for its
stockholders, with the money he earned from selling paper mills. He even created an
airline, Midwest Express, from the company’s own activities. Later, the corporation
made a profit of over $40 million by selling its majority stake in Midwest.
Competing with such powerful corporations demonstrates how astute and bold this
genius was to come up with such a plan. And if there was one lesson from analyzing Darwin’s story it should be considering risk. Sometimes being safe will keep you on track but expansions need some courage.
And always remember “a ship is safe in harbor, but that’s not what ships are for”.