Business Brains

Turnaround Artist | Donnie Smith, CEO, Tyson Foods

Posting in Food

We talk to this everyman leader about how to transform a company.

"There is absolutely nothing special about Donnie Smith," insists the Tyson Foods president and CEO, in a rural Southern drawl born and bred in "little bitty" Arrington, Tenn. "I wasn't born with any special gifts. I wasn't born with a silver spoon in my mouth. I'm just like you."

This declaration comes early during our 50-minute interview, in response to my curiosity about the casual sobriquet preferred by the refreshingly down-to-earth leader of a $33 billion-plus company ranked among the world's biggest chicken, beef and poultry processors.

With his warm smile, Smith sounds the everyman sermon whenever he can, especially in front of potential high-school and college recruits, and particularly when he's talking about the role that big agriculture will play in addressing one of the biggest challenges of the next generation –- producing enough food responsibly and sustainably to feed the 9 billion people likely to occupy the planet by 2050.

"We will need to produce twice as much food at that time as we do today, and that is a daunting task," he muses. "That is also a great way to get a group of animal science majors all fired up about their future."

Smith's passion is palpable through the telephone line that separates us. "There is a lot of noise today about 'big ag' and 'big is bad' and 'you can't trust those guys' and all that. Well, big is good. It takes a company that, by the way, operates responsibly and operates according to core values and culture tenets, it takes a company with a lot of resources to be able to broaden a production footprint like that," he declares.

This creed is one that the self-described "faith-friendly" company has taken far more seriously since Smith, 53, stepped into the CEO shoes in November 2009 to turn around the financially faltering Tyson Foods.

His more than 30 years with the company -- managing everything from supply chain operations to the IT organization -- could easily have made the new CEO blind to the tough business choices necessary for restoring shareholder value. But within months, Tyson Foods returned to profitability, inspired in large part by Smith's decision to play to some of the 78-year-old company's biggest historical strengths: its "can-do" culture and pride in a legacy of "firsts," such as inventing the chicken "nuggets" made famous by McDonald's. For fiscal year 2012, Tyson Foods reported profit of $538 million, off from the previous year, but the polar opposite of the $537 million net loss recorded for fiscal 2009 just before Smith took over.

The self-deprecating Smith says one of the quickest ways to transform a company is for its leaders to simplify the strategy and explode the pyramid organizational structure that can crush innovation and creativity.

"We view our company a lot more like peach tree than a pyramid," he notes, borrowing the analogy for Tyson's organizational structure from a favorite management tome, Orbiting the Giant Hairball: A Corporate Fool's Guide to Surviving with Grace. "My job is down at the root structure, where the trunk intersects with the ground. My job, like the root structure, is to funnel the resources and provide the structure and the stability that the organization needs to allow the people -- the peaches on our tree, the fruit on our tree -- to actually be engaged in our process. They become the star of the show."

Smith has made it a personal mission to communicate directly with dozens if not hundreds of team leaders across the 115,000-person organization over the past three years. In late January, he and his wife, Terry, a frequent companion on his road trips, drove to three processing plants across Tennessee. In early March, the map was for the Midwest with visits to six more facilities, including some of the independent hog farms that raise animals on Tyson Foods' behalf. At virtually every stop, the Smiths suit up and routinely spend more than two hours walking the line, discussing safety, labor practices, quality and animal welfare concerns.

These visits -- along with nagging public criticism over how massive food processing organizations raise the animals at the heart of their business model -- helped shape the new FarmCheck Audit Program launched by Tyson in October 2012 (and part of its broader push for better corporate sustainability). Audits have already been conducted among 3,000 of the 12,000 farms that supply the company with hogs, poultry and cattle.

Smith's interest in animal welfare isn't all that surprising: he was planning a veterinary career before his 3.3 grade point average in animal science and his academic advisor at the University of Tennessee convinced him to check out Tyson Foods instead.

"We believe the farmers who supply us are the best in the world, and I think the audits will verify this," said Smith, when FarmCheck was announced. "But, if we find problems, we want them fixed right away. To our knowledge, no other major U.S. meat or poultry company offers this kind of service to its farmers, customers and consumers."

Although Tyson has no plans to introduce an organic line, the company added a new line in April 2013 of "natural" chicken, heeding the feedback of consumers interested in cage-free birds raised on family farms, without the use of hormones or antibiotics. A similar line of beef has been available since 2009.

The Springdale, Ark., company will find itself in less familiar territory as it cultivates its international poultry business in geographies including Brazil, China, India and Mexico, where Tyson Foods has set growth targets of 12 percent to 16 percent.

"Here in the U.S., the farmer owns the land, the farmer owns the building, the farmer owns the equipment," Smith notes. "We supply the chickens, the feed, and the technical assistance. In China, we're doing it all, but we'll absolutely be able to ensure our customers that the food is completely safe, and we can prove it because we will have a documented source of everything they have been fed, everything that's happened to them, how they were processed. All that stuff, it takes a lot of capital to do that."

Outside those fast-developing economies, Smith has taken a personal interest in the role that chicken farms could play in providing a source of protein in developing nations, especially in central Africa where most diets consist almost entirely of carbohydrates. He and his wife are forming a foundation to build a commercial chicken feed mill in Rwanda. The intention (at least initially) is to support an existing egg-producing farm in the Musanze district (set up by Tyson and several partners). That operation, which produces 2,200 eggs daily, provides jobs and income for the local residents that run it, as well as a source of protein for young children attending the local child-care center through a program called OneEgg.

The venture may be small, but it aligns completely with Smith's mantra of self-accountability and self-empowerment. "The basic tenet of our core values and our culture says that we're going to do what's right," he says fervently. "We're not perfect, but our intention is always to do what's right, and the only reason we need to do what's right, is that it's right."

Photo: GSG/Creative Juice

Heather Clancy

Section Editor

Heather Clancy has written for United Press International, ZDNet, Entrepreneur, Fortune Small Business, the International Herald Tribune and the New York Times. She holds a degree from McGill University. She is based in New Jersey. Follow her on Twitter. Disclosure