Research Antec Ma, Geatile prepered ris case ‘onder ie sper of Prater Tee 0. fick os he mfr ete att rtary then lola ie ofeise Harvard Business School 9-486-090 Peter Browning and Continental White Cap (A) n April 1, 1984, Peter Browning assumed the position of vice presicent and eperating offi Continental White Cap, 2 Chicago-based div ff the Continental Group, Inc. Having completed a suc- cessful five-year tumaround of Continental's troubled Bondware Division, Browning found this new assign- ‘ment at White Cap to bea very difierenttype of challenge. He was taking over the most successful of Continental's nine divisions—"the jewel in the Continental crown,” as ‘one Continental executive described it. White Cap was the market leader in the production and distribution of vacuurn-sealed meial closures for glass ars. Browning's charge, though, wasto evitalizeand repo- sition the division to remain preeminent in the face of threatened, but not yet fully realized, changes in the carn- petitive environment, Sales were stable and costs were up. Recent years had brought changes in the market: one competitor in particular was utilizing price cuts for the first time to build markei share. and the introd uction of plastic packaging to many of White Cap's traditional Customers threatened sales. White Cap had not yet devel- ‘oped @ plastic sure o: the ability to seal plastic contain- ers. After more then 50 years of traditional management and close control by White Cap's founding family, corpo- rateheadquarters decided it was timeto bringin aproven, 1 ope lh NA? ere Rbk ors Sen oon WA 030, No partly be repress seal Sees eordng erence Semon© For work inamanutacunng sexing you couldnt do beter thon Whe Cap White Cap ent therel wercr whee the economy Shoring While Capsree White Ger atveysinesucto eid hatter opie are imports tous” They spas tore a huge ry pic overy yore fr ab Wiste Capper cnd fends When hey ot inshited be aneond shit nthe lacey, ey lined up cabsto take te workers hommes their ue. They sponsored gol eutings and 25 "older coal cant” Peon eoenc diy fete tat rething’s gong to hapeaeoy asfongas weve gota Aniethere Bot in 1967 Bob White stepped down and tured the management over Ws At Lense, ‘oho becase vee president and execute off ger Lawson, 63 years old, was an eldscne White Cappes, end many ssw him as simpy 2 proxy forthe Whiter Even Lawson woul cay that he ssw Nimeel ao carcaher sanage ‘painting things they hod siwsyoocee At about this tie, price competion begen {o heat up in the close nduney Whale Cop ‘ad been the marke leader or ever $0 yon, but customers were beginning fo ‘ake the atl System for granted. There were by then 3 gy i eacucaicr come: lace and 70 worldwide who offered the Iwistoif cap. Compettor ike Natoral Coe Company were begtning sach prices ware thatthe very edvantage White Cp had nates ‘Rive inthe market (Ge, Re RED ar fal ees ) made it dificut for it to compete tfechvely with drastic price cating Jat st this tine, pase containers—reguie ing plastic closure begun to be avalible ce Exhbit1) In 1962the Food and Dug Adee tration had approved tho use of a parsley plastic substance as an approprateospgen br, et for food containers Subsequemly, the American Can Compar’s Gurvne™ bate, 2 scjueezable plastic containe: was adopted by the Heine Company for ts kotchap oad 6p Hunt for its barteeve sauce (hie Cap hed Feld 100% of the Ketenap busines worideie) Welei’s jams and elles also acopre? ths new technology athe reasons vere pre Wiles expe the new pacagig io help evtalaebrohtvely fat proteetoe 1 sais tao Pete Browning and Continental WhiteCap (A) gory, baving conducted research indicating that ther customers aze willing to pay more {or the convenience of the squececble plastic teatle! Another major White Cap sccount had an. ounced plans to introduce 2 neve juice line in plastic containe's forthe spring of 1986, a¢ well Without « competitive plastic closure, White Cap would continue io lose customers Senior White Cap management, however, had been 1 luctant to allow R&D to commercialize plastics Ccevelopmonts because such plastics thicets in the past had never materialized 1964, two years atter Bol White had left, Pete: Browning was named vice president and ‘operating offices, reporting to A Lawson He took over a division with 5175 million in gross Sales. 1450 employees (of whom 480 were talay ted) 12 sales cces, and 4 plants (2 in Chicago, Ulinols, 1.in Hayward, California, and 1"in Hcleton, Peringyivanis), rowning's Backgrowne I'm Peter Browning and Tm 43 yenrs.ct age I have four dldreA three girls, 20,16 aL ana yar on My dag uate degree sin history, and while at We Gop, learned my MBA theough the Execu tse Program atthe University of Chicago. 1 have beer with Continental for 20 years This. was Pelée Browning's characteristic opening each time he presented himself and his deus to a new audience. On first imprection, Browning appeered youthful. charming, and in. tellecally end socislly curious, -Varous em Ployees and managers described him alvernately 8s “Mr. Energy.” “ambitious,” “direct "ihe ost powerful boss I've had.” “the quintessers Lal old-ime poutictan, shaking hands and Kise. ing babies” His speeches to management and stall were peppered with inspirational apho- sms and historical, often military. metaphos, epented ac refrains and rallying crea, ln spring 1965 the Continental Group ar- anged for each ofthe nine divisional cranagers {0 be imermewed by industrial psychologic ‘The psychologis's report on Browning stated His intellecrual ably isi the ve Rorrange. Heiss harc-daiving indWvice sPensng Clots Reale Fat Mares,” Pecogig Auge p. 3land envy and misconceptions 11 the corporate level ‘A former Continen‘al Group manager elab- orate White Cap nse always boon seen tg 2 prima donna by the Continental Group. I'm fot convinced that here aren tome in Con ‘necticut who might wan'to see White Cap Shumble. They hive aluayé looked af the val ary and administrative cost at 13% of net Sales, compared with a 35-45 rato in other Givisions, and concluded that White Cop Perhaps the Semand for cost outs wes fu ‘led by the fact thatthe Continental Group wis going through ts own period of “racieal sur. gery” al this me. Since 1986 when Peter Kiewit Sons acquized the company, corporate heed quarters hod “cold off SL. billon worth of ine Surance, paper products businesses. gas pipelines, and cil and gas reserves" and haccut Corporate staff from 300 to 40? The corporate climate was calling or swift, elfective action Takirs Charge In the first month of his new pasition, Browning. sumed hi attention to thee issues, To begin with, be felt he had to make some ges fuse Or take some stand with regerd to Bob White, White was very much ave in the hears tnd mines of While Cop's employees, and al- ‘hough retired he sil lived inthe Chucaga are Although Whate epresented many of the values and the style that Browning hoped io change he twas also » ey o the White Cap pride and mo Fale that Browning had ta presence In addition, Bob White's successor. Art Lawson, ses another link to White Caps past, land his strong presence in the marketplace sep. resented continuty White Cap's customer: lations, Since corporate heedquariers mes determined to msintain an uatrmudiec public image thoughout White Caps transition, they brought Browning in raporting to Lawaon—the division's vice president and executive officer land a person Browning had known for over 20 Yyencs (See Exhibit 2. Browning knew he had fo Bive some strong meseoges abou! new direc: tens ifhe was te shake up the comfortable divi= Pater romving and Conierial Wie Ca (A) sion, but be had do thi is blow Lawson tnd inspite of Whe’ hesiage A second challeage facing Browning was White Cop's marketing depatoen,” ata cne ‘when major: Tong-etin cistomers tn mature lets were faced withthe ataicon of tmergieg plasicpackaging technology and Site Sogiating to oke he Whe Cap Tet Sy tem for grasted, Browning found 2 marketing td sales ergsizton tha, scoring 49 ne Simply adminutered wasting progam I wan not spending conaacive ine withthe Customers who ha but the Bsies, nor we aggeively addmeaing new compels i Jim Stark nad boom the siedor of market ing or the previous fve years He fade Ga {ck record with White Cop cisone’s and, 45 2 individu! muntined ean song maton. ship in the fold Cuomen tnewt him wel ad rele on in. Held been wh te coat any for 3 years and hod been a eginal sales Famger blore hi traraer to aetng. in this pier poison. Saks sength hac easly teen fis abit 9 deal withthe eases oo eppose io he peste managing sls Dey Iateng ootide precentaton sv sling 4g hs feral eatorships wit Ns makeing 21 and withthe fd ses lee had appa Ft Soures over the yen, Team api wnat inevidence. Sark complained ththe Fda tive the suppor he ned fo mae changes male Stask’s boss. the general manager for sales and marketing and & highly competent sales professional urged Browning to aveid any sud den personnel changes and “to give Stark a chance” Moreover. relieving a manager of his responsibilities would be unprecedented at White Cap. Yet tor come, Stack was like “ baseball coach whe has been with the team through some slow seasons and was ne longer ableto tum around his image Browning alsp inheritad a manager of thumin cesources, Tom Green, whose role and ‘capabilities he began to Guestion | Browning, hod always beena proponent ofa sang human resources function. He met with Tom Green and shes him to help idently and evaluate hey se eee aa) Sa ee 3. Allan Dade Frank “More Takcons Cina” Fre AMBER 9.40 rete Bronning ond Continental Wile C3p A) Exiibit) Changes in the Container Incusty Ferceatage of Rigid Containers Shippedin 1974 and 1984 Plasictowles ° mm om oe wo 100% | of teat unt shipments Soutc: Butea of Cewus, Con Manularturerd Instn, International Tad Assaition. pd US Fucus Out 1285, Shipments of Plastic Bottles for Feod ms Ton Mitioaso! Uns mor s Source: Buses ofthe Cervve, nvemational Trade Adminiseaton and TS Indusira’ Oxtook 1988Ld ¥ * Remarc site Mary Gentleman de he person of Prosar Toda Dek the bas for lassi ther an ila coher ie or afc hing an Harvard Business School '9-486-091 Peter Browning and Continental White Cap (B) 'n February 1984, soon after he learned of his new assignment to affect changes in. how the White Cap Division did business, Peter Browning set up a lunch resting with Art Lawson, the company’s vice president and executive officer and successor to Bob White, the founder's son, now retized. Peter Browning, Act Lawson, and Bob White Peter Browning openly expressed his respect for Lawson and his desire to work through the leadership transition at White Cap in a mutually cupportive fashion, He also discussed White Cap’s current competitive chal- lenge. Browning pledged to keep Lawson informed of his actions, and he agreed that Lawson would continue in duties such as the chairing of executive staff meetings as Jong as he wished to do so. Browning did change the reporting structure, however: all senior managers would report to Browning directly rather than through the pre vious multilayered hierarchy. As the corporate office had expected, dueto Lawson's impending retirement, Lawson agreed to hum most decisions over to Browning by the stimmer of 1984 [he did notactually leave White Cap until June 1935). Though Lawson did rot immediately embrace allot Browning's initiatives, he did notblock them. efther Caprngh 8th aoa ‘is See fotPeter Browning end Contrertal vine Cap () national marketing efforts, and White Cap had picked up tio nev licensees: one in Korea and one in Colombia. += With segard to sles and earnings results, price competition had been severe in the past year and the National Can Company was termined to continue the onslaught throughout the coming year. The past year’s income was $4 milion shor of projections (On the other hand, White Cap's “Contrib tion te Earnings” within the Continental Group cemained constant with ts usual strong performance, ‘= Browning reviewed with satisfaction his sce cess in securing corporate support for the ‘new plastics plant site. He expected the neve slant to becompleted by April 1986. Finally, Beowning considered the past year’s successful introduction of performance p- praisals and meritbased pay increases. March 1866 ‘Six months later, performance looked sigrif- fecantly improved: # The S&cA a a percent of sles was finally be- sinning to turn and was expected to be down 5% to. from the previous year. The Salary Procluctivity Program enabled White Cap to climate over 50 salaried personnel, our! 47), over the two-year period (1985 and 1936). ‘+ Unitsales were projected tobe up by more han 5% * Cost reductions of $1.9 millon wore 2 pected. ‘= The new plastic closure was scheduled for ‘commercialization in the fal of 1986, Jim Stark's efforts ae dizectorof packaging development produced significant reaults ia the form of working nondisclosure agree= ‘ments with viewally every plastie-container smanutoctucer inthe Urited States, ettecting on the challenges ho confronted ‘at White Cap, Browning commented’ page ccs ae baa petit ti ry Sea een cates Deter a Se orcas aan eeceon scan ae See, seat ees oe ee meses a ele deere eens eae ee eon ieee neeeas eon cer naraee foe Peoe acta ccc ena a eee ee ee eae nee