Kraft CEO Slams Company, Trims Marketing Staff

Rosenfeld's Internal Memo Takes Aim at Bloated Bureaucracy

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We're too bureaucratic, confused and lack clear lines of responsibility.

With that blunt assessment, Kraft Foods CEO Irene Rosenfeld laid bare the $34 billion company's weaknesses-and how she was going to begin repairing them-last week in an internal memo to employees. The Kraft memo, obtained by Advertising Age, is surprising for a company known for managing the message by soft-pedaling hard truths even within its own ranks.

Kraft spokespeople couldn't be reached for comment on the memo.

In it, Ms. Rosenfeld states loud and clear that the marketer has been mired in "bureaucracy and confusion about who is accountable for what," paralyzing the central decision-making processes and hindering "new-to-the-world" innovations. In fact, one of her first moves was to eliminate the oxymoronic title of senior VP-business process simplification.

She's also trimmed the executive ranks by four, including Paula Sneed, exec VP-global marketing and resources, and installed a Rosenfeld Dream Team-including Kraft's first-ever chief marketing officer-to enable individual businesses to gain back decision-making power and better align Kraft's global strategy with local goals.

"Irene is saying straight out that the company is moving decisively from a political piranha pit to a marketing and management meritocracy," said Burt Flickinger, a principal at Strategic Resource Group.

Within that meritocracy is Kraft's reduced-fat executive team of 10, including Jeri Finard, formerly exec VP-global category development and now CMO. The appointment of a CMO is "long overdue," said Mr. Flickinger, to "work much more closely across product portfolios and agency groups, and referee battles" over how much to allocate to trade spending vs. the current $1 billion Kraft lays out annually for advertising.

D.A. Davidson analyst Tim Ramey said naming a CMO elevates the top marketing role at Kraft, formerly held by Ms. Sneed, a 29-year Kraft veteran who will leave after a brief transition period. "It takes it out of the business unit and says to the world, 'This is a critical corporate Kraft function,"' Mr. Ramey said.

Kraft, he said, has in the past been guilty of bowing to its profit goals and cutting advertising and marketing spending when expedient to do so, something Ms. Rosenfeld has vowed to change. Ms. Sneed was viewed more as a marketing-services head, acting in a support function rather than as an innovation driver.

One agency executive close to Kraft said: "Having one person as CMO is a very good move," especially since Ms. Finard is "incredibly popular, a phenomenal marketer and, like [Ms. Rosenfeld], will make big, bold decisions." Any change in how Kraft works with its agencies, though, likely will depend more on the structure Ms. Finard creates beneath her, the executive said.

'hip check' needed

The candor of Ms. Rosenfeld's memo and the "Global Town Hall" call that followed it came as a welcome surprise to Kraft employees. "I loved it. That's how we should be talking, because we need more than just a little nudge; we need a hip check into the boards to rattle us," one Kraft executive said.

He said the culture inside Kraft's offices has already begun to shift now that Ms. Rosenfeld's predecessor, Roger Deromedi, has departed and Dave Johnson, former president of Kraft North America Commercial, is being replaced by well-liked former convenient-meals head Rick Searer. In all, the shuffle represents a changing of the guard, observers said, from number-crunchers to enthusiastic marketers.

Ms. Rosenfeld has been signing off all communications and conversations with the rallying cry "Let's get growing!" which was at first greeted with guffaws and eye-rolls but has begrudgingly begun to sink in. "It's hokey," the Kraft executive said, "but it's in our heads now."

Amid the cheerleading, though, Ms. Rosenfeld is keenly aware Kraft has a long way to go. "Today is only a first step-a beginning, not an end," she said in last week's memo.

Indeed, the end is hardly in sight. "She has to rebuild the culture and get people focused on innovating and building brands again," Mr. Ramey said, noting that it took change-agent Carlos Gutierrez three years to turn things around at Kraft competitor Kellogg Co.-and Kellogg had less work to do.
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