Investor’s Business Daily
By Reinhardt Krause
June 19, 2009
Dig Deep: CEO Hugh Grant makes sure the company generates food and profit
Not many chief executives show up on a YouTube video, squaring off with a feisty critic.
Yet there you will find Monsanto CEO Hugh Grant, dishing out straight talk on global agriculture.
On the video site, Grant tangles with agribusiness foe Michael Pollan at a Google-sponsored forum on world food production.
When he’s not debating on the Web, Grant is flying around the world to meet with government leaders and industry groups as well as farmers in developing countries.
Whatever the venue, Grant’s message is the same: Biotech can help fill bellies around the world.
“If you don’t step up, people are going to do the talking for you,” he told IBD. “It’s my job to get engaged in the debate.”
Grant, 51, has transformed Monsanto into a biotech food giant from a stodgy chemical company. Boosted by the growing acceptance of planting genetically modified seeds, Monsanto’s profit jumped 84% in fiscal 2008 to $3.64 per share. Sales climbed 36% to $11.4 billion.
Critics fret over the safety of genetically modified crops, which are resistant to insects and weeds and will some day be drought-tolerant. Grant has aimed to soften opposition by focusing on farming’s challenges and how biotech can help.
To ease the developing world’s food crunch, crop yields must be doubled by 2030 even as farmers use less water and energy, says Grant, Monsanto’s CEO since 2003.
At some meetings, Grant cuts an apple into pieces. His aim is to show how land is a finite resource.
Grant’s punch line: Only one-32nd of the Earth feeds the planet’s population, because three-fourths of the planet is covered by water and much land isn’t usable.
Grant plucked the apple idea from a dinner table talk with his oldest son about a high school project.
The down-to-earth Grant owes his pragmatic side to his Scottish roots. Born in 1958 in Larkhall, a coal and steel town near Glasgow, he focuses on how to get things done. “I try to frame the conversation around the macro view, around what is likely to happen,” he said. “You can argue over some of the numbers. You can get into denial about how much more crowded the planet is going to become. But there’s a much more practical, maybe Scottish, way of looking at it, which is ‘So what are you going to do?’
“The business case that we’ve committed to is: How do you produce twice as much stuff on the same footprint of land with a third less water and fertilizer ?”
Monsanto has staked its claim. In agricultural biotech, it’s the leader in research and development.
The firm steers 10% of sales to R&D. “A big part of my job is the definition of what we need to get done, how we’re going to double yields over the next 20 years,” he said.
Grant’s father was a tailor; his mother worked in retail stores.
The first child in his family to finish high school or go to college, Grant earned a bachelor of science degree in agricultural zoology at Glasgow University and a post-graduate degree in agriculture from Edinburgh University.
Late in college, Grant caught agriculture’s bug side, or entomology. His dream was to find a job that would take him around the world.
Amid the U.K.’s recession of 1979-81, Grant felt lucky to land a job at Monsanto.
“I was 50% of Monsanto Scotland,” Grant said, referring to its small operations. He would drive his Land Rover truck through farming areas all over Scotland.
For many farmers, the main crop was barley, used for malt whiskey and animal feed.
Grant set up small trials with Monsanto’s Roundup weed killer.
He made sure not to sound like a know-it-all. He listened to farmers, and that helped him make sales. “As my career progressed, I tried really hard to stay in touch with farmers, whether it was in India, southeast Asia or the Midwest,” he said.
Grant rose to marketing manager for all of the U.K.
Promoted to global head of the Roundup business in 1991, Grant moved to headquarters in St. Louis. In 1995, Monsanto named him managing director for the Asia-Pacific region, based in Singapore.
One of Grant’s heroes is Norman Borlaug, whom he met at Monsanto in the mid-1990s. Borlaug landed the Nobel Peace Prize in 1970 for his effort to beat famine in Pakistan, India and Mexico. He developed better-yielding plants, particularly new strains of wheat.
Borlaug had run-ins with environmental groups that questioned some of his farming methods in developing countries. Like Borlaug, Grant sticks to his strong beliefs, not worrying about detractors.
“Norm (now 95 years old) has the ability to say ‘Here’s what needs to be done. Now let’s talk about how we’re going to do it,’ ” said Grant. “There’s a difference between the rhetoric, the flowery speeches and the realities of farming.”
Monsanto introduced genetically modified seeds in 1996. Other companies followed. Green groups soon branded genetically modified crops as Frankenfood.
In 2001, PBS released a documentary, “Harvest of Fear,” depicting the furor over genetically engineered food. Monsanto tapped the plainspeaking Grant, then its chief operating officer, as its spokesman to fire back at critics in the documentary.
With a series of buys, Monsanto moved away from the weed-killing and chemical business and into biotech, the future of agriculture.
Drug firm Pharmacia, which had bought Monsanto in 2000, spun out its agriculture arm two years later.
The reborn Monsanto struggled with consumer unease and protests in Europe over altered crops. In disarray after management shake-ups, Monsanto named Grant CEO in May 2003. The stock then sprouted 1,200% through mid-2008.
“The company was facing significant challenges in trying to take all their scientific research, convert it to reality and expand the bottom line,” said Benjamin Akande, dean of the business and tech school at Webster University in St. Louis.
Grant steered Monsanto’s marketing to commodity crops such as corn, soybeans, cotton and canola. The crops are harvested for industrial food products and animal feed.
In 2004, Grant shelved plans for genetically modified wheat. Monsanto’s genetically modified crops enter the human food supply only indirectly, such as in cooking oil. They don’t show up on store shelves.
Grant’s strategy has worked, says Dennis Avery, senior fellow at the Hudson Institute. “The best thing Grant did was to persist,” Avery said. “The greens tried to run Monsanto out of the biotech business.”
Time To Act
Grant remolded Monsanto as an outfit. Executives meet each Monday morning for an operational review. To speed up day-to-day decision making, only five or six execs attend to zero in on targets.
Monsanto reviews strategy every six weeks, not annually like before. At meetings, “hierarchy is dissolved,” Grant said. “You’re only as good as the intellectual capacity that you bring to the table.”
He said Monsanto’s endpoint, doubling crop yields, must be clear so “everybody in the company understands that they have a role to play on a daily basis.”
Grant has learned much from farmers he has cultivated over the years. Farming, he says, usually allows for one chance each year to get things right: in the spring when seeds are planted. Execution is vital. Those rules also apply to running the operations of a multinational. “Your strategy is only as good as your last season,” Grant said.
Publication:IBD; Date:Jun 19, 2009; Section:Leaders & Success; Page Number:A3