If anyone knows how to heat up a business, it’s Larry Blanford.
Blanford took the helm of Green Mountain Coffee Roasters (GMCR) in May 2007, replacing founder Bob Stiller, who stayed on as chairman.
Blanford, with more than 10 years leading high-growth firms, joined the wholesaler and direct seller of specialty coffee at an opportune time.
The year before, Green Mountain bought its remaining stake in Keurig, a maker and marketer of single-cup brewing systems.
Keurig’s proprietary system combines a pressurized hot water brewer with a portion pack called K-Cups, which are sold separately.
The burning question, says Blanford, was how could Green Mountain best leverage the acquisition?
Keeping with his business approach, Blanford gathered 24 senior leaders from Green Mountain and Keurig to craft a game plan.
“I always start with strategy,” the CEO told IBD. “I feel it’s critically important to get the overall business and brand strategies right, and always with sensitivity toward the user and channel customer. With the strategy in hand, you move to execute against that strategy.”
Using this approach, Blanford, 57, has helped Green Mountain’s business sizzle. Sales more than quadrupled to $1.4 billion in the fiscal year ended last September from $336 million (restated) in 2007.
Its stock price has soared over 1,500% since early 2007. An especially hot day came two weeks ago, when an announced deal linking Starbucks (SBUX) java to the Keurig system gave GMCR a 41% pop.
The 2007 thinking session started with the team “getting the strategy right,” Blanford said. “The process of bringing people together to develop a strategy has been tremendously important to the company.”
Among the key issues was whether to allocate resources for Keurig to take on hotshots in the home market for single-serve coffee.
At the time, Keurig had a strong spot in the single-serve office market.
Blanford and his team saw an opening in the home market. With that, the Keurig single-serve brewing system could go from a niche to mainstream player.
“We could have easily said we’re just going to compete in office coffee systems; we could have easily just continued to compete in office coffee systems and been very successful,” he said.
After a summer of strategizing, the team opted to take on home-market giants such as Mars and treat Keurig as a mainstream business. It would also continue to develop the office business.
The board gave the plan the green light and spawned a new growth era for Green Mountain.
In 2010, Keurig was No. 1 in coffee maker dollar share across all retail channels in America, according to research firm NPD Group.
Keurig has a sharp business model based on high volume and broad distribution. It offers over 250 varieties of coffee, tea and other beverages in K-Cups.
After the initial purchase of the brewing system, it sells K-Cups separately. So it’s constantly generating recurring revenue.
For the 12 weeks ended Dec. 26, K-Cup portion packs outsold all other packaged coffee — including nonspecialty java — on a dollar basis in the Northeast, according to market researcher SymphonyIRI.
Keep It Coming
Roughly 90% of 2011 first-quarter sales came from the Keurig brewing system and its recurring K-Cup revenue.
Green Mountain’s second business arm — its specialty coffee unit — produces, markets and sells coffee, tea, hot cocoa and other beverages in a variety of packaging formats, including K-Cups.
Nick Young, senior director at executive search firm Spencer Stuart, calls Green Mountain “an absolute rocket ship.”
Young placed Blanford as CEO at building and home products firm Royal Group Technologies, and Blanford served in that post from May 2005 to October 2006.
He put Blanford in touch with Stiller, who was looking to add a member to Green Mountain’s board. Stiller was so impressed with Blanford, he asked him to take on the CEO job.
Among Blanford’s leadership skills that help lift Green Mountain is his “deep appreciation for what his team has accomplished and (for) Stiller’s vision,” Young said. “To work with a founder successfully requires the ability to respect someone else and put your ego second, and Larry has the unique ability to do that. He’s very much about the team and working with others and less about himself.”
Blanford’s business strategy involves being in concert with end users and channel partners. It’s a way of thinking he learned at the various management posts he held at Procter & Gamble (PG), where he worked from 1977 to 1985.
When dealing with his team, he develops what he calls an empowered work force: Don’t wait for orders. Just do it.
To that end, Blanford keeps employees informed. “I want every person in the organization at a high level to understand the strategy of the company and how it relates to what they do,” he said.
This helps employee grow and align themselves with the company, he says.
Blanford also likes to nurture what he calls engagement. In another word, access.
“I want people to feel they can engage each other and management to talk about issues,” he said.
Why go to Green Mountain? Blanford said as he contemplated taking the CEO spot, “what won my heart was culture,” the atmosphere that Stiller created.
“We’re not bashful about making money,” said Blanford.
Blanford, who holds a degree in chemical engineering, also liked that combined with Keurig, Green Mountain teamed up brewing technology with the development of coffee and other beverages.
“The opportunity to bring the brewing technology and product technology under one corporate umbrella won my head,” he said.
Blanford was born in Dayton, Ohio, and received a degree in chemical engineering from the University of Cincinnati. While still in college, he participated in a work program at Procter & Gamble.
It was his first exposure to business, and he was sold on what he calls a “truly great company.”
After graduation, he worked for P&G full time, at one point for one of his mentors, Lloyd Ward.
The Maytag Way
Ward became CEO of Maytag in 1999 and recruited Blanford to work for him there — where he held various posts, including president of Maytag Appliances.
He taught Blanford that after every meeting, review what he did well and could have done better.
“I try to do that,” said Blanford. “That’s leadership — learning from your trials throughout your career.”
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