Kellanova Chairman and CEO Steve Cahillane

Brunswick Partners Jayne Rosefield and Monica Gupta interview Steve Cahillane about his role in the Kellogg Company spinoff that created a global snacking powerhouse called Kellanova, and a North American cereal giant called WK Kellogg Co.

You’ve noted that the separation of the North American cereal business was part of a multi-year portfolio transformation—can you tell us about that?

It really was the next step as part of our transformation journey. We never stopped challenging ourselves on how we could continue to press the portfolio in ways that would make it more competitive and set it up for more growth. Obviously, that comes with acquisitions, but maybe it’s not quite as obvious that it comes with separations, spins, or divestitures. So, in 2019, we divested the Keebler business. We looked hard at that. We loved the business, but it was hard to understand where our competitive advantage would come from, and hard to understand why we would invest in that business when we had opportunities in Pringles, in Cheez-It, and others. Selling the Keebler business strengthened our ability to focus on other areas of our business.

Spinning off the North American cereal business was an even harder decision because it was such a legacy part of the company. It was almost unthinkable. You couldn’t think about separating what Mr. Kellogg started. That’s where the courage of the organization came through—we found we could actually look at that and say, “Yes, we can do that because it unlocks value for all stakeholders.”

That really was the hardest part of this whole thing. And as I’ve said many times, the industrial logic to me was compelling, nearly inescapable. But that didn’t change the fact that people were going to react strongly. People would ask me, “How could you do that? What would Mr. Kellogg think?” Mr. Kellogg’s spirit lives in the company in ways that you have to really be part of the company to understand. We knew it was going to be difficult, and it was.

We felt that the North American cereal business had the best chance for success as a standalone company. We truly believe that. This also set up Kellanova for a real opportunity to direct investments toward our best opportunities for accelerated growth.

That helped us confront the unthinkable, separating the North American cereal business. And that’s what we did.

How has a transformation of this magnitude shaped you as a leader? Any lessons there for others?

I think the most important lesson, truly, is to surround yourself with an outstanding team. When you are doing something like this, as the CEO, it can feel like a lonely place, but only if you let it. When you surround yourself with outstanding people, and you treat them as equals, and you treat them with the respect that they deserve—because they’re really driving the organization with you—it makes this possible. It’s not easy, but it’s what makes the challenging exciting. You’re driving together to really do something that is exceptional.

When we’re all old and sitting in a rocking chair, what are the things you’re going to talk about in your career? This is one of them. We’re living through that moment right now.

Can you talk about naming the new company? You’ve mentioned how important it was for you to come out with a new identity, rather than just keeping the Kellogg Company name.

I consider myself moderately creative, but as much time as I spent trying to think about what the next great name for the business could be, I utterly failed. I didn’t come up with anything remotely interesting.

The unlock really became keeping the K, keeping the “Kell” at the beginning of the Kellogg Company name, and then just the magic of a new day and a new beginning. When Brunswick presented “Kellanova” as a choice, you could see everybody on the Executive Committee who was involved, just the light bulb going off—like, this is it. When we unveiled it to the organization, the enthusiasm for it was really inspiring.

This was an organization that was in the middle of the grieving process, understanding that the Kellogg Company name was going to go away for them, and suddenly there was this sense of excitement that permeated across the organization—people could put a name behind it now.

Were you nervous to do the big unveil for employees and then to the public?

Nervous is probably not the right word, and anxious probably isn’t the right word either. It was just the expectation that I had. The confidence I had in the new names was so great that I would’ve been disappointed if we didn’t get that reaction. So maybe that’s anxiousness.

I felt like I had this great gift, and I could see everybody just waiting to rip the wrapping paper off. So, there was a little bit of theater in it, and a lot of enthusiasm and excitement. It was an incredible honor to be the one to unveil this to the whole organization, because it’s a name that will live on long after I’m gone.

Kellanova’s new vision statement sets an ambition for the company to be “the world’s best-performing snacks-led powerhouse.” Can you talk about that?

It was a really important moment when we unveiled the new strategy. As an Executive Committee, we all articulated how purposeful the idea was—being the best-performing, snacks-led powerhouse—because it’s unlikely in our tenures that we’ll become the biggest, just being realistic. But that doesn’t mean you can’t be the best.

That underdog mentality to go against longstanding, truly world-class companies—how you can outmaneuver them, out-innovate them, out-execute them, out-think them, out-work them. That becomes a really inspiring place.

We’re still defining what it means to be the best. But the best is all those things, and it gets right at the heart of what Mr. Kellogg himself intended for the company. You have to have better innovation. You have to have better execution at the shelf and in high-frequency stores. You have to perform better in the away-from-home channels. You have to have better presence in emerging markets.

The other thing that we’ve unlocked is a healthier appreciation from our competitors that these guys are coming. And so it requires showing up in a different way. And that’s exciting for us.

Can you talk about the role people and culture will play in helping you achieve that over the long term?

Yes, it’s everything. It really is. I know, everybody says that, right? There’s nobody in my position who doesn’t say that. The differentiator is, do you really mean it? Do you really believe it? And do your actions back it up?

People created this great company and these great brands. There’s a man who invented Pringles. That happened. And these kinds of innovations are truly market-defining! Like the Pringles can, and the iconic shape of that product. Even “Mr. P.,” the Pringles mascot. These things define the category that Pringles is in. Rice Krispies Treats defines the category that it is in. Cheez-It, the same thing. It defines what it means to have real cheese in a cracker. These products and images that people around the world know, love, and recognize all came from our people. We as leaders can’t ever forget that.

So, with all of that in our past, the challenge for all of us is now to ask, what does being the best-performing, snacks-led powerhouse look like? What is the next Pringles in our portfolio? How do we drive Cheez-It to be a global brand? How can we use new technology to connect with consumers? There are real things that we need to do. It’s not going to just happen on its own. It’s going to happen because we bring together the best people, those people have the courage to challenge the status quo, and they work together to execute with distinction. It happens because people are going to make it happen.

You mentioned this separation being one of the most consequential moves in the company’s history. How does that play out in your communications strategy?

This was the most important communications campaign that I’ve ever been involved with. It really, truly was. Town halls, blogs, meetings, constantly communicating. Always showing up in places, physically being there. The communication was relentless, and it was really important—I’ll give you one simple example: So many times, we told people that we’re not changing the Kellogg’s name on the cereal box. And somehow some people still thought, “Oh, you’re changing the brand name of ‘Kellogg’s.’  Why would you do that?” And, that’s just not true. People are still able to buy the Kellogg’s brands they know and love—that is not going to change.

You can never underestimate the importance of getting the message right, making sure that it gets through, and then testing whether it got through.

When you look at our global opinion scores, when you look at the town hall surveys that we do after each and every event that we’ve had, we’ve scored very, very highly. That means a lot to me because, again, this was unthinkable at first. There were people when we announced this, who said, “You’re going to do what?” People went immediately into a grieving process. I had people coming to me and saying, “I’m a fifth-generation employee of this company. How could you do this?” People were crying.

These were incredibly emotional moments for the organization. Getting the communication right with the right level of empathy was important, but also with the right level of conviction: “We’re going to do this, and here’s why.”

As a broader point, our success shows the industrial logic in ensuring that people from the top of the organization all the way through the rest of the organization could understand the rationale, could ask questions, and could come to grips with why we were doing it. Ultimately, getting people on board and convincing them that this was the right next step in the company’s transformation was all about getting the communication right.

You also had to bring the local community along with you on this journey, a community that had grown to love Kellogg Company.

We have a commitment to Battle Creek, and we had to be thinking about the next 118 years. As an international enterprise today with 50% of our business outside of the United States, we need an international airport. We need certain levels of infrastructure.

To the community, it was fundamental that we were being honest and transparent, and we weren’t holding back. Community leaders were very appreciative of that. If you honestly confront the things that people are most fearful of, even if they don’t like the answer, that’s better. That’s the way to do it.

By the end of it all, several community members said to us, “You guys said you were going to do certain things, and then you did them. Thank you for the transparent and authentic communication.”

What was the most rewarding part of the spinoff for you?

When we launched company-in-company, essentially a trial run of being separate companies before the spin was officially complete, that first day, second day, third day went by, and it worked. The lights went on. The trucks ran. Orders were delivered. Cash was collected. All that stuff happened. It was really rewarding.

Being with members of my team down on Wall Street, ringing the opening bell at the New York Stock Exchange, that was exciting. Rushing into the CNBC booth, and representing the company, and talking about all of the things that make Kellanova compelling. Walking outside the exchange and seeing the food trucks with our new branding, the enthusiasm of consumers passing by and tasting all of our great snacks, and the food trucks being emptied out almost immediately, it was an exciting day.

You’ve talked about preparing for the next 118 years. What’s most immediately on the radar for you as you think through to the year ahead?

You’re only new once, so this is our debut—coming out of the gates strong and showing that we are a different company. We’re more innovative, more efficient, faster moving. We’re better collaborators with our customers.

That’s going to be really important. When our critics, when our fans, when our customers evaluate our performance, they have to really be able to say, “I see what’s different. I see that this is a different company.”

This year, we had the best Super Bowl spot we’ve ever had—that’s one example. When I joined the organization in 2017, I don’t think we’d ever done a Super Bowl spot. They had good reasons—it’s very expensive and competitive. But to me it’s not just a 30-second TV commercial. It’s a testament: Are you going to show up on the biggest stage, on the biggest day, against the biggest players and hold your own? So, we kicked off that year [2018] with our first Pringles spot. We’ve been on ever since.

I’m involved there every step of the way. I love it. It’s an exciting way to kick off the year. This spot marked our seventh consecutive year doing it, and the best one we’ve ever done.

How are you thinking about personally kickstarting the new year?

There will be a lot of time that gets freed up that is not part of a major project. More time with customers, more time out in the regions, constantly being where the action is happening is going to be really exciting.

What’s your favorite snack from the Kellanova portfolio?

I often say it’s like asking who your favorite child is. Difficult for me, but I will tell you that last night I opened a box of Cheez-It White Cheddar Grooves, and that box didn’t stand a chance. It’s empty this morning.

The Brunswick Review also interviewed Kris Bahner, Chief Global Corporate Affairs Officer for Kellanova, as well as Gary Pilnick, Chairman and CEO of WK Kellogg Co, and Stacy Flathau, Chief Corporate Affairs Officer for WK Kellogg Co.