Tom's of Maine CEO goes through a period of disillusionment as his company becomes more professionalized.
His company had taken off. But Tom Chappell lost track of who he was and why he was going to work each day
Over the years we've met many a founder who has made all the right moves in 'professionalizing' his company, only to wind up wondering whether he still has a role. Alienated from his own creation, a founder may choose to sell out rather than deal with the crisis. Not so Tom Chappell, whose story will engage anyone who's ever felt burned out on the job. -- T.R.
At 42, Tom Chappell had it made, and he was miserable -- frustrated, autocratic, and blue. His cars were new and imported, his house was old and stately, his boat was big, his kids were going to good private schools, and his marriage was solid. He looked great, fit and trim. Newspapers wrote stories about him and his company. They called him a success, and yet he asked, as in the Peggy Lee song, is that all there is?
Success? He didn't feel like a success. He sure wasn't having any fun at the company, where no one was doing things the way he wanted them done and where no one understood the business the way he understood it. He wasn't even sure anymore that his decisions were right. The less certain he grew of his own judgment, of course, the more he insisted on having his way. But he couldn't help wondering: maybe the managers he had hired for their business-school educations and consumer-brands experience really did know better than he.
Odd, wasn't it, that running the business had seemed so much simpler and so much more fun 15 years earlier. Back then, he and Kate, his wife and cofounder, had little money, no market, not even much of a product. But they had had ideas, desire, and confidence. By 1985 Chappell had run short of all three.
You may have heard of Chappell's company, Tom's of Maine Inc. During the fiscal year that ended last June, it manufactured and sold $8.1 million worth of all-natural personal-care products -- deodorants, shaving soaps, toothpaste, mouthwash, and so on.
It hadn't started out with either the name or the products. In 1968 Chappell quit a promising sales job in Philadelphia with Aetna Life Insurance Co. He and Kate wanted to make some money, but they were also concerned with environmental issues and they wanted to live in Maine. So they started a business that would reflect those concerns.
They called the company Kennebunk Chemical Center, after the town they settled in. Its first product, Chappell's own creation, was a nonpolluting cleaner for dairy equipment. The second was a phosphate-free liquid laundry detergent, ClearLake, which Chappell sold first along his dairy route and later through supermarkets. Environmentally commendable, ClearLake didn't clean awfully well.
For a couple of years the company stumbled along looking for a niche. Then Chappell met Paul Hawken. Hawken's Erewhon chain of natural-food stores was finding a receptive market -- and no one, Hawken claimed, was making a decent soap for the natural-food customer. Maybe Chappell should try. He did. Naming it was a problem. Why not just Tom's, Kate suggested finally -- Tom's Natural Soap. Hawken put it on Erewhon shelves, and it sold. Hello, niche. Natural- and health-food stores needed other personal-care products for their shelves. Kate and Tom and their pickup crew in Kennebunk developed them, wrapped them in funky packages, and expanded their distribution. The brand evolved over time into Tom's of Maine; so, eventually, did the company name.
By 1981 Chappell virtually owned the personal-care sections of health- and natural-food stores across the United States. Annual sales had climbed to more than $1.5 million.
That was the good news. The bad news was that consolidation was under way in the health-food retailing industry. To continue to grow, Tom's of Maine would need another market or product line. Since the company already knew personal-care products, Chappell reasoned, shouldn't it first look for someplace else to sell them? Probably there were people who didn't shop at health-food stores who would nonetheless buy a natural product. But to reach that customer, Tom's of Maine would have to get its products onto supermarket and drugstore shelves. It would have to learn trade promotion and consumer advertising. It would have to expand production. It would have to . . . well, it would have to become a different company.
With this new challenge and fresh determination, Chappell set out to make it so. He raised $75,000 in new equity capital -- taking care, however, that he and Kate retained a majority of the stock. With his new minority shareholders and some outside advisers, he created a board. He wrote a business plan. But a real business needed professionals in charge -- trained, experienced people like John Eldredge, a graduate of Dartmouth's Amos Tuck School of Business Administration and a veteran of General Mills.
So 1983 marked a turning point for Tom's of Maine. Eldredge arrived; so too, unnoticed at first, did the beginnings of Chappell's disaffection. If you've founded a business, maybe you know what happened. The better things got for the company, the worse they got for the founder.
Over the next five years Tom Chappell got lost. Three things happened to him. First, he tried to compete with the professionals he had hired to help him. Second, he became obsessed with the business of business. He grew so intent on what he was doing that he completely lost track of why. Third, he became Tom's of Maine. The idealistic visionary who had founded the company had by 1985 turned into a narrowly focused autocrat who drove it -- with little thought of destination and no purpose beyond meeting the next strategic goal.
He found himself competing with the people who worked for him. Why?
Consumers don't want to see flowers on the packaging, the professionals argued, they want to know what the product will do. They also thought that the chummy message from Tom and Kate printed on each package should be shortened. "New Customers and Old Friends," it began, "We founded our small company in 1970 on the coast of Maine. Our original challenge was to make a toothpaste, a shampoo, and a deodorant that would work as well as or better than commercial brands without using artificial additives. . . . We listen to what consumers want (and don't want) in their products. . . . Try them, and let us know what you think." Tom and Kate's names were printed in script.
What we need, the professionals argued, is more room on the package for useful information, such as "Reduces Wetness and Controls Odor with Natural Ingredients."
Chappell resisted. Maybe his managers had a point. Well, so did he, only they were so much better at making theirs. "I was made to feel inadequate," he says, "because I couldn't respond professionally in my own defense. I began to lose confidence in my creative ability." Maybe the pros were right after all. How could he know?
"I was committed," Chappell says, "to professionalizing the business and institutionalizing the discipline that would make it work. But in professionalizing the company, we were saying there was something wrong with the way Tom has been running it, that the entrepreneur was inadequate because he didn't value discipline and control. I spent $20,000 each to recruit these people. But now they were here, and they didn't resonate with the same vision that Kate and I did in approaching products or employees. Everything with them was so objective that I found myself being wholly subjective. They would defer to me when I wanted them to agree."
Then there was the problem of what he spent his time thinking about.
Tom's of Maine was a private company, and Chappell insisted on maintaining equity control. So capital was limited. If this little company, with less than $2 million in sales, was going to take its all-natural products into the mass market without a Procter & Gamble-size promotion budget, every dollar had to count. Chappell and his lieutenants worked out a strategy. They used Portland, Maine, to gather data and test assumptions. Then they began methodically entering markets one at a time, beginning with Boston. Once they had shelf space and sales there, they pushed on -- to Washington, D.C., San Francisco, and New York City.
The strategy worked. They got the shelf space, and first in one market and then in the next, Tom's of Maine's sales crept up. With more capital, they could have moved faster, but the trade-off was control. So Chappell kept close watch on the numbers -- setting goals, measuring performance, then readjusting goals. The numbers, as time went by, looked good. And Chappell grew to despise them.
Dollars, percentages, goals met or missed, and strategies -- digits began to fill his days. The more numbers he consumed, the emptier he felt.
When the company had been just Tom and Kate and a few others, they had had strategies, but mostly they just did what had to be done. Now, everything was quantified, reduced to some number. Numbers ordered Chappell's time, determined his success, expressed his self-worth. And yet they were just numbers. What was the point? Work became exhausting.
Something else bothered him, too, something that he couldn't put his finger on. It had to do with his identity, his fundamental sense of who he was.
Her husband, says Kate Chappell, who is now back at the company full-time managing R&D and regulatory and customer relations, was bound up in his identity with the business. "The company was his baby." Kate, on the other hand, "had other babies." She also had other jobs from time to time. And she had gone back to school for a degree in the late 1970s, after which she spent more time with her painting.
Now, she shows her work and sells it through galleries. "When I asked myself, 'Is there more?' " she says, "the answer was yes. And not just as the kids' mother and Tom's wife. I was also Kate the artist, Kate the communicator. There was still a me. It isn't Tom's and Kate's of Maine. It's Tom's of Maine. I understand that, and I didn't suffer the crisis with Tom."
At the same time, Tom's of Maine was becoming a much more tightly focused company. Chappell didn't have the time -- and the company didn't have the money -- to fool around with problematic product ideas, to fantasize about what else it might be doing. In fact, it didn't even have the luxury of keeping existing products that weren't pulling their weight. It dropped the soap that had gotten Tom's of Maine started. It wasn't generating the higher margins needed to support advertising and promotion. In the new, professionalized Tom's of Maine, there was no place for sentimental favorites.
Tom Chappell's office occupies one end of Kennebunk's old Boston & Maine Railroad passenger depot. Kate's is next to his, and other executives also work in the pleasantly remodeled space. There is a small outlet store for factory seconds and discounted items, and on sunny summer days you can brave the mosquitoes and eat lunch at the picnic table on the small lawn. Production and packaging of the toothpaste, shaving soap, mouthwash, and so on takes place across the railroad tracks in what used to be the freight house. Freight trains, two or three a day, rumble between the two buildings. The Chappells' walk home from the office, through a meadow and small woods, takes 10 minutes or less at a stroll. Small as the company is, Tom's of Maine has been a major employer in Kennebunk.
What should have been an idyllic life wasn't.
It's not unusual for business founders, over time, to drift into a state of ennui or even anomie, without knowing why or how they arrived there.
Those who recognize the crisis for what it is often end up selling the company. Chappell could have. Two potential buyers had already approached him, but he didn't like their plans for his brands, and he wasn't convinced they would meet his price. Besides, if he sold, what was he going to do? "I'd seen too many lonely, empty entrepreneurs who had sold out just going around with their time and money, chasing material things."
Still, if he was going to stay, for the business's sake and his own he had to identify what was bothering him, learn why, and decide what to do about it. He should have been happy; he was not. He should have felt fulfilled; he felt frustrated. Chappell wasn't foolish enough to believe that he could bull his way through the situation, ignoring the symptoms and pressing on. The problem wasn't the company; it wasn't the people he'd hired; it wasn't the products or the market. The problem was him. What, he wondered, was he going to do about himself?
He went back to school.
Even before we met, I was disposed to like Chappell. Some of his products had been around my house for years, and his radio ads -- "Hi. I'm Tom Chappell of Tom's of Maine" -- are straightforward and friendly. Presumably the man responsible would be the same. But at our first meeting I didn't find him so. He put me off with what seemed an air of self-righteousness, a touch of moral snobbery, a whiff of BS. Chappell dropped phrases instead of names. "Business as a moral agent," he would say, for instance, as if everyone knew what that meant. I didn't. Did he? Later, on my first visit to Tom's of Maine's Kennebunk offices, I noticed that every executive's desk held a slim volume: Kant on History.
Oh, come on. The company makes toothpaste and underarm deodorant. For this, they need an eighteenth-century German philosopher?
It turns out that for the past two-plus years, Chappell has been taking himself through a big change. He's picked up lots of food for thought. The people who work for him, skeptical at first of his turnaround, are beginning to forgive him his exuberance. They like the revived enthusiasm he's showing, the autonomy he's granting them, the ideas that he's starting to have again. They're even reading Kant -- a little of it, anyway. Chappell doesn't know what all those phrases and philosophers mean -- not yet. But he's having a great time finding out. Chappell's a man with a lot of new stuff on his mind, and he's just learning how to express it. Meanwhile, he's back in comfortable control of the business, his self-confidence renewed, a better boss and a much happier man. What went on?
The answer has two parts, one simple, the other not quite so.
The simpler part has nothing to do with where Chappell went to school or what he studied there -- or that he went back to school at all. The mere fact that he, with his board's and managers' concurrence, left the business on its own for a few days a week meant that some things had to change.
Tom's of Maine was forced to create what is now, people there say, a well-tuned reporting system that gives the part-time CEO timely information in meaningful form. And Chappell has had to come to terms with the fine art of delegation. It's a stronger organization for his having not been there. "I've maintained an involvement in anything that had to do with the personality of the company," Chappell says. That means participating in decisions about advertising, product ingredients, and packaging design and copy. But routine internal functions, he says, he has learned to leave to others.
So just getting away, even if only part-time, has helped to revive him and the company.
The other part of the answer to what happened, the part that's not so simple, does have something to do with where Chappell went to school and what he studied there.
He didn't know exactly what he wanted. He knew exactly what he didn't want. "Business school? God, no. Never. Business school was the thing I spent my time trying to undo in people."
Harvard Divinity School, which is where Chappell enrolled, might seem an odd place to look for the solution to a business problem. But the problem, as Chappell then suspected and now knows, wasn't business. It was a growing uncertainty about who he was and what role the business should be playing in his life. He thought he knew what he was doing and why in 1970 when he started the company; by 1985 he'd lost the conviction. He wanted three things from school. "I needed some spiritual fulfillment on a personal level. I needed a better understanding of the contribution I could make in my life. And, third, I had to resolve this thing called Tom's of Maine in my life. What was I going to do about it?"
Divinity school wasn't the only place he considered. He contemplated a master's degree in English, his undergraduate major at Hartford's Trinity College. Reading the works of great writers and writing oneself is an often-traveled route to self-understanding. But a visit to the divinity school in Cambridge, Mass., two hours' drive and a world distant from Kennebunk, removed the issue of choosing. He listened to Dean Ron Thiemann tell prospective students about the value of a theological education in a secular world, and he was captivated.
Now, he is very clear about what he has gotten out of the experience so far. In fact, he can list the gains.
Foremost is a reaffirmation and better understanding of his own values. That's not as exotic as it may sound. What it means as a practical matter is that Chappell can comfortably explain actions and decisions that earlier he could only attribute to instinct.
When he and marketer Eldredge argued over the symbols and words on the product packages, for instance, Eldredge, with his technical knowledge, seemed to have all the answers. But those answers, which he brought with him from business school and from the corporate marketing departments where he had worked, were based on value-laden assumptions: about the role of business in society, about the relationships between businesses and their customers, and about the separation of economic and spiritual man. They seemed to assume that a product's principal characteristics were function and price.
Whatever those values were, Chappell believed that they weren't his. The flowers and message on product packages felt right to him. What he understands today is that they are an effective way to establish emotional and spiritual relationships with customers who hold similar values. Eldredge was right, says Chappell, to argue that Tom's of Maine needed to address the consumer's intellectual side by pointing out benefits. "But now I know that a strategy that doesn't also allow for the spiritual and emotional relationship with the customer is not a complete strategy." Now, it isn't Eldredge who has all the answers.
Chappell learned, too, that he is not "inadequate," which had seemed implicit in his hiring of professionals. Rather, he says, he understands that in the company as in life he is "interdependent," with his own distinctive role to play. "My job," he says, "is not to do their work for them, but to let them do what they know how to do while I lead us as a group."
And he has learned to look for personal fulfillment in the here and now, not in the achievement of some future success. The beauty of life, he says, is in the journey. That bit of wisdom has put the numbers that were dogging him into perspective. Quantitative goals, such as market share or net sales, can't invest purpose in a process that has none. The quest simply for more of anything is inherently unsatisfying. If there is no point or joy in what you are doing, or if you lose sight of the point, then just measuring your progress can't make it worthwhile or fun.
Sometimes in warm weather Kate Chappell takes her conversations outdoors. "For Tom," she says, "this has been a personal transition. He is now more open, more accepting, and less dependent on himself for all the results, more able to trust the outcome and the process of working in a team. Before, it was Tom at the helm, bouncing his ideas off people, then making the decision. Now, he doesn't have to do it all. He is a good leader."
John Eldredge, whose body at age 35 has the leanness of the serious runner he is, is saying over soup and a sandwich in a Main Street café that a few years ago Chappell would just "throw the spaghetti against the wall to see if it sticks. He'd say, 'I'm the entrepreneur. I have hunches. I know what we're going to sell.' We, on the other hand, would look at the history and at numbers and make our forecasts based on rational judgments. In my view Tom has matured while he's been pursuing his quest. He's more comfortable with himself, less impulsive, more thoughtful; he listens more, and he's more willing to let go of some of the detail. For instance, rather than telling me what markets to go into with radio and then asking if I agree, he'll ask me first and listen to my answer. We're making progress."
Chappell hasn't finished his schooling. If he continues his current course load, which takes him to Cambridge two days a week, he'll collect his master's degree in theological studies in 1991. But he's already trying some new things at the company.
One will affect and involve all of its nearly 40 employees. It's the drafting of a corporate credo and a new mission statement.
The credo is a list of "we believes." An early draft, written by the board, says in part that Tom's of Maine believes: "In providing innovative products that are safe, effective, made of natural ingredients and are environmentally sound. . . . That both human beings and nature have inherent worth and deserve our respect and constant care. . . . That we are obligated to provide employees with a safe and fulfilling work environment, and an opportunity to realize their growth potential." Some of the language is derived from Kant. Employees will get a chance to work the draft over.
The directors also worked on a new corporate mission statement. The old one, written in 1981, said that the mission of Tom's of Maine was to become a professional marketer of natural personal-care products, to expand sales at a 40% annual rate, and to earn a 40% return on stockholders' equity. The new one, when it's finished, will be quite different. Its first draft says that the mission of Tom's of Maine is to respect, value, and serve customers, employees, the community, owners, and all others who "are in relation to us"; to be deserving of their trust; to distinguish itself in products and policies that honor the natural world; and to build a relationship with customers that extends beyond product usage and includes honest communication and education. There are no numbers.
"What drives and organizes people," says Chappell, "is values, not strategy or quantitative rewards. If I can organize people around purpose, that is the most powerful form of leadership."
It's not all softheaded stuff. Tom's of Maine still has strategies expressed in hard numbers. Chappell still believes in incentive compensation, and he shares equity with key managers so they can participate in the financial rewards of growth. But the point of all this talk about values is to make it explicit to people in the company -- and, Chappell might have added, to himself -- that there is a reason why the company does what it does. Strategy, while crucial to business success, is only the how.
Chappell's trip back to school has brought him to another realization that very likely will lead to more change -- maybe for the company and certainly for him.
In addition to avoiding numbers, the new corporate mission statement says nothing about toothpaste or even personal-care products. When Tom and Kate started the company, the only limit on what they might do was the fertility of their own imaginations. Why should success in one line impose limits now? The limits, Chappell says, come from thinking in terms of strategies instead of values. The pursuit of strategies tends to narrow your vision. A mission based on values will open it up again. Tom's of Maine, in other words, need not necessarily be just toothpaste. He won't say what they are, but he is at work on new products the company might develop.
By the same thinking, Tom Chappell need not be just Tom's of Maine. If he thinks of his life's journey as having purpose, then the company is one vehicle, but not the only one. He'll keep the company, he says, because it's a good vehicle. Among other things, its success gives him credibility. "I need," he says, "to be more than Tom's of Maine. I need to be Tom Chappell -- writing, speaking, sharing what I know with other people. It's almost critical that I have the company to do that. If I can't make it work here, I don't have the right to say to others that it can be done."