The simple iPhone case is an illustration of how far PolyOne Corp. has come. This product has become ubiquitous in today’s hyper-connected, social media-obsessed society, and PolyOne has used its expertise in thermal plastic elastomer, or TPE, to provide users everywhere with a wide range of colorful, stylish combinations to protect the device that keeps them connected.
It’s the type of work that can drive huge profits for a company, but more than a decade ago, it would have been a no-go for PolyOne, says Robert M. Patterson, the company’s chairman, president and CEO.
“There is no way our segments would have come together to deliver a unique solution for a customer like this,” Patterson says, holding an iPhone case that is a vibrant mix of blue and pink. “We would have had someone on our team try to sell one element of the product and hope that we might win that business. Maybe the color, maybe the engineering material, maybe the distributed product. The customer would have said, ‘I need someone who can do all this for me and make it simple.’ We would have tried really hard to win one-third of the business and not gotten any of it.”
PolyOne was formed in 2000 through the merger of Geon and M.A. Hanna, and for several years, Patterson says, the two companies struggled to find a common identity as one business.
“While we had the science here, we weren’t really directing it in a way that helped to move us forward in a specialized way,” he says. “We were kind of giving it away to get big-volume projects. No ill intent at all. There are plenty of companies that make money in the commodities space, and that’s fine. It’s just not our chosen path to prosperity.”
When Patterson arrived in 2008 as senior vice president and CFO, PolyOne was already beginning to change its ways. By the time he took on his current role, the provider of specialty polymer materials, services and solutions was moving at full speed toward a dynamic new model that would reimagine the business and redefine how people think about sustainability.
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One of the most important steps in PolyOne’s makeover was the opportunity Patterson was given prior to becoming CEO. The man he would replace in that role, Stephen Newlin, had him take the position of COO.
“It wasn’t a traditional COO role,” Patterson says. “It was really designed to give me a couple years to just spend time with customers. So for two years, that’s all I really did. I was on the road almost every week and saw probably 20 customers a month and kept a log book of all those experiences. Each month, I’d come back and review what I learned with Steve and look at the things that might translate to the rest of the company. Understanding how the commercial organization works, functions, thinks and is motivated was really important to me taking this next step.”
Patterson needed to know his people, what they did and how they did it if he was going to complete the effort begun in 2006 to become a sustainable organization. His initial observation was that the company had a lot more managers than direct reports.
“We really didn’t hire anybody out of school,” Patterson says. “We almost had an inverted human resource pyramid with lots of directors and no direct reports. So plagiarizing from some of my past experience at other companies, we launched a finance leadership development program where we took four kids right out of school and they did four six-month rotations over the course of two years. At the end of that time, hopefully they find where they want to fit in the organization and stay with us on a permanent career trajectory.”
Patterson understood that skeptics would ask, ‘How big a deal is four people in a company that has over 6,000 employees?’ Fast forward 10 years, however, and PolyOne hired 140 college graduates in eight different functional areas.
“To me, it is the foundation of what sustainability is in our company with respect to people,” he says. “It’s building that sustainable pipeline of talent from which we can develop our future leaders and truly create this world-class sustainable organization.”
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As PolyOne was remaking its workforce, it was also changing its culture to move away from a focus on big products and high volume.
“It sounds really simple and basic, but we had to just eradicate vernacular like volume and pounds and plant utilization,” Patterson says. “These are all things where we said, ‘Do not talk about those any more, ever again. Focus on customers, sales and profitability and how well we’re linking our innovation to our customers.’ That really began with training the sales organization and aligning expectations with respect to how we get paid, our goals, our objectives and our incentive programs. It was all-around training in that regard that also required bringing some new people into the company who already had that mindset to try to help accelerate that transformation.”
In addition to the internal changes, PolyOne has remade its marketing focus to create stronger links between what customers need and want with what the company can provide or should be working on to meet expectations.
“It wasn’t just training the people we had, but adding new resources to really help us evolve and grow with this specialty goal in mind,” Patterson says.
In 2014, the effort to transform the company reached a crossroads. The company had overhauled its portfolio and increased earnings five years in a row.
“It was inspiring to see our specialty story take hold and our improvements in safety, operating margins and return on invested capital,” he says. “But we needed to accelerate sales growth to sustain performance.”
So at the end of 2014, the company made a big investment in its sales, marketing and technology resources. Three years later, PolyOne delivered its most significant increase in organic sales growth since coming out of the Great Recession. Specialty sales from products introduced in the last five years are up 38 percent, and commercial resources have increased nearly 20 percent.
In 2017, PolyOne also made several acquisitions, adding nearly $60 million in total sales for the year. Overall, sales increased from $2.9 billion in 2016 to $3.3 billion in 2017, while earnings per share have doubled over the past four years, from $1.06 in 2013 to $2.13 in 2017.
“We’ve grown our EPS for eight years in a row,” Patterson says. “That’s awesome. There are a couple of years in there where our EPS growth would have been higher if it hadn’t been for the investments we made. But we wouldn’t be delivering the EPS we are today if it hadn’t been for what we did three or four years ago.
“You have to look at this thing in terms of making investments and building something. Patience and sustainability go hand in hand in terms of thinking about delivering for the long haul.”
The people part of the sustainability initiative will continue to be critical to PolyOne’s success in the years ahead.
“The reality is it doesn’t matter if you joined PolyOne from campus or if you’re an experienced hire,” Patterson says. “You want to come to this company, you want opportunities for advancement, you want to develop and you want to learn. You want to grow and ultimately have this sense that your work is valued and you’re contributing not only to the company’s success, but also to these broader goals of sustainability that we have.”
The company has started a number of leadership programs such as Next Gen, an intensive two-week session focused on how to be a better manager, and PolyMasters, which gives associates a chance for individualized interaction with executives and to share their own innovative ideas.
“This is the best way to transform an organization,” Patterson says. “It starts one person at a time, having a common set of goals, objectives and philosophies around leadership, and then effectively cascading that out through the organization.”
Diversity and inclusion are other key elements, and programs including LEAD by Women, Pride at PolyOne and Hype further that goal.
“What I really love about a more inclusive workforce is that I think it leads to greater creativity,” Patterson says. “Greater creativity leads to greater innovation, which helps us on this specialty journey and brings us back to that second part of sustainability, which is products.”
Patterson also embraces the thing that most people think about when they hear the word sustainability.
“When we think about taking care of our planet, there is no doubt there is an area and a focus around improving recyclability, using fewer natural resources and eliminating waste and/or bringing that back in and reusing it,” he says.
And while the future is always uncertain, Patterson is confident PolyOne is headed in the right direction to continue growing.
“Are we making the sales calls?” Patterson says. “Are we calling on the right types of customers? How many new products are going through our pipeline? Measuring the leading indicators really gives you a good sense of confidence that it’s going to work. That’s not to say we don’t run into something and say, ‘Well, maybe we spent too much time on that, or we could have done this differently or otherwise.’ But I think an important part of becoming a better company is being willing to make mistakes and learn from those mistakes and get better from it.”
The Patterson File
Robert M. Patterson
Chairman, president and CEO
Education: Bachelor’s degree in business administration, master’s degree in accounting, University of Michigan
Who has been an important mentor in your life? My mom sold Tupperware for 25 years. At the time, there were more than a million Tupperware sellers in the U.S. and around the world, and at her best, she was ranked No. 13. When that phone rang, nine times out of 10, it was somebody calling about Tupperware. So at an early age, you learned to answer the phone with a smile, and if you did nothing else, made sure you got a really good message for my mom to follow up on later.
What role did your dad play? I learned a lot from my dad about how to be a good father. It isn’t just about how well I’m doing at PolyOne and the role I have here. I also candidly spend just as much time thinking about whether I’m a good father. I’ve got three kids, 12, 10 and 9. I think just as much about how well I’m raising them and what kind of family I have.
What is special to you about the University of Michigan? I fell in love with the place from the moment I stepped on campus, which is something that can’t really be aligned with how the brain works. It’s aligned with how the heart works and makes decisions. I’m fortunate in the sense that I felt that way the entire time I was at school. Today, what I love about the University of Michigan is I love it more than I did when I was there. I’ve spent a lifetime thinking about my connection to that school. It’s part of who I am.