Brand leader Featured

8:00pm EDT April 24, 2003
On the wall of Richard Posey's office is a wooden plaque framing a hand drawing of four famous animated insects.

In the 1980s and early 1990s, we watched on television as these hairy green and yellow cockroach-looking bugs schemed to infest a home, then recoiled in terror when Raid insecticide appeared. The pests destroyed, the product's slogan would appear: "Raid: Kills Bugs Dead."

A redundant phrase, yes, but that was the intention, because it stuck. It stuck to the point where you couldn't mention Raid without thinking of that phrase. Those four simple words, written by beat poet Lew Welsh during a stint as an ad copywriter, conveyed not only what the product did, but helped create what every retail company aspires to own: a strong brand.

"It's an insecticide, so it kills things, but the way it's positioned in the marketplace, it's got an engaging, humorous personality, but with deadly efficacy," says Posey. "That's what the Raid brand is all about."

The Raid brand, which belongs to Racine, Wis.-based S.C. Johnson Co., is by all accounts the strongest in its industry. The executive responsible for that brand's success during its heyday, not to mention other ubiquitous brands like Windex, Pledge, Saran, Drano and Edge, was Richard "Dick" Posey, when he was director of North American businesses for S.C. Johnson.

"My background is in brands, that's really how I grew up," says Posey, now CEO and president of North Olmsted-based Moen Inc., the No. 1 faucet brand in North America. "The product is the tangible piece -- the finish, the way it looks, the way it performs, but the brand encompasses all the intangibles. Put the two together, and the brand is sum of all that."

Posey was named CEO of Moen in January 2002, which was a curious time for the company. Often new leaders arrive to save a struggling business, but not so with Moen. The faucet-maker, which also produces shower heads, composite sinks and other plumbing products, is the top performer for its parent company, Fortune Brands, in its Home & Hardware division.

Last year, Moen's sales were $800 million, up 7 percent from the previous year, according to Fortune Brands and analysts' estimates.

"They have a very strong focus on market brands, investing a lot of money in their brands, re-investing in their brand marketing and leveraging their No. 1 brands like Moen" says Alex Paris Sr., an analyst with Barrington Asset Management in Chicago, which follows Fortune Brands. "That's the whole operating philosophy in the company that keeps them going."

Posey, a proven brand-builder with global experience for S.C. Johnson and as CEO of small appliance manufacturer Hamilton Beach/Proctor Silex Inc., was tapped to grow Moen, not save it. In some ways, it's a more daunting challenge.

"When I arrived here, this company was not broken," Posey says, leaning forward slightly in his chair. "This company has had a lot of successes. What do you do then? What I'm trying to do is take the company to the next level and build on those past successes, rather than change everything around."

The next level for Posey is double-digit growth for Moen, which is no small challenge considering the average growth in the $8.4 billion residential and commercial plumbing products industry is a scant 3 percent a year, according to research firm Freedonia Group Inc.

"That means we have to take market share from our competitors in order to do that," Posey says. "We're going to grow through innovation. That's the main thing we're trying to achieve. We can innovate with our products and services. We can innovate in the way we run our business. And we can innovate the way we lead our people. All those pieces taken together will lead to the kind of growth figures we're looking for."

Moen's innovation is driven by investments in exhaustive consumer research and development, and 24/7 laboratory analysis of its products.

Moen studies every aspect of how consumers use its products, how they misuse the products -- and perhaps most important -- how they would like to use products. Because if a company is not in touch with what the consumer wants and needs, then the brand, and the company, will suffer.

"What we don't want to do is just come out with a faucet that's like anybody else," Posey says. "We call those 'me too' products. If you're just like anybody else, then you're not bringing anything different to the consumer, and ultimately that ends up in a price war. If my product is the same as your product, then the only difference is price.

"We want to make our products better and different so they demand respect in the marketplace."

Creating different and better products requires Moen to study consumers, whether it's in its kitchen laboratory in the basement of its headquarters or in their own homes. Moen used both formats for the creation of its Revolution shower head, but its observational in-home study is what really attracted industry attention.

Jack Suvak, Moen's director of marketing research, didn't know exactly what kind of shower head he wanted to help create in 1996 when he launched the study that led to the Revolution product.

"We were looking at understanding consumer usage of the shower," says Suvak. "We tried to understand how people were using their shower area and how they were interacting with water in the shower. We thought that would give us a basic grounding in understanding usage and how to develop better products to meet consumers' needs."

Suvak started with retail aisle research, interviewing consumers shopping for shower heads. And not just Moen shower heads, but all brands. Shoppers were interviewed when they were done shopping, and then called back four weeks later to see if the product met their expectations.

"This whole project was about what were the trade-offs people are making in aisle when it comes to the type of shower head they want," Suvak says. "What did they bring with them in their minds to the aisle, what type of trade-offs did they make in the aisle and ultimately, what was important to them in their decision-making, and how satisfied were they when they once they had it and were using it."

Suvak then formed the "Shower Head Panel," as he calls it, made up of about 40 people who tried a number of shower heads over time and told Suvak's team what they liked and didn't like about them.

This was pretty standard market research. But you can't really tell how people use the shower and "interact" with their home shower unless you, well, watch them take a shower in their home.

"If I asked several people how they shower, I can get about 30 percent of what they do," Suvak says. "If I took them to a facility and I had them shower in a facility, I might get 40 percent of what they do -- it's not their shower. If I can observe them in their home, I can get 80 percent of what they do. The incremental increase is significant by doing that type of research."

Using an outside market research firm to recruit test subjects, Suvak and his crew twice descended on 35 homes in diverse areas like suburban New York, San Francisco and Orlando to interview and video people while they showered.

"We installed cameras in their home, but we were not in their homes for weeks," Suvak says. "We would interview them while video equipment is being set up. We would show up in the morning, or show up in the evening, depending on when they typically shower. We would debrief with them, have another in depth interview for maybe 45 minutes to an hour again afterwards. Then we pack up and leave."

The research led to several new design features on the Revolution shower head. One of the most unique was what Moen calls the "Freedom Dial," which changes the type of spray dispersed from the shower head using a large toggle switch placed below the shower head instead of on it or around it.

"When you're in the shower and you're washing your hair or whatever and the water is coming into your face, you're kind of blind, and you want to be able make that adjustment easily, which is why this dial is on the bottom, so you can just reach up and grab it and turn it," says Posey. "Observational research was very helpful in developing this product."

In the main lobby of the Moen headquarters is the product show room.

Here, all the Moen faucets and fixtures are arranged in a grid on a series of six-foot-high charcoal-colored panels on each side of the room. Track lighting is positioned to make the chrome, brass, and copper finishes gleam.

Panels filled with bubbling water backlit neon purple are placed next to the faucets. Soft music lilts from the room's sound system.

What you don't see in this cozy space is what goes on in the basement. Just one floor below, the faucets are put through what could be called a faucet torture chamber. The faucets and fixtures are smashed with weights, pulled apart, dissected, cooked in 300-degree ovens, frozen to 100-degrees below zero, sprayed with salt and acid, and put through every extreme condition the 30 engineers and technicians in Moen's Design Reliability labs can imagine.

With a devilish chuckle, Moen mechanical lab manager Mark Meldrum enters the Life Cycle lab in Moen's basement. This is where most of the damage happens.

Meldrum and his crew subject new and old Moen products to thousands of test cycles, hoping to make the faucet fail so they can improve it. They want to see where the weaknesses are and make the product stronger.

"Better that they fail here than in somebody's home," Meldrum says.

"When I started here eight years ago, the test lab only used about 50 percent of the area. Now we use 100 percent of the basement. We've gone through quite a bit of growth over the last eight years. I started out in a group that was only six people total, now I manage a group of 14 people."

Dozens of test stations, which look like phone booths without glass, are arranged next to each other in the middle of the lab and against the walls. Young men in khakis, casual shirts and safety goggles tend to the testing equipment, turning dials, scribbling on clipboards and connecting water hoses to the poor, unsuspecting faucets.

These men used 29 million gallons of water last year testing Moen faucets. Some years they use as much as 39 million gallons.

At one station, a pair of white robotic fingers twists a two-handle faucet on and off and won't stop until it reaches 185,000 turns. At another station, Moen's new pullout model faucet jolts on and off while 125 pounds of pressure per square inch shoots through the fixture, more than twice the water pressure of an average home.

"When we were first testing this, we had water all over the place," Meldrum says. "No one had ever done testing like this before. Through constant development of this product, it will go 250,000 cycles without a problem."

Innovation occurs in these labs, too, small improvements which the consumer may never notice but which maintain the Moen quality, and more important, maintain the integrity of the Moen brand.

"Innovation is not just about major breakthroughs, not just about putting the proverbial man on the moon," Posey says. "It's all areas of the company, all levels of the company, and not just huge ideas. Innovation is all about improving everything we do on a regular basis."

Big box retailers like Home Depot and Lowe's make up a third of Moen's business, and with 203 Home Depot stores opening last year, that trend shows no sign of waning. These retailers, eager to keep costs low and product turnaround high, have thousands of suppliers and are always eager to reduce that number.

"Large retailers want to deal with fewer and fewer people," says analyst Alex Paris Sr. "Home Depot may like the product of one company, but they can't afford to deal with 1,000 little different suppliers."

Luckily for Moen, Fortune Brands' $2.5 billion Home & Hardware division includes Master Lock, Waterloo tool storage, and cabinetmaker Omega Group. This year, the cabinet manufacturer announced it will be the sole provider of Home Depot's line of Thomasville brand cabinets.

"There's a great deal of interaction between all of the brands," Paris says. "Enhancing one brand helps them to enhance the other brand, and introduces Moen to more and more distribution channels."

Likewise, Posey, a 25-year veteran of retail and consumer products, understands the importance of working with his big box customers.

"If we can make our customers' business grow faster, then we will benefit from that because we have a strong market position with that customer," he says. "The attitude isn't, 'I want to make Moen's business at Lowe's or Home Depot or a wholesaler better,' the attitude is, 'I want to make Lowe's business better, or Home Depot's business better,' and we will benefit from that growth they achieve."

Appealing to retailers' desire for exclusive products, Moen has a private line of faucets in Home Depot's 1,600 stores, as well as exclusive arrangements with Lowe's and growing Midwest retailer Menards. For Posey, it's a matter of growing with your customers or getting left behind.

"The wholesalers are consolidating, so we have a fewer number of larger customers," he says. "The big production builders are buying up local and regional builders because they want to achieve greater economies of scale. The result is the customers get ever larger; they have a lot more clout and a lot more influence in the marketplace.

"So it's important that Moen stay competitive, and to stay competitive, that we become global and that we get larger."

In his career, Posey has been somewhat of a globetrotter. He estimates he has worked in every region except the Middle East, Africa and the countries that make up the former Soviet Union. For S.C. Johnson, he twice lived abroad, outside Milan, Italy, and outside London.

"In five to 10 years, I would expect the company not only to be larger in North America, but have a larger presence on the world stage than we have today," Posey says. "So it's a good thing I like the international side of the business."

Like most U.S. manufacturers, an increased global presence inevitably includes sourcing more of its products from China. Last year, China exported $325.6 billion in goods, primarily to the United States. That's up 22 percent from the previous year, according to the World Trade Organization.

"Last year, we were able to increase our production volumes in our North Carolina plants at the same time we increased our sourcing from China," Posey says. "We are sourcing in increasing amounts from China, as is practically every company in the world. We're not immune to those pressures."

Those pressures have Posey planning to aggressively target untapped regions of the world for Moen, like the Pacific Rim, Latin America and Europe.

"We don't have anything in Europe right now," Posey says. "Europe is a very concentrated market, and it would be difficult just to enter the Moen brand into the market."

Therefore, to crack the European market successfully will most likely require an acquisition.

"Acquisitions are important ways to grow your business," Posey says. "But it's very important when you make an acquisition that the company that you're acquiring has a compatible culture and can be integrated effectively in your organization, because if you have divergent cultures, then it's very difficult to make the acquisition work well."

But with 7 percent overall growth last year and strong corporate backing, there won't be any rush to acquire a European business, Paris predicts.

"It's a longer term thing," Paris says. "But again, they do business with the big home builders here; there are probably big home builders in Europe they can deal with. It's the big box retailers they don't have there.

When Posey was recruited by Moen in late 2001, it was an unusually mild winter. He remembers there was no trace of snow on the ground, and people walked outside in light jackets or shirt sleeves.

"I was optimistic that it would maintain that, but this winter has been pretty dreadful," laughs Posey, safely inside his office on frigid early March morning. "Weather is what it is. S.C. Johnson was in Racine, Wis., and that's also Great Lakes weather. So, I'm used to it."

Talk of Cleveland prompts Posey to stand and open the vertical blinds covering the wall-to-wall bay windows of his second-story office. He points outside, across the roads that lead to Al Moen Drive, named after Moen's founder, who passed away in 2001. Posey motions across the road to a long grassy strip of vacant land with a line of trees separating the area from a condo development.

"We own about half of that empty land you see across the street," Posey says. "We have a lot of room. To that group of trees there to about the other end, we own. So we've go plenty of room for expansion for future growth, or should we make an acquisition or whatever. ... This is our home." How to reach: Moen Inc., (440) 962-2000 or www.moen.com