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Steven Sanger
  Stephen Sanger

General Mills CEO Stephen W. Sanger, MBA '70, Describes "Culture of Innovation"

12/3/2004 --

Dean's Speaker Series brings together students and alumni.

ANN ARBOR, Mich.–Flat-bottom taco shells that don't tip over, "grab-and-go" breakfast bars and fruit rollups packaged with tongue tattoos: All are the result of what General Mills CEO Stephen W. Sanger, MBA '70, calls his company's "culture of innovation." "If you want your market to grow at a faster pace than the population, you must constantly develop new approaches," he told students at the Stephen M. Ross School of Business at the University of Michigan. Sanger's Nov. 17 talk was part of the Dean's Speaker Series, a program that gives students opportunities to listen to and talk with successful alumni about business issues and career development.

The 75-year-old company, which has products in 98 percent of American homes, introduced 145 new items in the U.S. during the last fiscal year, he reported. New products accounted for seven percent of sales.

New flavors and varieties of any given brand merely "cannibalize" existing products, Sanger noted. When consumers choose new tropical fruit yogurt, it reduces sales of vanilla. "The more viable strategy is to seek new markets for a strong established brand."

Take Cheerios, for example. Introduced in the 1930s, the oat cereal has been praised by pediatricians as an ideal finger food for toddlers. The child population was not growing in the 1990s. When the Food and Drug Administration recommended that adults eat more oat fiber, General Mills conducted a clinical study documenting that Cheerios lowers cholesterol. Bingo! The cereal has now enlarged its market to include health-conscious baby boomers, the fastest-growing segment of the population.

Sanger described other trends in his industry, including developing new products for international markets, creating more easy-to-prepare foods, and small portion packaging for single- and two-person households. He illustrated the company's unique packaging approaches, noting that some Wheaties cereal boxes featuring popular athletes have become collectors' items.

"We do not think of innovation as an R&D or marketing role, but as part of the company culture," he stressed. Flexible hours, employee fitness and daycare programs, diversity initiatives and a high rate of employee volunteerism have earned General Mills accolades as one of the "the best 100 companies to work for."

One of its most successful outreach efforts is occurring in Hawthorne, an urban Minneapolis neighborhood that witnessed an alarming increase in homicides in the mid-1990s. General Mills initiated the Hawthorne Huddle, a monthly meeting of community residents, police officers, elected officials and other concerned citizens.

"Statistics show that crime in the neighborhood has been reduced by 30 percent since we began sponsoring this forum. It is cited as a case study of business leadership in the social sector. General Mills doesn't claim to know about crime prevention. That's not our business," Sanger concluded. "But we can bring people together. And we can feed them!"

Written by Pat Materka

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Mary Jo Frank
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