Leadership in Action: Painting the big picture

How Kellogg Company Chairman and CEO Steve Cahillane transformed an iconic 117-year-old organization.

Executing an industry-defying growth agenda

When Steve Cahillane joined Kellogg Company as CEO in 2017, the consumer packaged goods industry was overwhelmingly in cost-cutting mode. To ward off private equity takeovers, many had enacted zero-based budgeting—a policy that requires every division to justify every dollar of its budget every year. Companies that wanted to avoid a takeover instituted their own preemptive cost-cutting measures to make themselves less attractive targets.

Cahillane saw this industry trend—cutting costs at the expense of investment in brand building—as a grave mistake. “This company has tremendous brands,” he says. “When brands like ours have the right level of investment behind them, they respond.”

At first, the most pressing challenge in zigging against a zagging industry was getting others to believe in Cahillane’s vision of global growth. That meant telling a new story inside and outside the organization. The story Cahillane told was about a future at Kellogg that centered on growing brands, eating occasions and hiring initiatives. “Once you get a certain number of people believing, you get momentum,” Cahillane says. “There’s nothing more important in business than momentum, but you’ve got to create it.”

Planning for a spinoff

Creating that future would require bold decisions with complex executions. Most notably, it centered around Cahillane’s plan to separate the 117-year-old organization into two separate companies to transform Kellogg from an iconic American breakfast brand into a global snacking behemoth. “It’s the most consequential move in Kellogg’s history since Mr. Kellogg himself invented breakfast cereal,” says Cahillane on making the decision to do the spins. To help with this undertaking, Cahillane turned to Kellogg’s journey partner, EY.

“Steve and the Kellogg management team really entrusted us to work with them on their transformation, from design through execution,” says Julie Boland, EY’s U.S. Chair and America’s Managing Partner. “We partnered with Kellogg on every facet of their transformation to ensure success and open a new chapter in the legacy of this great company.”

One fundamental challenge of a spinoff is that in turning everyone’s attention toward executing the spin—and away from day-to-day commercial operations—critical momentum may be lost at exactly the wrong moment. By bringing in EY to oversee the timely execution of the transaction, Kellogg ensured that its internal teams could continue to focus on driving growth.

“EY brought market-leading expertise to the partnership, helping Kellogg execute their transformation so they could also focus on running the business successfully. From commercial analytics, portfolio transformation and ESG, our capabilities are helping Kellogg grow momentum, deliver for their consumers and power the next phase of growth,” says Dave Holloman, Global Client Service Partner for Kellogg at EY.