culture-shift play.”
The process began with a seminar in Market-Based Management. Watson needed to teach the philosophy to Purina’s top leadership, just as Charles Koch had first taught it to his own senior managers. The parameters of MBM demanded total conversion on the part of new employees. But Purina Mills already had a corporate culture of its own.
You could call it the Danforth culture, named after Purina’s founding family. The Danforth name carried a mythical reverberation that could only be heard by Missouri ears. The Danforth family was the state’s equivalent of royalty, having mastered all three important realms of midwestern civic life: business, church, and politics. The patriarch, William H. Danforth, founded the Ralston-Purina Company more than a hundred years before Dean Watson showed up. Danforth’s son, Donald, took over the company and became a fixture of the St. Louis business community. Danforth’s grandson, John Danforth, was an ordained Episcopal priest who went into politics and became a US senator.
The Danforths had their own way of doing business at Purina, generation after generation. Even the company’s logo—a famous checkered logo with nine squares, four white and five red—were a symbol of the founder’s philosophy. The four corner squares in the logo represented the four necessary elements of human well-being, according to William Danforth: physical, social, mental, and religious. These four elements blended together to make a corporate culture that executives would describe as being like family. As such, employees were not discarded. If an employee’s job was eliminated after he’d been with the company for forty years, he could rely on Purina to find a place for him. He could totter into work until he no longer cared to—his joints would give out far earlier than his job security. Such an arrangement was considered perverse under the philosophy of Market-Based Management. Letting someone work past their prime only robbed precious resources from potential new employees.
Shortly after Koch Industries took control of Purina, Purina’s senior management team was called into a meeting. The executives arrived at a hotel in the western St. Louis suburbs, where the wide windows look out over rolling green hillsides and the rooftops of suburban cul-de-sacs. Roughly two dozen Purina executives sat down in the conference room. These were men who’d been with their company for decades, many of them with the white hair to prove it. They were not a class of eager college graduates attending a Market-Based Management training session in Wichita.
Dean Watson stood before them and explained that the first step toward being an employee of Koch Industries was learning MBM. Learning the philosophy wasn’t a benefit of being at Koch—it was a precondition to working there. Purina’s executives would need to understand the five dimensions to MBM. They would need to internalize Koch’s Ten Guiding Principles—not memorize them, but internalize them. These principles included integrity, compliance, and value creation.
Arnie Sumner, Purina’s chief operating officer, listened to the presentation and thought it sounded like management consultant sloganeering. The nature of a good merger, in his mind, was when two companies meshed their corporate cultures. But Koch wasn’t trying to mesh with Purina’s culture; it was trying to eradicate it. The Purina executives didn’t swallow it. They didn’t think it was necessary to erase their neural pathways and start anew under Charles Koch’s tutelage.
Dean Watson became agitated in the face of this resistance. “He got up on the stage and started screaming and yelling,” Sumner said. He remembered Watson shouting: “Who the hell do you think owns this damn thing? You guys are going to do what the hell we tell you to do. If you don’t like it, get your ass out!”II
If this was a sales pitch, it was less than inspiring. Senior executives began quitting the company soon after the meeting. They took retirement packages or moved on to new jobs. Watson seemed to realize his mistake immediately.
“Afterward, he said to me, ‘I really screwed up, didn’t I?’ ” Sumner said.
* * *
Things started to go south for Purina Mills because of a change in government policy. It wasn’t an OPEC-style embargo that unleashed an era of volatility in food production. It was Congress. For the preceding half century, the world of agriculture had been remarkably stable. Prices for crops like corn and soybeans moved around, but they moved within a narrow band. The food industry was a lot like the oil industry during the 1960s. It was predictable.
This changed in 1996, shortly after Republicans took control of Congress. Newt Gringrich, the Speaker of