Colgate

Alex Brogan
August 03, 2024 • Read Time: 19 minutes

This edition is brought to you by Athyna

Good morning to all new and old readers! Here is your Saturday edition of Faster Than Normal, exploring the stories, ideas, and frameworks of the world’s most prolific people and companies—and how you can apply them to build businesses, wealth, and the most important asset of all: yourself.

Today, we’re covering Colgate and it’s journey to creating iconic products that have become household essentials.

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What you’ll learn:

How Colgate became a household name
Lessons on loyalty, localisation, and employee growth

Cheers,

Alex

P.S. Send me feedback on how we can improve. We want to be worthy of your time. I respond to every email.

Colgate

Odds are you have a few of this landmark company's products in your bathroom. Colgate is one of the world's largest companies, ranking at 228 on the Fortune 500 with a $78 billion market cap.

Colgate-Palmolive began with an immigrant with a dream. William Colgate was a poor English immigrant who came to the U.S. at age 21 in 1804. He struggled to find work in New York City among thousands of immigrants looking for work. So, he opted to learn a trade—soap boiling.

William secured a position as an apprentice soap boiler in the city. However, he quickly grew disenfranchised by the opportunity and noticed inefficiencies in his employer’s business practices. One day, a friend told him, “Someone will soon be the leading soap maker in New York. You can be that person.”

After just two years in the U.S., William had learned a valuable business lesson: what not to do. Leveraging his newfound knowledge, he started William Colgate & Company in 1806, a small business selling starch, soaps, and candles.

Colgate’s business flourished in the following years, and a few important new products were developed, including Windsor toilet soaps and Pearl starch.

Despite his success, he struggled to maintain supply. In 1820, he moved manufacturing to Jersey City, just across the water, to make stronger inroads with other manufacturers.

William struggled with his health throughout his life. Regular heart attacks rendered him unable to work. Unfortunately, he passed in 1857.

His son Samuel took over reluctantly. He didn’t want to continue the family business, not because of profitability but because of what he’d seen its stress do to his father’s health. However, the Colgates were very religious and, like Rockefeller, had a mind toward duty and efficiency. Samuel decided to follow in his father’s footsteps, believing it to be the best way to honor his legacy.

It took Samuel a few years to navigate the business landscape, but after mastering operations, he began looking for opportunity again, finding it in product diversification. Leveraging the public’s growing interest in hygiene, Colgate launched the first perfumed soap of its time, cornering a wealthier customer base in 1852.

Industrialization during and after the U.S. Civil War translated to more disposable spending for the general public, igniting a stronger interest in hygiene and health. In 1873, Colgate introduced toothpaste in a jar, leveraging the Civil War’s tailwinds. Twenty-three years later, Samuel saw a need for a more usable product and introduced toothpaste in a tube.

Strong sales characterized the years that passed, but Colgate understood its need for greater product diversity and set its mind on laundry soap. Laundry soap had been developed by the Palmolive company in the Midwest, which leveraged similar tailwinds to Colgate and capitalized on the public’s growing interest in hygiene.

In 1928, Palmolive and Colgate struck a mutual agreement, a merger, one of the first of its time. The following years were wrapped in competition: Palmolive originally assumed most of the control over the new firm. However, after the stock market crash, which caused laundry soap’s profitability to recede, Colgate emerged victorious.

A new rival emerged: Proctor & Gamble. The two firms had similar beginnings, and P&G cornered the detergent market throughout the early 20th century.

Colgate-Palmolive executives went back to the drawing board. Over the years, they launched multiple strategies to try to garner P&G’s market share. They brought in George Lesch as President in 1960, hoping his experience in international markets would yield success domestically.

Still, P&G reigned supreme, prompting shareholders to bring in David Foster in the 70s. The 70s marked an exciting time in consumer culture: Growing demands for environmental sustainability and widespread economic growth characterized the era, and Foster was eager to meet these needs.

Foster initiated a joint marketing and acquisition strategy to gain a brand advantage over P&G. Colgate developed the box-top program to target its brand image, awarding money to schools whose students collected the most. The firm also became a sponsor for sporting events and TV shows, sponsoring the Colgate-Dinah Shore Winner’s Circle, a women’s professional golf tournament among others.

Today, with over 800 brands, Colgate invests heavily in brand image, using sponsorships and innovative products to maintain its 35% market share and $19 billion in revenue (2023). Despite a history of relative instability, the firm grows at around 6% YOY.

Colgate is still working to win the battle against P&G, aiming to corner the market through sustainability campaigns.

Here’s what we can learn from Colgate-Palmolive about loyalty, localisation, and employee growth.

Lessons

Hire from within to boost loyalty and decision-making. Unlike many other firms today, Colgate takes its people-first strategy seriously, hiring executives from within the company. David Foster, one of the most successful CEOs in the firm’s history, is an example of this. Foster began at Colgate in 1946 as a management trainee, working in sales and marketing interchangeably. He rose through the ranks, becoming Colgate’s CEO in 1971. Foster used a war-like offense against P&G during his executive tenure, implementing internal development and acquisition strategies to gain a competitive advantage. Foster is just one example of this strategy at work: The company’s current CEO, Noel Wallace, has been at Colgate for nearly 40 years. Hiring executives from within breeds loyalty, as employees are incentivized to work toward broader goals. Furthermore, hiring from within gives executives a sense of context and purpose, as they’ve spent years developing their knowledge of the firm and its inner workings. It also creates trust within an organization—lower-level employees know that those at the top understand their roles and potential complications.

Use localisation in distribution and marketing to corner emerging markets. Colgate was one of the first companies to expand into global markets, contributing to its edge over the competition. Fueled by competition, by the 1950s, Colgate had expanded into six continents worldwide. Colgate’s most impressive expansion strategy was launched in China in the 1980s. China is a fickle market, and many companies struggle to expand into the region due to poor research and strong consumer preferences. However, Colgate was different: Rather than opening their own distribution and production locations, the firm acquired an established Hong Kong manufacturer already recognized for toothpaste production in the area. Colgate’s acquisition built trust with Chinese consumers, capitalizing on bonds already developed within the industry. Other firms looking to leverage expansion in emerging markets should look to Colgate for its strong understanding of the key issue present in globalisation—trust. Many firms, like Starbucks and its failed attempt at garnering Australian business, disregard trust’s role in the buying process. Moreover, many companies, including Starbucks, forego thorough market research and don’t understand consumer preferences in the region they’re looking to expand to. Like Oracle, another company with a strong expansion strategy, Colgate values trust, combatting common issues with localised manufacturing and distribution to accommodate and predict consumer preferences.

Remain constantly receptive to new ideas and strategies. Like Rolex, a firm with a hundred years under its belt, Colgate is a mainstay in consumer culture. However, both firms have similar challenges, including maintaining relevance amidst today’s highly transient digital culture. While Rolex copes with new concepts and strategies more resolutely, staying true to its initial value proposition, Colgate adapts through an overhaul. More so than many others, Colgate values going back to the drawing board and seeking expert guidance. In the past, this means investing more in R&D to create products accommodating consumer hygiene needs. More recently, in response to drastic shifts in mainstream marketing channels, Colgate revamped their KPIs and digital strategy to maintain relevance. The firm uses partnerships to maintain relevance, shifting its marketing strategy accordingly. For firms with long histories, receptivity to new ideas is crucial: While doing what works yields high returns for Rolex, the nature of Colgate’s products differs. In other words, Colgate’s target audience, the middle class, demands shifting strategies and new marketing models. Without this approach, the firm would’ve been obsolete years ago. Adapting new strategies is crucial in today’s shifting culture, a key practice for all firms seeking longevity and relevance among customers.

Provide all employees context, not just executives. More so than many other firms, Colgate prioritizes context, believing it to be the best way to accommodate shifting workforce demands. For Colgate, context drives the large firm’s multiple missions. Wendy Boise, Colgate’s Senior Vice President of Global Talent, says, “The change starts with our leaders. We wanted to make sure people understood our priorities and that we’re all speaking the same language.” Colgate’s shared language translates to greater transparency: C-level employees speaking the firm’s ‘shared language’ communicate more clearly with lower-level employees, creating trust within the large organization. Through extensive training, lower-level employees are briefed on Colgate’s sweeping goals and missions, giving them a ‘why’ behind their work. As a whole, the practice improves trust and transparency, the key to navigating the complexities of a large organization. It boosts employee satisfaction as they feel their work has a clear purpose. Furthermore, the practice provides Colgate stronger access to upskilling, as employees and managers using similar language can more accurately assess peer skill levels and share achievements.

Design a measurement ecosystem to capture factors contributing to ROI. Today’s business landscape inherently lends to challenges, especially for mainstay firms like Colgate. With nearly unhindered access to all kinds of data, many firms focus on the wrong things, wasting precious time and energy. On the other hand, Colgate harnesses data differently: The firm’s data use is grounded in the idea that all analysis must deliver “measurable business value.” Colgate uses a use-case-driven approach guided by the organization’s larger business goals to assess the degree to which points deliver business value. Other firms use what Colgate calls “defensive data.” Still, Colgate’s approach is more like an offensive measurement ecosystem: The firm uses data to capture features contributing to ROI. The firm uses Revenue Growth Management (RGM) data, including product pricing, promotion, assortment, and areas like Marketing and Media Effectiveness and Digital Commerce. To that end, Colgate synthesizes data to understand better consumer needs related to growth using a proprietary graph network. This network examines Google and Reddit extensively; insights help the firm identify consumer needs better. Most importantly, Colgate’s measurement ecosystem, the product of its graph network, cultivates stronger customer relationships and synergic efforts toward the firm’s goals as opposed to competitor insights, thus resulting in consumer-centric growth.

Invest in employee growth to develop stronger performance metrics. Colgate “see[s] digital training as a way to break down barriers and create equity of opportunity for all our employees. Employees can brush up on digital basics and embrace new skills.” Colgate takes growth seriously, especially that of its employees. The firm uses upskilling and digital courses to continue fostering a growth mindset, a hallmark of the firm’s culture. On an individual level, continuous training and assessments ask employees to “identify areas for growth and uncover unique pain points.” Perhaps more importantly, assessments and constant learning opportunities allow the firm to identify key talent at its source and to cultivate a stronger relationship with employees. On the other hand, employees have access to more learning and development, gaining key transferable skills. Colgate gathers findings from assessments and opportunities and re-examines leadership structures. The firm says “Once we’ve taken the time to gather these findings, it becomes much simpler to solidify your vision, identify your priorities, and set quantifiable, measurable KPIs.” Investing in employee growth opportunities is critical for large firms with massive employee pools. Not only does the practice foster a stronger and more robust culture, but it provides insights that would’ve otherwise remained subjective.

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Weekly Challenge

Colgate CEO Noel Wallace says, “Innovation is key to our progress, education is essential for building momentum for change, and partnership makes both far more powerful.” This week, consider lessons learned from Colgate and how you can incorporate them professionally and personally.

On receptivity to new strategies.
- Are you receptive to new ideas? Consider all contexts (personal and professional, etc.)
- How can you foster a more accommodating, agile mindset? Brainstorm 2-3 methods.

On providing others context.
- How might providing context shape or amend your interactions with others?
- Choose one interaction a day, and provide that person as much context as possible. Reflect on the result.
- Do you appreciate context?