The year was 1923, and Merritt J. Osborn was in a tough spot. M.J., as his friends called him, had lost his car dealership business and needed a new source of income – especially with two sons about ready for college. As he considered his options, he remembered a problem he’d seen years before as a traveling pharmaceutical salesman.
He recalled that, to clean guest room carpets, hotels removed them for cleaning by an outside vendor. While the carpets were gone, often for one to two weeks, the hotels shut the rooms down, foregoing revenue until the carpets were returned.
M.J. wondered if there could be a better way. Why not a product to clean the carpet in the room and do it quickly so the room could be rented again that evening?
M.J. was not a trained chemist. But he did some research and blended a few ingredients together. He called his new carpet cleaning compound Absorbit™. And he named his new company Economics Laboratory, conveying the idea of savings and science. Thus was born the company that in 1986 took on the name Ecolab.
Absorbit wasn’t the success M.J. hoped. But he was not deterred. He looked from the hotel room to the hotel kitchen, where electric dish machines were being adopted. He learned that the machines did a poor job of cleaning, partly because no good soap had been formulated for use in them.
With the help of a chemistry student from the University of Minnesota, M.J. created a dish machine soap called Soilax™. Although Soilax did not deliver perfect cleaning, it was the best detergent on the market. It sold well – even becoming a popular consumer product. By the mid-1930s, the company was on solid financial footing.
From the start, M.J. said the company was about: “Saving time, lightening labour and reducing costs to those we serve.” He demanded that products offered by the company fulfill their sales promise to “get the job done.” Getting the job done, to M.J.’s way of thinking, meant that trained service representatives also would be available to help solve customer cleaning challenges.
M.J.’s guiding philosophy laid the groundwork for the culture that has defined Ecolab ever since:
Major achievements during M.J.’s tenure as president and CEO included:
E.B. Osborn had established a powerful legacy well before moving into a senior leadership role with the company. As national sales manager early in his career, he studied the psychology of sales (and the importance of service to sales) and developed a systems approach to service (for more on his approach, please see History/Service). He also introduced innovative methods for sales training, focusing on preparing sales and service representatives to become dishmachine “consultants.” It’s not surprising that E.B. became recognized as the “father” of Ecolab’s legendary round-the-clock, on-site service, which, to this day, remains at the centre of the value Ecolab provides its customers.
As president and later CEO, E.B. oversaw dramatic expansion of the company in the U.S. and around the world. In addition, he oversaw a number of key acquisitions:
E.B. also was president and CEO when the company:
When E.B. joined the company, annual sales were $147,000. By the time he retired, revenues were more than $400 million – and the company had recorded 44 consecutive years of sales growth. And EL served customers in more than 50 countries and offered more than 1,000 products.
Fred Lanners, a chemical engineer by training, joined EL in 1948 to work in the company’s St. Paul, Minnesota, laboratories. The company soon recognized his considerable sales and executive skills, and in the 1950s, he was given responsibility for developing new markets in Europe. Fred established a sales organisation and a subsidiary, Soilax AB, in Sweden, then followed with subsidiaries in Norway, England, Belgium, Austria, Denmark, Germany and France. Following a series of assignments with increasing responsibility, Fred was named president in 1972 and elected CEO and chairman in 1978, the first non-family member to lead the company.
Fred is credited with continuing to strengthen Ecolab’s focus on service – and made it integral to EL’s market strategy. “Nobody wants to buy a detergent; they want clean dishes,” he said. “We make products valuable to our customer by training him in their use, and by furnishing him with applications systems so that he gains an end result that has economic benefit to him.”
Under Fred’s leadership, EL:
Following the tragic automobile death of Allied Chemical President Richard Ashley, who would have been the first outsider to assume the CEO role if he hadn't died before his start date, the board elected Pierson "Sandy" Grieve as chairman and CEO. Sandy was a 55-year-old executive from the consumer goods company, Questor. His experience in acquisitions and corporate planning, as well as his aggressive and articulate management style, were considered valuable qualifications.
After being on the job for less than one week, Sandy shut down the Apollo Technologies business. Soon after EL had purchased Apollo in 1980, changes in the market resulted in declines in Apollo’s business. The decision resulted in a $43 million write-off but it did stop further losses. Later in the decade, Sandy oversaw the sale of the company’s Magnus division, which, like Apollo, targeted industrial customers.
Other major events during Sandy’s tenure included:
The company, restructured and focused on core markets under Sandy’s leadership, was in a strong position to continue its record of dynamic growth.
“The 12 years I’ve spent at Ecolab have been the most successful, satisfying and fulfilling of my 44-year career,” Sandy said in a farewell letter.
Al Schuman’s career with Economics Laboratory (later Ecolab) began in 1957 when he joined as a junior salesman calling on the hospitality industry in the New York region. His career with the company ended 49 years later in 2006 with his retirement as chairman.
Al inspired a culture of aggressive, but ethical, salesmanship. His tough and inspiring style produced results. Under his leadership, Ecolab experienced dramatic growth through strong organic sales and several strategic acquisitions. When Al became CEO in the mid-1990s, sales were $1.3 billion and net income was $99.2 million. By 2005, revenues were $4.5 billion and net income was $319 million.
One of the most significant acquisitions of Al’s CEO tenure was the buy-out of Henkel KGaA’s 50 percent in the Henkel-Ecolab joint venture, formed in 1990 to strengthen Ecolab’s position in institutional and food and beverage sectors as the European Union took form, creating one of the world’s largest markets. In addition, Al oversaw:
Reflecting on Ecolab’s growth, Al said: “First, we have anticipated marketplace changes, always staying several steps ahead of the game. We’ve expanded our market potential, ‘growing the pie.’ We’ve maximized the differentiation between our offerings and the competition’s, and we’ve built rock-solid customer relationships, the foundation of our Circle the Customer – Circle the Globe strategy. We’ve also established a strong leadership team that combines vision and execution. Last, but by no means least, we’ve developed a truly unique culture that ties it all together.
“Doing these things is never easy. Especially when you’re the industry leader, it can be tempting to get too comfortable and think you’re untouchable. At Ecolab, we know that nobody’s untouchable and, most of all, we stay hungry for success. That’s what got us here today – and why we’ll keep ‘turning it up’ tomorrow.”
The story of Doug Baker’s years at Ecolab’s helm is still being written. But his legacy is set: it’s about dramatic growth for the company. The numbers below reveal the trajectory through December 31, 2019:
Net Income Growth
|Price||Shares||Mkt. Cap||% chg|
Total Ecolab Associates
Doug had a profound impact on the company in many ways. He built a culture around a clear and meaningful purpose – to make the world cleaner, safer and healthier, while protecting people and vital resources.
The purpose continues to provide inspiration for the company’s 45,000 employees and provides focus for strategic decisions. For example, Ecolab’s 2011 acquisition of Illinois-based Nalco, the world’s largest water treatment and management company, supported a vision to build expertise, capabilities and global reach to address the global need for clean water. Dozens of other acquisitions and product innovations during Doug’s tenure also have supported the company’s global leadership in water, food, public health and climate.
Doug joined Ecolab in 1989 and held a number of marketing and general management roles in the U.S. and Europe before becoming president and chief executive officer in July 2004. In 2016, Doug reflected on his role: “My main responsibility as chairman and CEO is to make sure Ecolab lives up to its potential. I feel proud of so many things about our company, especially the way we integrate our success with a larger purpose. Our impact – and our potential – are huge.”