University of Arkansas

Walton College

The Sam M. Walton College of Business

Episode 149: Building a Global Pet Business with Jeff Simmons

November 17, 2021

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In this episode of Be EPIC, Matt is joined by Jeff Simmons, president and CEO of Elanco, a leader in farm animal and pet health solutions, treating and preventing disease in more than 90 countries. Jeff describes the evolution of Elanco and how social changes affected the company, especially during the COVID-19 pandemic. 

Listen as Jeff Simmons explains Elanco’s vision and how it can be implemented in multiple facets of a company— and even life.

Episode Transcript

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0:00:05.7 Matt Waller: Hi, I'm Matt Waller, Dean of the Sam M. Walton College of Business. Welcome to Be Epic, the podcast where we explore excellence, professionalism, innovation and collegiality, and what those values mean in business education and your life today. I have with me today Jeff Simmons, who is President and CEO at Elanco. Jeff has a quite remarkable career with Elanco and in the industry, and we're gonna be talking about that today, but first of all, Jeff, thank you so much for taking time to join me, I really appreciate it.

0:00:46.3 Jeff Simmons: Oh, Matt. Thank you, excited to be here and looking forward to the discussion.

0:00:51.6 Matt Waller: You know, Jeff, there's a lot of things I think we can learn from you. But if you wouldn't mind, I would like to understand Elanco's journey through M&A and a spin-off from Eli Lilly. Would you mind starting by telling that story?

0:01:09.7 Jeff Simmons: Yeah, So Elanco stands for Eli Lilly and company, and almost seven years ago, we were founded by a bunch of Lilly researchers that were on an airplane in the 50s flying out to the East Coast from Indiana where we're headquartered, and they overheard about some people literally on an airplane talking about some science that was being done at Iowa State on some products, and they had some actually, chemistry and knowledge inside of Lilly and human medicine meets animal needs, and the next thing you know, I was... Stayed in, Eli Lilly developed the first product that helped beef cattle overcome poor feed quality for better feed quality and better gains, and in 1954 were born... I would tell you to jump ahead... Absolutely, there is a belief that making animals lives better makes life better, that you probably saw this in the pandemic, whether it was the empty meat cases, and in the midst of some of our toughest times, we reached for what we wanted and needed most, which was meat, milk, eggs and fish, as well as companionship, over half of Elanco is in the pet business as well, so we saw pet adoption grow to all time highs, and people found that companionship in their homes was best founded by a dog or a cat.

0:02:29.8 Jeff Simmons: Our vision is five words, food and companionship, enriching life. Eli Lilly in 2008, when I became president, made us one of their five businesses because they believe that, "Hey, we can make people's lives better with protein and with pets in a big way," more so actually, we touch more people than their diabetes business unit, their oncology or cancer business unit, and so we became a people business by serving people that serve animals, farmers and veterinarians, that's ultimately what we do, and we quickly went down a path where we actually grew... We acquired in 2008, I think the story is that when they asked me to be president, the new CEO, John Lechleiter came into my office at the time and said, "Hey, I wanna make you the president of this division.

0:03:16.9 Jeff Simmons: But we have a challenge, we're gonna lose $4 billion and patent expiries on human drugs, we need a couple billion dollars to be made up by the animal division, so let's start a pet business and let's also go out there and build a global leader through acquisitions," so Elanco, we acquired about 12 companies, the Animal Health Division of Novartis and J&J, and Monsanto and others, building a global business and also building a pet business organically, so half of our growth came from, went from a $900 million business to a $3 billion business became global, acquired, and then there became an era where animal helped multiples were kind of high out in the marketplace and literally had a change in leadership and they saw an opportunity and we became independent as a company and went on Wall Street, became a New York Stock Exchange public company in 2018, became independent. Soon after acquired Bayer, and now we're a company that's in over 150 countries, reaching 19 species of animals, we are a bridge to the world's animals, bringing them solutions through products and services.

0:04:28.6 Matt Waller: Your vision is really interesting, food and companionship, enriching life. Is that right? Did I say it right?

0:04:38.1 Jeff Simmons: It is. Yeah, yeah, it's kind of, can kinda seem boring, but I think as you start to apply it and it becomes personal stories, then everything changes... Right, that's important.

0:04:49.4 Matt Waller: Well, you know John Carter, who's a famous kids management guru, I'm sure you've heard of him, I love his writings, but he is known as saying many times, a vision doesn't need to be anything but ordinary, but it needs to be a creative way to understand where the company's going, and when I heard that food and companionship, enriching life, I can see how that could be applied in many different ways. It could help guide the company, it's funny how vision... It can seem so mundane, but so important, and I noticed that the reason I bring it up is you mentioned it so quickly, in the discussion, so it's clearly on the top of your mind.

0:05:38.6 Jeff Simmons: Yeah, I think vision needs to turn from those five words into relevant... I call it wise for different people. I ask every new employee to do a few things, but the first is, "Hey, within the first six at months of Elanco, revisit why you do what you do, it's much more important than what or how," purposeful people... I give 12 stones to my kids, I have six kids, they all have different words on them, but one of the most precious one is the one that says "Chase," because I believe somebody chasing something is a different kind of a person, and I'll tell a, I'll tell a funny story, one of the first times I reached a senior executive level, being a little vulnerable here, I'm in a big ballroom with the top 100 executives of...

0:06:24.9 Jeff Simmons: The company that I worked for, and I'll never forget it was two days of pretty boring presentations in a ballroom, and then suddenly at the very end, it wasn't one of those times in a company where a lot was going on and it was truly just getting through the two days, and somebody walked up to a microphone, Matt in the last five minutes of the meeting.

0:06:45.4 Jeff Simmons: And they said this, and I'll never forget it, they said they had all the senior executives up at the front sitting up there, there was a Q and A session, and they said, "Could somebody up there just tell me... Tell me something, a vision of what you personally see in the future that can excite me as I leave here" and I'm in a animal business, and when you hit a barn, in a turkey barn and you slap the boards, all the turkeys heads rise up, and that's exactly what happened in that ballroom that day, [chuckle] and everybody's heads rise up, and all I would say was the response was corporate, it was fluffy. It was stiff. And I said to myself, right then, at any point in time, if I get asked the question in an elevator, in a ballroom or actually in a restaurant by an employee that steps up to me, tell me about the future. Make sure it's relevant. Make sure it's real, it's timely and it's very personal. I truly believe that the world needs Elanco in it, we have anxiety at all time levels and kids, and I know that pets help that, we have obesity at all time levels, it won't be insulin, it will be good nutrition, and protein is 40% of the calories and we're a big player in that.

0:08:01.2 Jeff Simmons: We know we gotta call this climate by 2030, Matt, Elanco can help with our products, with cattle producers actually cool the climate, it's happening today. That's relevant. That's what I see in 2030 in Elanco, and the world needs us in it. That's enriching life, 2021. And I think every leader needs to have something personal and relevant and never be what happened in that ballroom, don't leave your people flat, and we know that people need to chase something right now, this great resignation is a big deal.

0:08:36.3 Matt Waller: The way you explained the vision, elaborated on it, I can hear the passion in your voice, and that clearly is an important way to get alignment in an organization on the direction the company is going, but it also provides a lot of motivation when you feel good about where you're going as a company, and clearly, I can see your passion for this and you thought it through very carefully, you said "Chase," I'd like to drill into that just a little bit, and if you're chasing something, you're not just, one, you're not being chased necessarily, and you're not standing still. I've never heard someone say that before... How did you come to that?

0:09:22.8 Jeff Simmons: Well, you see, you see people, I always say any time I walk into a room of people or now, I guess you get on a Zoom call, I quickly look at people through the lens of, where are they? Are they bringing energy? Are they taking it away? You know this, are they leaning in? Are they engaged? Do they have their camera on? Are they real? And I think that if you are relevant, your company's relevant, your personal why is relevant to something that matters, that's back to the why Matt, then you need to be responsible with... Being relevant, you need to be responsible. And being responsible is... You can't be politically correct. And this is one of my big passive aggressiveness and being politically correct is today's world cancel culture, whatever you wanna call it, it's made a lot of people that get platforms, a big influence, get smaller because they're too careful, but when you're chasing something and you see this then it is time. I mean, one month ago, we had over 50% of all the meat, milk, egg, and fish executives in the world on a Zoom call talking about... With the United Nations talking about how animals can help cool the climate, we're part of the solution, you don't eat your way out of not eating a hamburger is not the way to cool the climate, 'cause that isn't gonna happen.

0:10:44.2 Jeff Simmons: Number one and number two, the best way to reduce methane is productivity and healthy cattle, and it's happening today, and we all got together and talked about it because of relevancy. So to me, you chase things when you know you can make a difference, and when your vision and your why is bigger than your cautionary political correctness, odometer, which I think is a real big factor now, it's one of the biggest shames I see in the world today, is the people that have the knowledge, the know-how and the platform to influence, but they're so concerned about the risk factors of speaking out that they don't.

0:11:26.0 Matt Waller: For leadership in general, I've heard it said, and I don't remember who has said this before, there are two things that hurt leaders, and usually it's one or the other, but it's a little bit of both, but it tends to be one is more pronounced in the other, and that is, it's either hubris or fear, and what you're talking about there is fear, there's a lot of fear out there, people are afraid to be bold and to chase things many times, and it inhibits progress in many cases.

0:12:01.5 Jeff Simmons: Yeah. And let's put it into today's environment, I think... And I love Jim Collins, and he always talks about the Stockdale Paradox, where you have to have resolve, you have to show your organization hope, you have to have that side of the coin, has to be really strong, and that I think is being extremely vulnerable. It's being your belief in the long-term, but on the other side, the Stockdale Paradox talked about how they survived in that Korean camp was...

0:12:31.2 Jeff Simmons: Look at the brutal facts, don't walk away from the brutal facts, and if you can get that duality as a leader of resolve and reality then I think you watch out, and so I look right now and say to your students out there Matt, oh my goodness, there couldn't be a more beautiful time if you are a bold, courageous leader that wants to make a difference in the world. Here are my little bubbles on your white board, one, there's been a pandemic, all the things that come with that. We got a great resignation. Do you realize that in August, we're what? 10.6 million people. We had more people quit their jobs in August than any month in the history of man, people are deciding to vote with their feet, do what they want, if they wanna move to Jacksonville, Florida.

0:13:15.8 Jeff Simmons: Live in Minneapolis. They're doing it, Matt. So as leaders whoo... We got divide in the world, there's a sea of divide, that's the third bubble, we have a supply chain that is broken, that is dependent, and we have got inflation and maybe an economic cycle that's changing, and you probably have three other bubbles in your world that you would add to that, one in six people are going through a personal crisis, so you put all this together and say, "Well, that Jeff, yeah, that's reality." My resolve and my hope comes from the fact to say, as a leader, if leadership is influence and you bring... Best definition I've heard of leadership, we call it influence, but it's taking people to a place they would normally not go by themselves. So with all this chaos right now in 2021, where can you take this world by 2030? We'll look back in nine years and say, "Remember when this decade started? What can you do?" I see a company in Elanco that's gonna make animals center to society in so many ways, as I mentioned, anxiety, obesity, better nutrition, cooling the climate really? Yes, we're gonna do all that, and we're gonna stay in the center of that, but you as a leader, what role can you play in this bigger time of need? More people are spiraling than ever before.

0:14:36.9 Matt Waller: You mentioned leadership is about influence and the definition you gave, like I may get it wrong a little bit, you said taking people to a place they might not go themselves, is that what you said?

0:14:51.2 Jeff Simmons: That's correct, yeah.

0:14:53.1 Matt Waller: And I like the, one thing that we've done in the Walton College, we have a large number of registered student organizations, we call them RSOs, and I remember at one point someone said, "We've got too many of these. We should probably consolidate them," and I was against it, I actually said I'd rather have more RSOs and encourage more students to participate because every RSO is an opportunity for a new leader to test their leadership skills and to grow as a leader. We started something years ago through an endowment, back when the Walton College was endowed called Leadership Walton. And in Leadership Walton... Students get exposed to a lot of different things and they have a way of monitoring. None of it's required, it's completely optional, but the students can really... If they want to develop a lot of leadership skills along the way, and I won't go into all of it, but your point is really good, we've got so many areas of challenges, the world faces, it's easy for a student to withdraw and say, "Look, the world's scary it's dangerous.

0:16:11.8 Matt Waller: There's bad things happening. What can I do to help?" But the reality is, we need leaders that will say, "I will help," and that's one of the reasons why I like to have lots of different RSOs, because people have different kinds of interests and passions and so forth, and they can make a difference, they can make a difference with the students that are in their RSO, for example.

0:16:35.7 Jeff Simmons: Yeah, if you're gonna take people, large organizations, small groups of people, whatever, to a place they would normally not go, you need an organization that has leaders at all levels... And we gotta throw the organizational chart away, we gotta throw titles away, I believe if you need a door, a parking spot that's reserved or... You need to make sure you get credit. It's the game's over. I think all of us are in this game and we gotta think about it, and as high of humility as ever, because we need diversity, we need someone at any level, at any capacity, six months into a company, fresh out of your school, in a company... They can reach people that I can't... It's been around here for three decades, and so diversity of leaders that are bold and courageous will bring more of the organization to the place you've gotta go.

0:17:30.9 Matt Waller: Since we're talking about leadership, I'd like to go back to something you mentioned earlier that really caught my attention, when the CEO of a company came to you...

0:17:41.2 Jeff Simmons: John Lechleiter. Yeah.

0:17:43.9 Matt Waller: John Lechleiter, he came to your office and he said, "We wanna make you the president of the division, [chuckle] but we have a big challenge. We're gonna lose four billion in patents that are going to be expiring then we need to make it up with the animal division," so I would think that was quite a big charge for you.

0:18:05.1 Jeff Simmons: Yeah, and I think... Well, I would say it was for us because the immediate... I remember the immediate conversation was with the lead team, saying alright, let's start developing... At the time, Elanco 2012, what are we gonna do in the next four years? How do we do this? And it was a collective ownership, and any time you're faced with a challenge, you turn around and you say, "Who do I... Who can I bounce this off from, but also who can collectively own this with us?" And it was quickly cascaded across the company, my confidence grew much quicker in the first couple of months, and I don't know if it was an exact dollar challenge, but it was... I remember the word, "You're gonna be a counter-cyclical asset and a business unit to Elanco." And I laughed and said, "Okay, I've never heard that word before, but I'll take it." And sometimes timing is everything, it isn't strategy, and we had good timing, a good opportunity, and the media thing was to get collected people together, and I remember one of the biggest impactful stories to me, I grew up on a grape farm, a Welch grape farm in Upstate New York, and I remember in the early 70s, I was seven years old.

0:19:18.0 Jeff Simmons: I remember my Chuck Taylor converse sneakers hanging over the edge of the porch. And if you're a great farmer in August in Upstate New York, you do not want a hail storm, you are fully in debt, you had 11 months that you've been paying employees, and we were fully in debt... We were not well off. It was a new farm, and there stood, my dad, my mom, my brother and I lined up on the edge of this porch as the black clouds rolled over the hills in the Finger Lakes of Upstate New York, and hail, within about 12 minutes, dropped every grape we had on the ground after 11 months of investment debt, and the tears ran off my dad's face first time I saw my dad really well up, and my brother turned to my dad and mad, I can still smell the kind of sulfur in the air and see the dirty converse sneakers in my mind. And my brother said, this simple question, "Dad, this isn't good for us." And he turned and said, "No, no, no, son. It's not good for them, and it's about them, and he pointed to the shed with all of our employees that were in the shed, looking out as well, and that was my moment of servant leadership to say, "You never do it alone, you never do the counter-cyclical fill that pipeline alone.

0:20:40.9 Jeff Simmons: You don't do anything alone." And if you can turn that around, I think in any challenge as a leader and say, "This is a challenge, but you're not doing it alone," who are the people you're serving, I think is the most critical, important thing, and every crucible of Elanco's story, it was the best moment of servant leadership in our company.

0:21:03.0 Matt Waller: You have lots of really good stories, and I could see how your stories could have an impact on the culture of Elanco. Would you mind talking a little bit about the importance of building the culture in your company and how you have gone about doing that?

0:21:22.0 Jeff Simmons: I think the first thing is you need to talk about it. You need to talk about culture at every Town Hall, every conversation, cultures like water is to a fish, you don't know it's there until it's gone, or it really changes, and I really believe that, yeah, culture will eat strategy for lunch, lots of quotes, but ultimately to me, you need to talk about culture and say what's essential in our culture, one word we talk a lot about in Elanco is humility, we serve farmers, one of the most humble, determined, loyal, smart, but it is not about a farmer's life, it's about what the farmer does. If you serve them, you need to be as humble or more humble than them, veterinarians, pet owners. So to me, I think that culture, you start to gravitate around what works, then Matt, when culture is working and you see it working, you call it out, I take 1600 leaders and I get three metrics every quarter on my iPad, I do a survey, very simple that is an engagement survey. So I know at the 1600 level, supervisor level, so groups of five, seven, 10, I know what the engagement score is, I demand a greater than 80% engagement, and it varies right now in the company from 42% to 100.

0:22:42.6 Jeff Simmons: Number two, you look at the execution, do you have a disciplined organization and then are you delivering against your objectives? So very simple, three key expectations, and what I would say is, "If culture's not right, the engagement is not right and the delivery is not right, but the stories aren't right either." And it starts popping. And culture becomes antibodies. When it's not right, it pushes, it pushes things out, it pushes exposure, pushes people under the fish bowl, and when it is right, the stage comes out and people start to point and say, "Look at that over there, I'm gonna go work over there." And so I would tell you things we just talked about, we want delivery and discipline, we want ownership, you're not an owner, you got stock in this company, we want humility, stay small, and that leads to stories, and I started giving out my cell phone at every Town Hall 11,000 people. Why, as a symbol of speed, quickness, text, somebody, call somebody and you can call me. There is no one more important than anyone else, you also gotta be raw and vulnerable when it's not working, and I will tell you, we've had a lot of seasons.

0:23:52.2 Jeff Simmons: Right now, we're in a tough season, buying a company in a pandemic when it's not working, call it out, it's not where we want to be, we gotta keep working to get in a better place.

0:24:02.5 Matt Waller: So Jeff, I'd like to ask you a question, particularly for the students, so that they can improve. And you know the students listening to this tend to be more ambitious students, they're listening and trying to learn, but you mentioned to me this concept of a personal standard operating procedure, what is that and how should students think about that?

0:24:27.0 Jeff Simmons: Yeah, I think this is... If I had to say, boy, if I had to write a white paper or a book today, it would be on this, because to me, this is the difference between good and great in the world we're going into Matt, they say the average attention span is 10 seconds, gold fish is 11, and the cell phone world has made us as connected as ever, but we've never been more isolated, and we can go on and on. And I think if I'm coming out as a new graduate going into this world, I think that a PSOP is the most important thing you can have... What is it? Well, an SOP is a standard operating procedure, which is a theory that says, after lots of study and Six Sigma and all process controls... Every manufacturing plant has an SOP to optimize. If you follow these steps, it is the optimal state of productivity and sustainability, and so many years ago, I said, "Hey, we need a PSOP, we all need a personal standard operating procedure," listen, I'm a dad of six kids and been married almost 30 years and life goes on, and the life blends with the work and community and all these other challenges, if you are not in control of yourself and are optimized yourself, you're not gonna be sustainable, and you'll be another statistic, like so many other leaders are, so my challenge to you is to stop on a routine basis, about every six months and say, "What is my... "

0:25:56.6 Jeff Simmons: Not my friends, not my boss, not my, what is my ideal state? And it will change about every six months as your life goes on, and what I would tell you is, I remember distinctly when my kids were younger, my wife was needing help, we were being moved around the world, and I thought, if I don't get this thing figured out, something's gonna break the family, my career, the people I'm serving, and so I quickly, here's a few things, so you have to stop and say, "Alright, what's my ideal day? What are my ideal habits, what are my ideal ways that I actually have an outlet?" I remember here's a few things were on my PSOP Matt during some of my challenging times, was six to nine. And I knew that six to nine at night was my important time for my kids, my phone had to stay in the car from six to nine, and I had to do homework, play ping pong and whatever it was, because I knew for my wife, I knew that the other number was that I could travel 24 nights a quarter, which gave me almost 70 nights at home, and if I didn't get home by 6:15, it was a travel night, I could get a lot of travel done at 20 some nights, but I was home, turn it around 70 nights, six to nine.

0:27:15.9 Jeff Simmons: My family never got better, it just got better and better and better. Those were things that were critical to me, I needed a mentor, I needed, and I had five bullet points that was my PSOP, get your PSOP, get someone to hold you accountable. And make sure you protect yourself. Think of that manufacturing line, it is optimized. What is your optimized state? Control it, man. I had someone say to me, I've gotta fish every weekend... Got it. I've gotta read, I'm a reader. Make sure you know what your PSOP is, with that, comes sustainability. It comes success, it comes, you stay in control of yourself and physically, personally, professionally, spiritually, you will be where you want to be, and the people that follow you will be glad you're doing it.

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0:28:07.9 Matt Waller: Thanks for listening to today's episode of the Be Epic podcast from the Walton College. You can find us on Google, SoundCloud, iTunes, or look for us, wherever you find your podcasts. Be sure to subscribe and rate us, you can find current and past episodes by searching beepicpodcast. One word, that's B-E-E-P-I-C podcast. And now be epic.

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