Gillette's Kilts says do the right thing

(Note language in final paragraph) By Brad Dorfman

CHICAGO (Reuters) - For James Kilts, the former chief executive who engineered the sale of Gillette Co., the important thing in business is taking the right decision.

In "Doing What Matters" (Crown, $27.50), Kilts describes his first days at Gillette in 2001, sifting through suggestions for turning around the razor and battery maker, which had missed its quarterly earnings estimates for four years and whose stock had dropped 62 percent in two years.

Among the options were divesting the struggling Duracell battery business; holding on to Duracell but slashing prices; divesting other businesses; entering new product sectors; or selling the entire company.

Kilts used what he calls the "fast-track, quick-screen elimination process" to ask a few key questions that allowed him to quickly eliminate most of the options, an approach he says can usually screen out 80 percent of the choices.

"In effect, something that seemed larger than life is now scaled down to manageable proportions," Kilts said.

In the end, he decided to keep the businesses and led a turnaround at Gillette before selling it to Procter & Gamble Co (PG.N) for $57 billion in 2005.

The elimination process isn't only for chief executives, he says.

"Regardless of your position in a company or organization, there is always a flood of data and a lot of conflicting ideas and opinions," Kilts said. "How you get to the heart of what matters will define you as a leader."

Kilts, who was chief executive of Nabisco before joining Gillette, also identified inertia as a major obstacle at many companies.

"What happens in a lot of companies is ... you get a propensity toward inertia or inaction," he said in an interview. "One of the most difficult things you can do is get action in a company."

In his book, Kilts weaves anecdotes of his own experiences and those of executives he worked with to show the importance of basics like choosing the right team, focusing on fundamentals and having the right leadership process.

Among the things that matter, according to Kilts:

-- Hold a mirror up to an organization and face reality.

-- Always over deliver, never over promise.

-- Use real, sustained enthusiasm, such as when getting Gillette employees to embrace cost-cutting.

-- Do the right thing by understanding the big picture.

-- Reward people for results, not just for trying. "Effort is the price of admission, results are what matters."

-- Establish yourself as a leader on Day One.

-- Avoid (or escape) the Circle of Doom. Unrealistic sales targets at manufacturers, for example, result in end-of-quarter discounts to retailers and lower profits.

In the book, written with John Manfredi and Robert Lorber, Kilts also talks about avoiding self-promoters who focused on meeting individual targets instead of team goals, citing a mantra of another former Kraft Chief Executive, Mike Miles.

"I look for somebody who might turn out to be a prick," he quotes Miles as saying. "We had a rule at Kraft that we were not going to hire any pricks."