The ever vigilant CEO

BEIJING – The mission of David Calhoun, chief executive officer of The Nielsen Company, one of the world’s leading suppliers of marketing and media information, TV ratings, online intelligence and cell phone data, is to measure the world in a “watch and buy” way.

The “watch” segment provides audience data and analytics primarily to the media and advertising industries. The “buy” segment provides retail transactional measurement and consumer behavior information as well as analytics primarily to businesses in the consumer goods industry.

“If it can’t be measured, it can’t be managed,” Calhoun told China Daily in his first exclusive interview after the company floated its shares on the New York Stock Exchange in January, raising approximately $2.1 billion in net proceeds. It was the biggest initial public offering since General Motors Co’s public rebirth at the end of last year.

Although Calhoun declined to disclose numbers on how much investment Nielsen plans to pour into China, he said China, India and Africa are where the company makes its biggest investments.

“And they will continue to be that way for quite a long time,” he added. “For the next two years, the increase in our investment in China will be at least 100 percent.”

Nielsen’s business in China has more than doubled over the past few years, growing much faster than the industry average reported by the China Market Research Association.

According to Nielsen’s financial report, developing countries accounted for about 17 percent of the company’s revenue in 2009. Incorporated in the Netherlands but headquartered in New York, the company now operates in more than 100 countries.

In March, the company reported its 2010 financial results, saying revenues for the year increased 6.6 percent to $5.126 billion, or 6.1 percent on a constant currency basis.

For Calhoun, the company’s biggest difficulty in China is the scale of the country.

“There are so many people to reach and measure, so finding qualified people to acquire data, finding qualified measurement scientists to process that data and then packaging it in a way that satisfies our clients and manufacturers in China is the biggest challenge,” he said.

To deal with the problem, Nielsen attaches great attention to localization. Calhoun’s suggestion for any other companies coming into this fast-developing country is to “get local fast”.

“I consider our business in China to be very local, and we will become more local,” said Calhoun, “This is critical to release the potential of our company in the market.”

As proof, the company has just appointed Yan Xuan as president of Nielsen Greater China, with responsibility for all of Nielsen’s business activity on the mainland, Hong Kong, Macao and Taiwan. It was the first time Nielsen named a Chinese native as the president of its China operation.

Yan, who was educated in the United States, where he picked up a doctorate in jurisprudence, reports to Calhoun directly and is now a member of the Nielsen executive council.

Calhoun said the appointment reflects Nielsen’s commitment to and focus on China.

Yan’s experience in leading sales, business development, strategic investment and government affairs, and knowledge of the China market will add to the momentum of Nielsen’s efforts to further grow the business and accelerate growth of the company’s clients, Calhoun added.

However, Calhoun never weighs people highly just because they are smarter than everybody else. “I actually see it differently. I rate people highly when they create an environment where everybody thinks they are smart and everybody contributes. Success is about more than just being smart. You also need leadership,” he said.

‘Demand chain’

Besides hiring the best people to boost business, Calhoun believes the business model also needs to change.

For Calhoun, companies now need to shift their focus from the supply chain to the demand chain. That is the subject of his new book, How Companies Win.

In a world of contracting markets and diminished consumer demand, Calhoun, together with The Cambridge Group founder Rick Kash, show companies through the book how to find new customers and bigger profits.

For the past 20 years, the growth formula for business has been to increase revenues by expanding product offerings and streamlining supply. But with the recent global recession, the world economy has changed forever. Now the old tools – most notably supply-chain management – are no longer enough.

In a new digital age characterized by over-supply and too many product types in almost every market, the new challenge is to locate and capture the elusive pools of high-profit demand.

Kash and Calhoun have the answer: a revolutionary, demand-driven model that has already proved successful for some of the world’s most admired companies, including Best Buy Company Inc, Anheuser-Busch Companies Inc, The Hershey’s Company and Allstate Insurance Company.

From GE to Nielsen

Before joining Nielsen in 2006, Calhoun served as vice-chairman of The General Electric Company and president and chief executive officer of GE Infrastructure, the largest of six GE business units.

Under his leadership, the business annually contributed more than $47 billion in revenues and $9 billion in profits to the company, driven by a team of more than 120,000 employees around the world.

The scale of the GE Infrastructure business was 10 times that of Nielsen. Calhoun’s move, for many people, came as a surprise.

His mentor and long-time boss, GE’s CEO Jack Welch, observed that Calhoun’s GE contemporaries were taking CEO slots at far larger corporate icons.

“I think if he had waited a little longer, he might have gotten a really big one,” Welch was quoted by Fortune as saying. “But this was the right offer at the right time in the right environment.”

Calhoun said he had his reasons for coming to Nielsen.

“It was my desire to practice leadership in a different environment and to test myself, my own leadership development. Also, part of it was my personal interest: I can spend a little more time with my four children,” said Calhoun.

“I want to complement, not repeat. I feel this is a perfect complement: I have seen the development through the eyes of governments and economic policies, now I get to see the development through the eyes of the people and consumers. It’s a wonderful perspective to have,” he added.

Guo Lan, director of business development for Nielsen’s “buy” segment, was a bit surprised when she learned that Calhoun would leave GE and join Nielsen.

“He was named ‘the most lusted-after managerial star’ by Fortune and could take any CEO job, so I was curious to see what kind of impact he would bring to us,” recalled Guo.

“He did bring us pleasant surprises in terms of pushing on the integration of different lines of business and outlining a clear business strategy: ‘watch and buy’,” she added.

“As a simple and elegant abstraction, ‘watch and buy’ highlights our key competitive advantage and it is quite helpful in communicating our business,” said Guo. “I am not a celebrity worshipper, but I am really a fan of David.”

Nielsen’s financial performance has been improving ever since he joined in August 2006.

From 2007 to 2010, the compound annual growth rate of Nielsen’s revenue was 5.2 percent, with revenue hitting $5.1 billion last year. The adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) grew 9.7 percent to $1.4 billion, which is 27.5 percent of revenue.

For Guo, Calhoun is an easy-going leader. She spoke to him face-to-face for the first time at the company’s 360 Consumer Conference in Orlando this year.

“He is as charismatic off stage as he was on stage,” Guo said.

In the eyes of Mitch Barns, president of US media client service for Nielsen, Calhoun is a real leader and is inspiring.

“More importantly, what he is doing is always in line with what he is saying,” said Barns.

When describing himself, Calhoun said: “I’ll always be a student, always learning. And I’m an optimist. Very few things get me down.”

For him, the biggest benefit from working at Nielsen as CEO is his own personal development.

“I see the world differently. I appreciate it in a different way. I feel fortunate to lead the company with 35,000 people and hopefully contribute to their personal development. All those things are very satisfying,” said Calhoun.

In his spare time, the executive loves sports, with skiing being his first love and golf the second

“I’m sure it’s because of the competitive element they require. I’m pretty active, so I try to engage in them as often as I can, but never often enough.”

Calhoun’s family life is also important to him.

“I follow every step of their development, and you know, that’s pretty good,” he said of his four children.

Although Calhoun spends much time traveling around the world on business, he always makes time for his children, no matter how busy he is.

“If they have needs, you make sure you get them on the phone. You go to see them, swapping emails with them. You are always there for them. Believe it or not, in today’s world, you can do that no matter where you are. And these technologies we have are available to us. I can have personal discussions with them, watch them on my screen anywhere in the world,” he said.

Source: China Daily

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