Phillip Morris wants you to quit smoking … and Asia President Stacey Kennedy is leading the charge
Phillip Morris International, the American multinational cigarette and tobacco Fortune 500 company, is now committed to designing a smoke free future. Whilst tobacco isn’t completely off the table, PMI wants to have a long-term impact on its customers, by helping them to make positive and healthy lifestyle choices. PMI has turned its attention to manufacturing and designing smoke free products that it hopes will one day replace cigarettes. That’s a big message to convey internally and externally, but as the company’s South and South East Asia Asia President Stacey Kennedy tells Finfeed, with the right leadership practices you can achieve almost anything.
Jonathan Jackson (JJ): Stacey, thank you for your time today. You have had a stellar career with PMI, can you give our readers a quick overview of how you have risen through the ranks?
Stacey Kennedy (SK): I started at PMI right out of undergraduate school in sales. I was a territory sales manager and called on about 130 retail outlets, from convenience stores to supermarkets. From there, I had a series of increasing responsibility opportunities from key accounts, to trade marketing, to marketing, until I became the vice president of sales for the Southeast part of the United States with Team USA. I had an international assignment in 2002 and have been on the international side since then. In 2011, I started as the vice president of global sales strategy and spearheaded a major initiative to change our commercial approach and our go to market business model throughout all the markets in PMI.
JJ: What brought you to the Asia region
SK: When I made the big leap into general management, my first assignment was in Southeast Europe running a cluster of 10 smaller markets including Romania, Bulgaria, these countries. It was a fantastic opportunity with lots of mergers and acquisition and business development opportunities. Then I went on to be the managing director of Germany, which is one of the top five biggest markets for PMI. And then from there headed to Asia, which is my first full time posting assignment in Asia. And I'm really thrilled about it.
JJ: I have been told by reliable sources that you are an avid learner. Where did this passion for knowledge come from and do you attribute it to your rise through the organisation?
SK: None of us are born with all the information or even the leadership traits that we need. I think we have to build those over time. So, I am a curious person and I've been pretty passionate about learning and developing myself. If I'm not learning something every day, it's a big missed opportunity.
That curiosity was developed pretty early in childhood. Both my parents were public school teachers in Mississippi, so I got a hearty dose of learning agility, and realised the value of education and hard work. That just really translated right past university into my career because you have to be pretty curious to understand how to solve problems and meet the unmet needs that consumers have.
I find that when you understand how people make their decisions, then you can better connect with them. That just fits right into the learning agility and curiosity curve.
JJ: I guess that would feed into the way you manage people as well?
SK: It does. The one commonality that we all recognise in business, that leaders have bigger responsibility for, is delivering results. You can only deliver results through other people. That's about leadership and leading and inspiring other people to be curious to always find a better solution. To find a common vision and a strong set of principles and values, is what allows teams to be truly successful.
JJ: This would be the same principle in each of the regions you have worked, but how do you approach leadership in the different regions, particularly Asia.
SK: South and Southeast Asia is a really unique part of the world. There are plenty of global commonalities, however I'll focus on some of the differences to more developed markets in Europe or the United States.
South and Southeast Asia has a tremendous opportunity ahead in emerging markets where entrepreneurial spirit is alive and well. You can see the economy significantly improving and there's potential upside and a lot to be learned from developed markets that have tackled some of the challenges there. On the other hand, there's such unbelievable uniqueness and complexity in the operating environment, that it really does take the entrepreneurial spirit – that I believe is alive and well in South and Southeast Asia – to be able to grow.
JJ: What are some of the biggest challenges you're referring to?
SK: I think governments in South and Southeast Asia have a pretty uniquely tough challenge in terms of managing growing economies. It's also about making sure that different segments of the economy are keeping pace and that they have supportive infrastructure. This is particularly poignant when we talk digital technology, it's very easy for one part of the economy to outpace the other and you need the infrastructure to be able to grow at the necessary rate.
On the other hand, another challenge is being able to recognise and harness the entrepreneurial spirit that exists among many people and to be able to use that to transform the labour markets to be ready for what's coming ahead.
Finally, the markets need to be able to keep pace with the growing consumer demand, because as consumers become more global with a mass amount of social media and influence, they are being educated at a vastly rapid pace. Governments and economies have to keep up in order to be able to pass regulation, to be able to make sure that there's access to markets and that consumer products can be brought to commercial markets as fast as consumers are demanding them.
JJ: I do want to touch on Hong Kong for just a second. It's a progressive country and for PMI in particular, that's reflected in the fact that women constitute 68% of the senior management positions there. Why do you think Hong Kong is so progressive and how is it leading the way in that regard?
SK: Hong Kong is, I think, a really unique place in the world. You see the business mentality in Hong Kong is alive and well. The market has had a lot of changes over the past decade, when you look at population shift and expat population shift, but it really is a major financial hub within Asia. You can tell just by being in a very vibrant city, that this is something that Hong Kong really prides itself in as it looks to influence all of Asia.
JJ: It is unfortunately going through some fairly strong turmoil at the moment. Is that affecting business in general, or PMI's business at all? And how do you deal with something as important as what is going on there, that is potentially as dangerous as it can be. How do you deal with that from a management point of view and how do you create or maintain that safe, inclusive environment that you've created?
SK: That's a really important question. Tensions are definitely high in Hong Kong and we have our regional headquarters here for both East Asia and Australia as well as South and Southeast Asia as well as the local Hong Kong market. I'll tell you, from a management point of view, my counterpart and I have been solely focused on the safety and security of employees that work here. So, it's getting our heads wrapped around how we provide up to the minute accurate information, make sure that they're aware of how to keep themselves safe in their morning commute, their evening commute home, making sure that we provide as much flexibility as possible, deciding whether to move meetings from the office location or elsewhere. That's really been the main focus; to make sure that employees are engaged and that they're aware of how they can keep themselves safe.
JJ: I guess that comes back to the strength of management and your management in particular. As you said, you're someone who likes to learn. What have you learned from this situation?
SK: I've had the fortune from a leadership development perspective, to have the misfortune to be in several places around the world where there were very difficult situations going on that involved my employees. And so I think the first thing that you learn is just a sense of humanness. To try to be empathetic and understand what anxieties might be on different people's mind. Not trying to anticipate for any individual employee, but just trying to understand globally how different people, from different points of view, may come from this very different mindset. Fundamentally, we are all employees for one company and everybody has a common focus on safety, security, and trying to reduce any stress and anxiety in a time of difficulty.
JJ: I guess one of the questions to that is how have your people skills changed over those periods of time?
SK: I think each and every one of us are human and at the end of the day, we're all employees. I'm an employee just like everybody else is. I have concern for my family, for the job that I need to do. So, does everybody else. While some of those may not be shared publicly, I think just having the humanness to recognise that nothing can beat a smile, an arm around the shoulders and encouraging words in times of stress. Although you may not be able to solve someone's personal dilemmas, whatever they might be, we can all make sure that we grant a caring mentality and really safeguard the things that are most important, commonly to everybody, which is around safety, security and understanding of management.
That's universal, whether it's a situation in Hong Kong or last year when our Indonesian affiliate suffered losses with employees in Palu. I've been through hurricanes, volcanoes and I think all of those require the same type of understanding and empathy from a very human point of view.
JJ: Speaking of looking after people. You also have to look after yourself. You are a mother as well. How do you balance this role, which must have an element of high-level stress to it, with being a mother?
SK: I think it's just having the ability to switch gears and be always on. We were talking about learning agility a moment ago. I have twin daughters, they turned 10 back in the spring. I remember thinking the morning of their 10th birthday, we did a little math exercise and calculated up the number of questions that they've likely asked me over their lifetime. We hit more than a million. They're voracious question askers. I think staying curious with your kids and finding ways to be really present, is one of the struggles of working parents, moms and dads, particularly when you have a high stress, high travel job. There's always this guilt and anxiety about ‘am I being present enough for my children’.
If you really get down to the facts and the reality of it and look at the number of minutes that on average a child gets undivided attention from a parent per day, it's really not a lot. They're busy with school, they have lots of activities. What I've learned is 30 minutes that parents are really present and focuses individually on each child, means more than three, four hours of time together spent multitasking, TV watching, doing laundry or errand running. Finding those moments to really be present and focused each and every day and have fun at the same time is very important.
JJ: I guess being present for employees, is not quite the same as being present for your children, but the same principles apply to some degree.
SK: They do. At work there are so many priorities and so many competing resource constraints, but the one thing that we can't make more of is our time. Where do we spend our time with whom and how, is probably the most critical decision that a leader can make. I'm not perfect, but I think one of the best values for time spent is recognising and simply saying, ‘thank you’.
I used to have a ritual that every Friday afternoon I would stop and either write a handwritten note or email to people that acknowledged something they did or success they had that I really appreciated. That means it's announced to people that we take the time to say thank you. Sometimes I get off my routine and I have to pull myself back to it because it's an easy one to let slip, but I think it's really super important. It's always important to me when someone says thanks, so I think it is to everybody else too.
The changing face of PMI .. and changing nature of smoking
JJ: Getting back to PMI and at its core business, it has changed significantly recently including the key messaging, so what is the core business now and how do you adjust to that change? How do you navigate through the challenges that a change to smoke free products bring and how do you get employees on board with that and drive the business forward through it all?
SK: I don't think I have ever seen PMI as a company more alive to the individual level of employees than we are today. And it's always been a great company, which is why I've never left it. Our core business, our core consumer, was the adult smoker and now it's the adult smoke-free consumer.
We're a business that's right smack in the midst of transformation. I know a lot of companies talk about transformation, but I can't think of one bigger than having the bold ambition to switch more than a billion smokers from smoking conventional plain old cigarettes, to smoke free alternatives that are vastly less risk to them and to the people around them. It's a very big bold ambition. It's a journey. We'll not be there in one day, but we are focused squarely on switching as many smokers as we possibly can, who would otherwise continue smoking, to our smoke free alternatives.
JJ: How difficult is it to put that message forward? It's not an easy habit to break, so it's a matter of a company changing an entire mindset.
SK: It's not a particularly easy challenge, but sometimes the harder the challenge, the more important it is. If you don't smoke, it's better never to start. That's clear. For those who smoke, it's better to quit. That's the best alternative. But the reality is that nine out of 10 smokers every year will continue to smoke, no matter increasing regulation, no matter increasing prices, no matter that they know that it harms their health.
Because nine out of 10 continue smoking, that's absolutely why there needs to be an alternative available that would reduce their risk. That's where we want to begin the conversation. For those who can quit, that should. It's not easy and many simply won't, but for those who won't, then the far better choice is to switch completely to a smoke-free product that delivers about 95% less harmful chemicals, than smoking conventional cigarettes. That's the reality.
JJ: It's a message you have to get out into the broader market, but also one that has to be backed up from within. So how do you put the message through the business?
SK: It takes time. We started years ago from the inside out. We started to transform within ourselves to make sure that each and every employee understood the science, alternatives, how the product works and what it means for our consumer, for smokers. And then you have to look at all of the stakeholders that have a role to play. One company trying to transform an entire industry of over a billion consumers, you can't do it alone. We need governments. Governments play an immense role. Governments set regulation, they set standards of products, they set risk proportional taxation. They build awareness among their constituents, citizens, smokers and non-smokers. Governments have a vital role to play as does the scientific community, the medical community and media.
We need to ensure that we go to market when consumers have high enough levels of understanding of the risk and the problem and that everyone from the government to scientific and medical communities can help explain the level of risk reduction to people.
Changing the message in an evolving workplace
JJ: You are changing the message at a time when workplace is changing as well. Not only are you navigating a different message, but you're navigating workplace changes, different ways of working and different fundamental opinions about how work should be. So how do you navigate that in terms of not only changing what the company is, but how the company needs to move forward operationally?
SK: Change is hard. For the vast majority of people, change is not comfortable. I think one of the things that helps me and helps my team to be more comfortable is to recognise that it's going to happen with us or without us. It's better to try to get comfortable with it because the world moves and the company moves and we need to move. It comes back to having a healthy sense of curiosity and motivation to learn new things. This puts our employees in a vastly better place to manage and lead through change, than having a fear-based mentality. I think the fear-based mentality is the worst thing you can get when you're trying to manage change in your organisation and your culture. Fear gets you fight or flight mentality and it's not helpful for any change that you're trying to undergo unless it's some type of severe crisis.
I try to inspire and motivate by helping everyone to remain curious and to create lots of learning opportunities and also to instil a healthy attitude that failure is not only okay, but it's welcomed. We have to experiment in order to learn and to move forward. That encompasses our new ways of working, to learning about how our target consumer, legal age smokers and the markets that we serve, are going to respond to our new products. We need to learn and be able to adapt to them based on that.
The large cap to small cap mentality
JJ: PMI is a $132 billion capped company and shares have increased 26% this year. We've spoken a lot about change, but what do you think has facilitated the growth this year in the company and the change in opinion towards the company. Has it dropped the stigma of being ‘big tobacco’?
SK: The consistency of message and the transparency from our senior management has played a major role in this. We have been absolutely consistent and transparent about what it is that we're doing for the past several years. Now, the market hasn't always responded as favourably to that and that's okay. But I think when management has a long-term vision and clearly demonstrates the utmost commitment to that vision and the street continues to see solid fundamentals from the core business and the conversion rate of switching smokers to our reduced risk, smoke-free alternative, that's a pretty powerful belief statement, which is really down to the way the consumer accepts the product.
Now that we have more than 10 million users and more than 7 million that have fully switched to I smoke-free alternatives, I think that's where a lot of the belief in the credibility and consistency of the message from senior management really fits in.’
JJ: We deal mostly with small caps here, but we do talk about large caps to a degree. Given your experience, what are your key lessons in running part of a listed company and what advice would you give to the CEOs of small caps who are just trying to survive day to day?
SK: I think we have different challenges obviously, but we also have a lot of similarities. The one thing that I've learned in working for a very large listed company, but also transcends everything from the work that I've done with non-profit boards to my daughters, is that the leadership that we each portray, each and every day has to be grounded in a set of values. Small listed companies have resources that are really lean and so CEOs cannot get everything done by themselves. You have to have the team that does it. Having that grounding and having the leadership mantras within the company to make sure that each and every employee shows up every single day as his or her best self, ready to be passionate and commit everything they can towards the company is vitally important. Success in any listed entity is really about inspiration and having a shared common vision. I think those are commonalities that transcend from big companies to small companies.
JJ: Looking forward, what are some of the challenges that you expect to have? Where would you like to take the Asian market in the near future?
SK: Some of the biggest challenges for me personally are going to be in pace. I would like to move a lot faster than we're moving today. We're in a couple of markets on the small scale and I'd like to make it large scale. We have to work on all fronts as I articulated earlier, with governments, with scientific and medical communities, with media and communications to make sure that we raise the level of awareness and understanding. A consumer products company can only move as fast as the level of awareness and acceptance.
I'm impatient by character trait, yet my leadership experience also tells me that we need to be consistent and methodical in order to make sure that the ultimate outcome is a success and that success breeds success. The more successful we are at smaller scale than it'll make our larger scale go faster.
JJ: Stacey, thank you for your time.
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