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Direct Selling News’ Publisher and Editor in Chief recently spoke with Rich Goudis about his first year on the job as CEO of Herbalife Nutrition.
So how are feeling with your first year as CEO now behind you? Sum up for us your first year in the role.
Rich Goudis: Mostly successful I would say. 2017 was a year of transition for us, complying with the FTC order in the U.S. was obviously a big priority. I had been the executive tasked with the implementation back in 2016, so making sure that we were in compliance and sustainable going forward was crucial. Our North American business pivoted in July 2017 and we made a tremendous recovery by the end of the year. Net sales Q1 of 2018 were up 7 percent over the prior year’s first quarter. So, we have had an amazing, resilient recovery.
What were your goals at the beginning of your tenure? Are they the same today or different?
Rich: I think they’re very similar. Again, I realize that some of the most important things a new CEO can do are to set out a simple game plan in the beginning and don’t change too much. It takes time to get your message all the way down to 8,500 employees, let alone hundreds of thousands of members. So, when you change your message from the top, it has to be well thought out, not a flavor of the month.
Curious about the backstory of why you added ‘Nutrition’ to your company name. How did that come to be?
Rich: It actually started as a marketing campaign about four years ago to try to help ask and answer the question of who is Herbalife and what do we do. We have really changed the mindset that we’re a nutrition company that uses direct selling versus a direct selling mindset company that just sells nutrition products, and that has been a really big shift. It worked out to be the same number of letters as Herbalife, so it stacked nicely as a logo. Our distributors have embraced it, and we started to evolve a lot of our gear and our branding around it. Our former CEO Michael Johnson initiated the name change to better reflect our strategic transformation as a leader in the nutrition industry.
What do you think is the biggest threat the industry faces today?
Rich: It’s always the unknown. Because I think the biggest threats come from the outside, not from the inside. We’re the poster child for that.
The opportunity now for Herbalife—and the entire industry for that matter—is taking to heart one of the biggest lessons that came out of the FTC order: How regulators view this industry through their lens. You have to go back to landmark Amway case in 1979 where the rules were established by the FTC the first time and then reaffirmed with our order in 2016. Our meetings with the regulators around the world have been very productive and have given us clarity on those elements that make the most sense for distributors in helping strengthen their business, like segmentation of distributors and preferred customers, for example.
Tell us a little about your leadership style.
Rich: I subscribe to something called servant leadership, where you care more about those that are in your care than yourself. And I just think that when you do the right thing for others, the right things happen for you. Conversely, when you do the wrong thing, the wrong things will happen to you because that’s just the way the world works. And we didn’t lose any senior executives during this whole process. We have a very transparent and trusting leadership team. And now it’s about vocalizing what we think is important.
I share with all the executives that your number one role as a leader is to create more leaders. Your number one role is to make sure you’re planning for who’s taking your seat next. That’s got to be your commitment to me. In the last year, probably three-quarters of the people that we’ve hired or promoted have come from within the company.
When it comes to your company, what are you most proud of?
Rich: I think our culture and our values. Do the right thing, right. And as we say internally don’t shoot the messenger, because if you do you will never get a good message ever again. Be honest and be truthful. It’s just what we teach our kids, you lie, there are certain consequences. Everybody makes mistakes, everybody. So, understand it, be transparent and be honest about it. If you make a mistake and you walk into my office and say, Rich, I screwed up. I’m like, okay, what can I do to help? That’s the culture. Versus you hide it, you push it off, and the problem just gets bigger and bigger.
What is Herbalife Nutrition doing to stay nimble and agile to counteract the disruptive market forces we are seeing today?
Rich: I think there are two parts to that question. First off, I think we are very nimble when we’re challenged ( e.g. the FTC or Bill Ackman’s attack on us) we’re great firefighters. The second part is how do we create a culture of agility so we don’t feel like we’re always in a firefight, right?
We strive with an intense focus to stay nimble and flexible by creating a culture of innovation. Otherwise, we’ll become slow and bureaucratic. There are a lot of great companies that have grown and fallen from grace because they were too slow to react to where the market was going. The two things I want to usher in during my tenure: a culture of innovation and making sure we have the best trained and educated distributors in the marketplace. We’ve made the investments needed for both and the team is moving forward to execute on both these important initiatives.
We’re very fortunate as an industry to work for very nimble, flexible, entrepreneurial-minded individuals, which my peers can attest to. If anything changes they’re quick to let us know what they think. We have to be as nimble just to keep up with our salesforce.
What specific feedback are you getting from the field? What are they telling you they need or are happy with?
Rich: They’re seeing our company embrace their point of view more. We get together twice a year with the field leadership. And for the first time ever that I can recall in the 14 years I have been with the company, the last day we were with them we had a breakout day, where the whole purpose was to talk about transformative ideas. We broke out the groups so there were no language barriers and we had each group come back and present to the bigger group their findings. Interestingly enough, the top three ideas of each group were nearly identical.
So we are learning to speak as one voice—field and corporate—and many field leaders have come up to me and said this is the first time anyone has asked about our input on these long-term strategic initiatives, and we greatly appreciate it and look forward to working more together.
What keeps you up at night?
Rich: Nothing. Honestly, nothing does. I’m usually in bed by 9:00 and I’m up at 5:00, in the gym by 6:00, so nothing keeps me awake. I think we’ve created a circle of trust where the threats are only coming from the outside, not from the inside. Whatever those threats are, we’ll deal with them. We’ll deal with them in an honest and transparent way and if we’ve made mistakes, we’ll own up to it and we’ll change and correct and improve. And you can sleep well at night. We’re not insecure in anything that we do. We’re very secure in our own skin. So I think that we’re very fortunate in that regard and I try to emanate that from the top and hopefully everybody buys into it.