EXECUTIVE FORUM: A Conversation With Dan Carrothers

Wih the recent announcement that Bayer Garden & Professional Care has purchased Aventis Environmental Science, all eyes are on Kansas City, Mo., headquarters of the company’s specialty products business. The man responsible for leading Bayer in these rapidly changing times is Director of Sales and Marketing Dan Carrothers, a native of Canada with extensive experience in the chemical manufacturing business. Carrothers, a graduate of the University of Guelph, grew up on a family farm just south of Ottawa, Ontario, before being recruited by Monsanto following graduation. He later earned his MBA from Queens University in Kingston, Ontario, joining Bayer as a Regional Business Manager in 1996.

Eighteen months ago, Carrothers was asked to lead the company’s Professional Care products marketing group, launching a number of innovative sales and marketing initiatives, including Bayer’s Home Health program in the highly competitive Florida market (see related story below). Although SEC regulations prevent Carrothers from commenting on the Aventis acquisition, the 42-year-old hockey enthusiast was able to provide PCT with some valuable insights into the company’s long-term strategic objectives during a two-hour interview with Publisher Dan Moreland earlier this year, excerpts of which are printed here.

Dan Moreland: Bayer Corporation has undergone a significant transformation in the pest control industry in the past decade. As you know, the company’s image took a beating in the early 1990s when Pryfon® termiticide was taken off the market due to various performance-related issues, alienating a significant portion of the company’s customer base. Although you were not involved in the company’s specialty products business at the time, you and others have been responsible for reshaping the company’s image in the wake of this market setback. How did you accomplish this transformation?

Dan Carrothers: We took away as many lessons as we could from the experience and simply decided to look forward rather than backward. There was some research data that was different from our own and we felt we could refute any claims of diminished performance and extend the life of the product. However, we decided to dedicate our time and our resources to introducing some new technology we had in the pipeline. That new technology ended up being Premise® insecticide, which has been a very successful product for us. In fact, we will be treating our one-millionth home with it shortly, so I think it was a good decision. From a public relations perspective, however, I think the most significant decision we made was not to focus on the past, but to continue to bring forward the best technology possible in the future.

DM: How long did that process take, winning back a skeptical marketplace that may have been disappointed by Bayer’s handling of the matter?

DC: Just the fact we’re talking about it today means that it has been a nine-year process. The decision to phase out Pryfon was made in 1992 and Premise was launched four years later in 1996, so there was a lot of time in between that we used to launch a new class of insecticide chemistry (imidacloprid), as well as rebuild our image. One way we did that was by embarking on an aggressive Experimental Use Program, whereby we partnered with leading pest management professionals across the country and treated 122 sites with the product, including those with different soil types and a wide range of ph levels, as well as different types of structures.
We did that to ensure that when the product was launched there would be absolutely no doubt that this new chemistry was the absolute best and most efficacious we could offer. We did that because we recognized that trust is a very fragile thing and we recognized there were some people — including some very prominent pest management professionals  — who were upset by the performance of Pryfon or our decision to remove it from the marketplace.

DM: Given that experience, what would you as a chemical company executive like your customers to know about the challenges of bringing a new product or a new class of chemistry to market? 

DC: First of all, I would say that our troubles should not be their troubles. Ultimately, what chemical companies should be concerned about is solving their customers’ problems. If we look at it from that perspective, Bayer needs to have an intimate understanding of our customers’ problems so we can bring products to market that will help solve those problems.

One of the primary challenges we face in achieving that goal is to streamline the process so the lag time between when a problem develops and a solution provided is shortened. That’s very difficult given all the regulatory hurdles we face at both the state and federal level, and the research and development costs associated with bringing new products to market. It represents a serious challenge for us as a chemical supplier, but again I do not want our problems to become their problems.

DM: Since you’re making decisions now that will affect the marketplace five to 10 years down the road, what are some of the resources you’re using to ensure your decisions are on target? After all, your job security — as well as the job security of your entire staff — is on the line.

DC: First of all, we’re continuously assessing the marketplace from a market research perspective, whether that’s qualitative or quantitative research. Second, we’re continually talking with our customers to understand what new problems they’re experiencing and why the old solutions may not fit the new problems anymore. It’s a highly interactive process if you want to do it right.

We then take that information and use it to design products that our customers may not need today, but they’ll need five or 10 years down the road. So you have to make sure your research and development pipeline is constantly being refreshed — developing new chemistry, new formulations, new packaging.

It’s a bit like trying to land on the moon. If you left from earth today to where the moon is positioned at this moment, you would miss it by a million miles. You have to try to project where things are going to be when you arrive at your ultimate destination. When you come down to it, that’s the essence of marketing, that’s the essence of customer intimacy.

DM: How do you communicate the importance of that message to your staff? And even more important, how do you as someone in top management make sure you don’t become insulated?

DC: First of all, we can’t sit in Kansas City and pretend we know what’s going on in the marketplace. We have to make sure we’re out on the front lines meeting and traveling with customers. That’s one of the things all of the people in my group are charged with on a daily basis. Otherwise, I believe you run the risk of becoming isolated and starting to develop things based on assumptions that are incorrect. That’s the first thing we do.

The second thing we do is rely on a lot of market research from a variety of different places. I don’t think for a minute that market research should be your only tool, but it certainly is a very good tool. Market research allows you to identify trends that are starting to emerge in the marketplace. It allows you to bring together a number of different pieces of information and assess that information from a broader perspective. It allows you to connect the dots.

Finally, we have to accept the fact that we are going to make mistakes. We have to accept the fact that not everything we do will fit the market every time. We just need to make sure that as a company we don’t make the same mistake twice. Failure will be accepted as long as it’s part of the learning process.

DM: Shifting gears a bit, in working for a global company with the worldwide market reach of Bayer, how do you make sure your voice is heard in Germany where key market decisions are being made that could impact the structural pest control industry?

DC: I think that you’ve used the right word — global. A lot of businesses do business internationally, but they may not be global. That’s an important distinction because the difference between a company doing business internationally and a company doing business globally is significant. You can have global synergies and global strategies, but those strategies must be implemented locally to be a truly global company. To be successful, you must have a deep understanding of local market conditions, which requires a different sales and marketing approach for every market you serve, including structural pest control.

That’s why Bayer Garden & Professional Care was formed in 1996 as a separate entity from the company’s crop business. We understood that the specialty chemical business was a very significant business worldwide that required a completely different approach.

DM: It sounds like much of the decision-making for the professional pest control market is made at the local level. Based on your experience, do you perceive a different management style in Germany than exists in Bayer’s U.S. operations?

DC: Yes, there is a difference. With its German heritage and culture, Bayer brings competencies in research and development, as well as competencies in manufacturing, while we bring an entrepreneurial approach to business. I think Bayer also brings a certain conservative nature to the industry — which quite frankly, given all the things that are going on in the economy today — is kind of a lighthouse, a beacon of stability during challenging economic times. To a certain extent that’s what Bayer is all about. We are a very stable, very conservative company, yet at the same time we have been leaders in bringing forth new technology. 

DM: Do you sense that stability is something that pest management professionals are concerned about when it comes to their product suppliers, particularly when one considers the high-profile mergers and acquisitions that are taking place?

DC: Not particularly. I wouldn’t want to suggest that pest management professionals should pat us on the back for being a stable company. What I would say is that with all the changes that are going on in the marketplace we have stuck to our game plan. We continue to be very committed to this marketplace, as evidenced by the number of products in our pipeline. In the coming year, we’ll be launching Tempo Dust and a wettable-powder formulation of Tempo Ultra, as well as a liquid ant bait and fly bait. We’re also introducing a line of products for the termite market we’re calling “Premise Portables.” 

DM: What exactly are “Premise Portables?”

DC: It’s portable termite technology that was developed in response to the public’s desire for less intrusive termite control products. While customers are comfortable with liquid termiticides, it’s clear they don’t want us drilling inside their homes. They want us to do our job outside the house.

So, by looking at imidacloprid differently and developing new formulations around that technology, we hope to extend the value of the product. The product line will include ready-to-use Premise Gel and a Premise Granular formulation that can be used either inside the home or as a spot treatment around the outside of a structure. Beyond that, the line will include ready-to-use foam and dust formulations in the future. These are products that will be significantly less intrusive to the homeowner, but provide the same efficacy they have depended on previously.

DM: Is such a strategy predicated upon maximizing your investment in an active ingredient that is the foundation of your product portfolio (imidacloprid) or is it based on the company’s reticence to put a large sum of money in the cost of developing another new class of insecticide?

DC: I would say neither is true. Clearly our R&D pipeline continues to be something where considerable time and resources are being put to develop new, novel active ingredients. That’s an ongoing process. Our strategy is being shaped by the feedback we’re receiving from pest management professionals and homeowners that say we need to look at termite treatments inside the home differently than we have in the past. Sixty percent of the U.S. population is represented by dual-income households, so scheduling appointments to come in and perform these treatments is getting harder and harder.
Second, traditional drilling inside the home is far less agreeable to homeowners than it was even a few years ago. Therefore, it’s incumbent upon us to provide the pest management professional with choices, choices they can use to sell the customer a customized program. Ultimately, I think our strategy is predicated on changing market conditions, changing demographics, and the changing needs of the homeowner.

DM: With its plans to expand its termite control product offerings, is Bayer also considering entering the bait market?

DC: Yes we are. Next year we’ll be introducing a product called Outpost,™ an IGR bait containing diflubenzuron that will further enhance the pest management professional’s termite control toolbox. Pest management professionals will be able to use it alone, in combination with Premise or with our new Premise “portable” termite technology. Outpost will be the first true IGR bait available to pest management professionals through distribution starting in 2002.

DM: As consolidation continues and market conditions change, we’re seeing more and more strategic alliances developing in the pest control industry. Is there anything else on the horizon for Bayer Garden & Professional Care?

DC: Not anything I’m prepared to talk about at the moment, but Outpost, our new termite bait product, is a good example. We worked very closely with Whitmire Micro-Gen in terms of licensing some new technology designed to meet the needs of modern-day pest management professionals. We recognize better than most that there are legitimate needs not being met by the industry that we do not have solutions for internally. In those cases, instead of trying to convince the PMP that those needs aren’t really important or that something else will work, we’ve chosen to work with companies that will allow us to address specific product needs as they emerge.

DM: So would you anticipate this trend continuing?

DC: Absolutely. A recent issue of Fortune or Business Week had a story that stated companies must either form these strategic alliances or perish. The premise is that there are so many needs out there for which solutions are either not available or unprofitable that you cannot possibly do them all yourself. Therefore, forming strategic alliances with a small group of key business players is critical to our success. Any other type of strategy simply isn’t sustainable long-term.

DM: Since entering the field nearly two years ago, what has impressed you most about the structural pest control industry?

DC: What has impressed me more than anything else is the creativity and innovative nature of pest management professionals. I’ve also been impressed with the unique relationship pest management professionals have with their customers. There are a lot of pest management professionals who have told me their customers leave the door open for them or leave the keys under the mat. That takes an incredible amount of trust, particularly in today’s environment where trust has been abused. I think that relationship is powerful and anything Bayer can do to augment that relationship is beneficial. Our goal is to work with PMPs throughout the U.S. to grow the market together.

Dan Moreland is publisher of PCT magazine.