Peter Ruzicka was due for his first day of work on Monday as the new chief executive of Orkla ASA, Norway’s largest private company that produces some of the country’s most common food brands and other household items. Orkla, though, has recently suffered internal trauma and a decline in revenues, leaving Ruzicka charged with boosting both spirits and sales.
The 49-year-old Ruzicka, whose appointment was announced just last week, has experience from the grocery store business and the advantage of being a highly trusted “right-hand man” for Orkla chairman Stein Erik Hagen, who has ranked for years as among the wealthiest Norwegians. Ruzicka has worked for Hagen for more than 20 years as Hagen built up his Rimi grocery store chain and then sold it to Ahold and ICA. Ruzicka most recently has led Hagen’s family firm Canica and they reportedly both share a passion for sailing.
Now Ruzicka will succeed another business pal of Hagen’s, Åge Korsvold, who took over as CEO of Orkla (of which Hagen is the largest shareholder with a 25 percent stake) less than two years ago and launched a major restructuring. It led, however, to top management conflicts, caused heads to roll and is at least partly blamed for the unprecedented drop in sales. Some claim that a string of major acquisitions and sales, along with disappearing bosses and even the relocation of Orkla’s corporate headquarters and outsourcing of technology and accounting functions so distracted Orkla’s roughly 28,000 employees during the past two years that they lost sight of Orkla’s customers.
Newspaper Dagens Næringsliv (DN), which has covered Orkla closely over the years, reported during the weekend that Korsvold’s management style also caused conflicts and that at a board meeting in December, he indicated that he didn’t have faith in the budgets presented by his own division leaders. That reportedly led to an uproar on Orkla’s board, from members who felt that a CEO’s main responsibility is to lead a team that works together, not undermine his or her subordinates.
DN reported that the board decided it was urgent to find a new CEO who could get Orkla’s employees to work with, not against, him or her. The board speeded up a process that began three months ago to find Korsvold’s successor.
‘Grandiosa’ not as grand
In that sense Orkla may have been subject to a “bad cop-, good cop-” situation, where Korsvold took on the unpleasant tasks and Ruzicka now is coming on board to smooth over the rough spots but make sure they ultimately bear fruit. Korsvold engineered not only the restructuring of Orkla away from heavier industry and towards brand marketing, but also fired several divisional heads and forced through some difficult integration of new Orka acquisitions like Rieber & Søn, the big Bergen-based foods company with such brands as Toro. Ruzicka himself praised Korsvold for carrying out major changes within Orkla during a short time period, but also confirmed that the huge changes have been very demanding internally.
“There’s no doubt that a lot has happened at Orkla, not least structurally,” Ruzicka told DN. “That’s good, but now it’s right for us to calm down and spend time on our core operations and our customers.” That will likely involve some reassessment of new products that haven’t been popular, and developement of new strategies for coping with some fundamental changes in what Norwegians eat. Orkla has long specialized in processed foods, with its frozen “Pizza Grandiosa” among its most well-known brands. Norwegian consumers, though, now prefer far more fresh foods and even Grandiosa sales are under pressure. Orkla needs to meet new consumer demands.
Listening to collegues and customers
Ruzicka said he wanted to hear from top managers at meetings on Monday about what they think is most important for Orkla’s brands, which now range from Jordan toothbrushes to Lilleborg sundries, Nidar chocolates and Stabburet, Toro and Sætre food brands. The company, rooted in mining operations 350 years ago, also still owns aluminum company Sapa and industrial concern Borregaard.
The household brands production is now Orkla’s largest business, though, so the company needs to recover its customers in the grocery stores, especially in Norway. Hagen is confident he has the right man in place now, given Ruzicka’s retailing background and an ability “to listen” to others.
Ruzicka, who’s married with three children and lives in Asker, has promised he now will “gather the troops” and put emphasis on operations. “Now we will direct our attention on customers and consumers,” he told DN. “That’s the most important job ahead.”