Peter McGuinness, Chief Marketing & Commercial Officer at Chobani, is one of three 2019 selections for the Path to Purchase Institute Hall of Fame. We interviewed him in March at Chobani's offices in New York.
Title: Chief Marketing & Commercial Officer
Years in industry: 27
Years with current company: 5
Career path: McCann Worldgroup, EVP, Worldwide Account Director (1992–2005); Momentum Worldwide, Regional President for Europe, Middle East & Africa (2005–2008); Gotham Inc., Chairman & CEO (2008–2011); DDB Chicago, President & CEO (2011–2013); Chobani, Chief Marketing and Commercial Officer (2013–present)
Education: Roger Williams University, bachelor’s in marketing and economics
Community/industry activity: Ad Council, AAAA, Advertising Education Foundation (AEF), the Mobile Marketing Association (MMA), and the CMO Council
of North America. He is a member of the Advertising Hall of Achievement.
As CPG companies face a market in which more and more control is slipping into the hands of their consumers, they’d be well advised to heed the advice of management guru Peter Drucker: “The best way to predict the future is to create it.” One company, Chobani, is already doing just that, embarking on a sweeping, enterprise-wide reorganization centered on developing demand-responsive capabilities.
Chobani’s revolutionary, almost inside-out approach to management is being implemented by Peter McGuinness, chief marketing & commercial officer. Over the past two years, he’s broken down interdepartmental walls and budgets while restructuring key parts of the company into a unified “Demand Department” that oversees all global demand creation, including marketing, sales, insights, product innovation, creative and commercial finance.
The goal is relatively simple, he says: “Put our dollars where we are going to get the most demand.” McGuinness’s willingness to “create a future” for Chobani is one of many reasons he was selected this year to be inducted into the Path to Purchase Institute’s Hall of Fame. On May 16, McGuinness – along with Jody Kalmbach, vice president, digital experience, The Kroger Co.; and April Carlisle, VP, shopper marketing, Coca-Cola Co. – will be honored at the 26th Hall of Fame induction ceremony, held in conjunction with the Shopper Marketing Effie Celebration in Fort Lauderdale, Florida. Both events are part of the Path to Purchase Summit.
In March, Bill Schober and Peter Breen interviewed McGuinness at Chobani’s offices in New York City.
Where do you hail from?
McGuinness: I grew up in a small coastal town in central New Jersey called Monmouth Beach. On one side was a bay and on the other was the ocean. Every hurricane it would be enveloped by water.
My mom was a stay-at-home mother who owned several small businesses and was quite entrepreneurial in her own way. My dad worked for Burlington Industries, the big textile company that made Levi’s denim and fabric for couches and carpets. My dad came up through marketing and market research, and he spearheaded the “Crafted with Pride in the USA” program. He was ahead of his time, advocating for transparency in terms of country of [origin for] where things are made.
Did you get your start in business during school?
McGuinness: I went to a Christian Brothers Academy for high school, and then attended Roger Williams University in Rhode Island. I thought marketing was interesting, although I wasn’t sure what it really meant. Like many college kids, I didn’t really know what I wanted. Every summer since high school I’d been a lifeguard, but in my junior year, a light went on, and I ended up interning at McCann Erickson in their accounting department. It was an utterly thankless job, inputting media invoices into accounts payables on what was called “The Donovan System.” You might input 1,000 spots off an invoice from NBC or ABC – and these were for massive clients like Sony and Coca-Cola – and if just one item was discrepant, the whole invoice was discredited. It was two summers of torture.
Did you learn the fundamentals of the business doing that?
McGuinness: Yes. I learned that I did not want to be in the accounting department. But it was a foot in the door, and upon graduation I thought I was a shoo-in at McCann. So, I showed up, explained that I wanted to be in account management, but their head of HR said, “Nope. At McCann you need an MBA for that.” They instead sent me to the local media buying department (which was as low as accounting) and made me an assistant media buyer in local broadcast, which was a real eye opener.
But you went on to become the youngest VP, SVP and EVP in the agency’s history, correct?
McGuinness: I was able to get into the McCann training program. There was a team competition, and I’d been made the media person on a cross-functional team, developing campaigns and presenting to the global executive team. When our team won, the CEO pointed at me and said, “Let’s get this kid into account management.” And off I went.
I was put into account management, and even though HR’s guidelines said I was supposed to be an assistant for two years, in six months I was promoted to account executive. It went on like that: I was 25 when I made VP and was lucky enough to go on from there. Never judge a book by its cover, give people the benefit of the doubt and take chances on them, and you’ll be surprised by what they can achieve.
You had quite a career in advertising ...
McGuinness: It was a wild ride through McCann. I went overseas and ran Europe Middle East Africa (EMEA), which involved something like 38 offices, and that was a wonderful learning experience. Then I came back and in 2008 became CEO of Gotham, which was where we pitched the Chobani account and met Hamdi Ulukaya, its founder. I later became CEO of DDB Chicago.
You didn’t initially win that first Chobani pitch, correct?
McGuinness: No, we didn’t, and that was very humbling. We nailed the pitch, but Chobani was much smaller back then, although growing like a hockey stick. I think they thought we were too big, too polished, and maybe had a few too many Type A’s in the room. But we got a call six months later saying, “Hey, we made a mistake. We’ll give you the account, no pitch.”
Was it clear back then that Chobani’s culture was different?
McGuinness: Even from “Cup One” — when they’d just started — they set up a foundation and gave money to charity. From “Cup One,” they made it all natural, and they didn’t have to. They were a values belief-based company that did the right things regardless from the very beginning, and that always impressed me.
How did you find your way to Chobani as an executive?
McGuinness: Hamdi had talked to me about coming over several years ago, but at the time they were growing triple digits a year and just trying to keep up with demand. But then the category became congested. In the last few years, 800 new SKUs have appeared on the shelf. A lot of this is cannibalizing and there’s a lot of irrational pricing as well.
Some of the big, traditional CPG companies are doing the whole “Greek washing” thing: Greek pretzels, Greek facials … all sorts of Greek stuff, but cheaply and made in a crappy way. It’s just the whole mess of big food. (That’s quotable, by the way.) Chobani meanwhile was expanding, so about five and a half years ago, Hamdi asked me to come over.
Why did you say yes?
McGuinness: I was 22 years into advertising and being an agency CEO had become less challenging and more of a financial exercise. And Chobani itself felt like an agency, with a culture that celebrates creativity. Ironically, I joined Chobani in the middle of an agency review — PR, shopper, all of it — although for the past year and a half, we’ve been doing 85%-90% of everything in-house.
Why bring all of your agency work in-house?
McGuinness: We wanted to see if we could move faster and have less of a learning curve. About six months ago, we did the same thing with retail execution, creating our own in-house team instead of brokering it out.
And that takes us to one of your signature initiatives: the “Demand Department.”
McGuinness: As forward leaning as Chobani was, we still had a legacy structure of separate sales and marketing departments. On a good day in pretty much any organization, marketing and sales quietly hate each other, and on bad days, almost fight. It’s just silly.
Well, whether you’re selling a customer on shelf space or developing ads or creating packaging or point of sale, we’re all selling. If everyone sells, why have 17 different departments all reporting to different people? We collapsed those walls and reorganized category management, sales, research, marketing, advertising, graphic design, packaging, corporate affairs, insights, PR — all of it — into one group called the Demand Department. We have one big budget and we put our dollars where we are going to get the most demand.
How did employees react to such radical change?
McGuinness: We lost the old head of sales, and there were some other people, but you know what? With all the fiefdoms and silos and different budgets, no one really loved it. It was just the way it always was. And the good news with Chobani was that we didn’t have 40, 50, 60 years of legacy fiefdoms to deal with, which really would’ve been traumatic.
How long did it take?
McGuinness: We did it quickly — roughly six months, but we’ve been evolving and perfecting it ever since. So far, so good.
What are the benefits?
McGuinness: I can bring groups of people to key retail partners to do truly creative presentations. We’ll bring people from insights, marketing, R&D and even corporate affairs and our foundation, because it’s all a part of our brand. We want to let customers see everything there is to know about Chobani. When you just send a single salesperson, they have to try to interpret back everything. And while I love salespeople, their chronic complaint is that they don’t understand the new products, or the ads, or the marketing campaigns because “we’re always brought in late to the process.” Well, now we are all in the Demand Department together, and it’s a big, hot mess — but it’s a fun mess.
Now we show them food early, and yes, they still have their complaints. But they’re more involved upfront now and really understand what’s happening. And they give great feedback, especially on our retail toolkits and point-of-sale, because salespeople are smart.
Are you concerned about too many cooks in the kitchen?
McGuinness: We still move fast on the food, but we’re incorporating more market science and feedback from our customers and consumers. Hamdi is still signing off on every cup and bottle that goes out of the building. But I feel that the info we put in front of him is just better informed now.
The other massive benefit — and it didn’t dawn on me initially — is the sense of pride. When we launch something now, the pride is off the charts. I’m not going to tell you it isn’t a little messier to have 16 departments involved and navigate all those opinions. But man, oh man, the group is so much more motivated.
The third byproduct is knowledge transfer. I’ve heard marketing people say, “I finally understand how hard it is to sell.” Our salespeople now appreciate just how hard it is to design something. And we no longer create beautiful but unrealistic stuff because our designers didn’t understand commercial reality. Everybody is smarter, more sympathetic and empathetic.
Were you emulating any other systems or companies?
McGuinness: There were no models or consultants. I just knew that, after working here for almost five years, we were too siloed. Here we were doing all this exciting, modern, cutting-edge work in community relations, food development, universal wellness, refugees and the charitable foundation, and yet structurally, we were just like everybody else. It didn’t make any sense. It’s important to have your own playbook that makes sense.
Why bring retail execution in-house?
McGuinness: It’s critical. We have 33,000 doors and stores out there, and we were reliant on all these brokers.
This is not an indictment on brokers. We still use brokers. But what if we in-housed a massive chunk of it? Wouldn’t Chobani employees, who were in the Demand Department and understood every ad, every SKU, and how products are made, be more effective with dairy managers, buyers and the consumers, especially if they are bonus based on demand creation? It’s just human nature. We have 70 in-house retail execution people now, and we are climbing to about 120 by July.
Also, on the first Monday of every month, we hold a companywide “Retail Day.” Our latest retail tool kit — full of wobblers, violators, IRCs, everything — is sent to every single person in the company, including all the plant workers, who then go out and hit the stores. We photograph all of it and have a massive internal communication. People bring their kids and it’s awesome, galvanizing and inspiring.
Ad agency veterans aren’t exactly known for being passionate about merchandising. What happened?
McGuinness: Right now, the average yogurt shelf is cold, confusing and congested with 475 SKUs. It’s one of the worst places in the whole store. If we can make it beautiful and help with navigation, it benefits the category and it benefits us too. So yes, we’ll go in and fill voids and fix out of stocks and all the technical stuff, but then I want to make that shelf look beautiful. I want that shelf animated. I want it to look like a festival.
When a shopper suddenly sees that one brand takes the time to do beautiful communication, how can they not be impressed? I don’t need to over-intellectualize this: Of course it works. And I’m proud that we are doing it.
It’s still early with Demand, but are there any major learnings yet?
McGuinness: We’re doing less — although still a good amount — of what I’d call traditional advertising up the funnel. But our budget has shifted down the funnel to three components: point-of-sale, shopper and retail execution. It’s warfare out there, and I think that battle is won or lost at the shelf.
When I do industry keynotes, I say that everybody has to stop with all the shiny object stuff. I’m proud to do television because it works. We still do digital, social and DMP [data management platforms], but at one point we all went so heavy on DMP that we “efficiency’d” ourselves to death. We didn’t have any up-funnel awareness and trial.
So yes, I want to increase yogurt household penetration, but the reality is yogurt household penetration hasn’t moved much in five years. And yes, I want to do that as a category leader, but that’s a massive investment and it’s only going to happen gradually over time. I’m not going to stop doing advertising, but I am also going to spend more money closer to purchase. We just see the ROI. The data is clearer down the funnel, and closer to the purchase, and more inextricably linked to the result. When it comes to shopper and shelf, we do engage great outside agencies like Momentum.
How does the Demand Department team interact with other areas of the company?
McGuinness: We basically have two groups at Chobani: Supply and Demand. In the past, we were throwing some new product ideas to Supply that were not fully thought through, making it easy for them to say no. But now that we have NPD [New Product Development] in Demand, and the key supply chain folks are in the process alongside sales, forecasting and commercial finance, the opportunities are better baked and our success rate is higher.
Well then, let’s talk about Chobani’s values.
McGuinness: To be relevant, you must stand for more than just the product you make. Consumers expect you to make a good product. But when you are transparent and have a point of view, you’re also not going to be beloved by everybody. And that’s OK, too.
Now I grant you, it’s easier when you have a founder like Hamdi. He was told he couldn’t make company shares available to every employee, but after two years of lawyering, he figured out a way. That story went up on NBC.com and had 54 million views because people need to hear something good. When we added paid parental leave for men, women, foster, natural and adopt, we just put it out there and it organically took hold because people want to hear something good. And when we sued certain people who defamed us [about Chobani’s hiring practices], it became an anti-bullying story. It’s all part of modern demand creation and modern brand building.
When we agreed to a “60 Minutes” interview a year and a half ago, we knew it was a risk because we knew they’d talk about our refugee work. They’ve since rerun it three or four times. We put paid media around that earned media and grew a point and a half of share. That’s modern brand building. You should use everything you have to create differentiation, brand preference and brand love.
Any final thoughts?
McGuinness: If what you are doing is genuine, truly special and germane to the brand, you should talk about it. It’s a delicate, delicate dance. Just make sure it’s authentic and you’ll be on the right side of the consumer.