[Executive Forum] Dan Rosenbaum

Dan Rosenbaum, director of
FMC’s Specialty Products
Business, is something of a
Renaissance man, possessing a unique combination of skill sets not typically found in business executives. A graduate of the prestigious Tuck School of Business at Dartmouth University, Rosenbaum has a bachelor’s degree in economics, which isn’t all that surprising given his chosen profession. Where Rosenbaum diverges from many of his colleagues, however, is in his passion for art. Possessing a bachelor of fine arts degree from Cornell University — which coincidentally boasts one of the most respected entomology departments in the country — Rosenbaum is an accomplished sculptor, specializing in metalworking.

Coming out of high school, Rosenbaum had two primary, although disparate, interests — math and art, which is why he decided to attend Cornell, a school with strong academic credentials in both disciplines. "I was interested in math and science, but I also was interested in cultivating my creative side," he said. "I’m naturally analytical, but I’m also very creatively driven."

While at first glance these characteristics don’t seem particularly compatible, in a corporate environment they offer some unique benefits, according to Rosenbaum. "From a strategic planning perspective you need to be creative, and from a business perspective having some analytical skills is very helpful. It’s great to have both tools available to you in a business environment. It helps you to see things holistically."

A collaborative, team-oriented environment is also very important to Rosenbaum, though it was something he failed to find in his first job out of college working at a modest advertising agency in Connecticut. "I was in a design role for two years and assumed responsibilities for printing and estimating jobs," he recalls. "It was a very small company that wasn’t particularly well run. As I got more involved in the business side of the operation I gained a strong appreciation for the importance of good management and strategic decision making. It also is what led me to pursue my MBA at Dartmouth," Rosenbaum says, a decision which ultimately would pay significant dividends for him later in his career.

After earning his MBA in 1993, Rosenbaum joined the Scott Paper Company as a planning analyst in Philadelphia, a particularly volatile time for the company, which was sold to Kimberly-Clark in 1995. "As a freshly minted MBA it was a fascinating time to be involved in the company, but it also was very disruptive to a lot of people’s lives," he says. "While it was a challenging time at Scott, I think in hindsight it was a positive experience. It gave me an appreciation for the amount of change that can take place in an organization in a short period of time.

"I learned if you choose not to recognize that change, you’re choosing to become vulnerable. Those at Scott most negatively impacted by the changes that occurred in that organization had gotten almost complacent," Rosenbaum observed. "A lot of people landed on their feet and did fine, but others suffered. My boss used to say, ‘I want you to do a job search every six months because I want you to know your market value. Know what’s out there and choose to stay because you know the value of being associated with this business.’ It taught me the importance of understanding the realities of the marketplace. Whatever industry you’re working in, it’s always changing and you need to use that as energy, not as something to be feared, but as motivation. It was a good lesson to learn early in one’s career. Of course, it was probably easier for me because at that point I didn’t have that much emotionally invested in Scott Paper."

Nonetheless, it provided Rosenbaum with much-needed perspective as he started his career at FMC Corporation, which he joined in 1995 following the sale of Scott Paper. "At that point in my career, I needed to stay put for a while," he recalls, "so I joined the ag group at FMC as a senior business analyst. My objective was to gain a thorough understanding of the business with the aspiration of eventually managing a strategic business unit."

Rosenbaum rose through the ranks quickly, serving as a planning and control manager for the company’s Specialty Products Business for three years before being promoted to manager of FMC’s Software Solutions, where he turned around the company’s newly acquired, but struggling, technology operation. "It was a chance to run a small business and I believed in the product," he recalls. "The organization had some customer relations problems early on, so I spent most of my early days in the business getting yelled at by customers, but once I allowed them to vent their frustrations and we corrected the problems with the software, things improved. It was a tremendous learning experience and a lot of fun. Don’t get me wrong, it was stressful, but it was a chance to build a team and marry two cultures — FMC’s corporate culture with FMC Software’s entrepreneurial culture," Rosenbaum recalls.

"I remember saying to a customer who was upset, ‘I’d rather have you punch me in the nose today after telling you the truth than promise you something that isn’t true and lose your business down the road. We’re not going to make promises that we can’t deliver just to calm you down.’ We needed to re-earn the trust of our customers, which we did over time. It was a gratifying experience."

Following his success at Software Solutions, Rosenbaum and his family moved to Brazil in 2002, where he assumed a role as director of marketing and finance for FMC’s crop business, growing it nicely, before returning to the United States to accept a global planning and marketing position in FMC’s global Ag Products Group. This past January, as part of a corporate reorganization, Rosenbaum was named director of FMC’s Specialty Products Business.

PCT magazine recently caught up with Rosenbaum at the company’s Philadelphia headquarters to gain a better understanding of his "vision" for FMC’s pest control business, which continues to have a significant market presence despite being the subject of persistent acquisition rumors. In a spirited 90-minute interview Rosenbaum shared his thoughts on a wide range of subjects, including the company’s decision to outsource its upstream discovery activities and the recent launch of its company-wide Innova Solutions™ initiative.

PCT: In your opinion, what are the most pressing challenges currently facing FMC and the pest management industry?

Rosenbaum: As I’ve been getting back up to speed with the specialty chemical industry after being away a few years, there are three things that concern me most. One is this potential commoditization of a lot of the products used in the structural pest control industry. Second is the increase in anti-pesticide groups at the local level, often under an environmental protection umbrella, that claim pesticides are bad and must be reduced or eliminated. These groups seem to be much better organized than in the past, which concerns me because emotion rather than science can win the day, and the benefits of what we do as an industry can be marginalized. And third is the high cost of introducing new tools to the pest management industry. As your readers know, it’s becoming very expensive to bring new products and new chemistry to market, in large part because of the higher regulatory requirements that exist today, yet there’s a growing need for new tools. You put those three things together and it’s a challenging picture for anyone in the industry.

PCT: How does your company plan to meet those challenges?

Rosenbaum: First, we believe very strongly that in order to succeed in the future, innovation is critical. Innovation is core to our business. It’s part of our DNA. However, we have broadened our definition of innovation. It’s no longer company driven. It must be customer driven — segment driven — and it must result in a much quicker development cycle for our products and services. Ideally, it’s a one- to four-year cycle rather than a 10- to 15-year cycle. And any new technology must have economic and business relevance for our customers. You can’t do science simply for the sake of doing science. It must be customer driven.

Second, we have to work with our channel partners and with the industry to stress that it’s not just the liquid in the jug that is adding value to your business. What a PMP is actually buying is much more than the product itself. There’s a whole set of services, technical support, training and education, stewardship programs, and other services we’re providing to our customers that go far beyond simply the pesticide. For example, last year we took thousands of technical support calls. That’s a critical element of what we offer as a company. We have to stress to our customers that value-add services such as these become threatened in a world that becomes commoditized.

PCT: What sort of impact is the commoditization of certain products having on the industry?

Rosenbaum: Pricing has been significantly impacted. Part of the danger in the commoditization of the marketplace is some of the real repercussions don’t happen until years later. For example, we take well water samples for hundreds of PMPs every year. That’s a service that could go away if pesticide pricing continues to erode. The customer needs to assign some value to that service, as well as all the services provided by basic manufacturers.

PCT: How are these market dynamics impacting product innovation?

Rosenbaum: It’s as simple as innovation costs money. A significant portion of our profits go back into new product development. With fewer resources allocated to R&D, there will be a slowdown in the introduction of new active ingredients (a.i.’s) since it costs five to 10 times more to produce an a.i. today than it did 25 years ago. Fortunately, there’s a tremendous amount of innovation that can be incorporated into existing a.i.’s to enhance their performance and meet the customers’ product needs. As a manufacturer, it forces us to ask the question, "What’s relevant to the customer and how do I help address the business challenges they’re facing on a daily basis?" "How do we help them reduce callbacks by three percent?" "How can we do a better job controlling emerging public health pests?" In many cases, we can achieve these and other goals by investing our time and resources on enhanced formulations and delivery systems that specifically address these issues.

When we interact with customers, the two issues that come up again and again are labor and liability. That’s why we’re asking ourselves as a company, what can we do to understand our customers’ businesses better? Once we broaden our view of our customer and tie it to new product innovation, there’s a world of opportunity for FMC.

PCT: Specifically, what is FMC doing at a corporate level to address the issue of innovation, ensuring the company remains competitive on a global basis moving forward?

Rosenbaum: It’s all about being customer driven. We want to know from the customer’s point of view what’s relevant to their business. We want them to describe what needs aren’t currently being met by manufacturers, and we want to understand it in their terms. It’s our job to connect the dots and create the technology that will allow them to address those needs. Yet you must be nimble and have the ability to satisfy the requirements of the marketplace quickly.

What’s interesting is that in some cases the solution to their problem(s) may be found outside FMC. It could be a technology not currently in our product portfolio or it might be a technology we’re using in a different area that we’ll transfer to the pest control market. Contrary to popular opinion, it doesn’t have to come from an FMC lab. We’re open to all opportunities.

PCT: What other steps is FMC taking to nurture innovation?

Rosenbaum: Late last year the company launched its Innova Solutions™ initiative where we took all of our global functions — research and development, regulatory affairs, licensing and acquisition, and global product development — and put them under a single organization led by Jim Collins, who has broad experience in the specialty products business (see related story on page 88). It puts a greater commercial focus on our innovation efforts. By linking our research and product development capabilities more effectively with our global businesses capabilities and our customers’ needs, we’ll have a better understanding of the problems we’re trying to solve for them. Such a structure helps us define what is meaningful to our customers.

What it does for us in the specialty business is broaden our reach and enhance our capabilities. If we were out on our own, we wouldn’t have the significant resources of a global business at our disposal, but with Innova we have a global group whose mission it is to do just that — enhance and expand our business capabilities.

PCT: As part of this effort, why did the FMC Ag Products Group decide to outsource its discovery activities rather than continue to invest in discovery efforts to identify new active ingredients?

Rosenbaum: The short answer is it’s simply inefficient to go it alone. There’s too much duplication of effort among manufacturers in a mature market. By being more focused in your R&D efforts, shifting the balance to accelerate formulation enhancements and other non-discovery efforts, it implies you’re going to do some things and not do some other things. But it also opens up the possibility for additional partnerships, which I believe is good for the industry.

PCT: FMC announced several of those partnerships at NPMA PestWorld in 2005. How are they progressing?

Rosenbaum: I think overall they’re going well. Some are further along than others, but we’ve been pleased with how they have progressed. Transport™, our new bait product, is a good example. The technology was discovered by Nippon Soda Co., which is headquartered in Japan, but we brought the product to market in the United States. It can sometimes be frustrating when it takes longer than you would like to bring a product to market, but that comes with the territory. It’s also more complicated to balance the needs of two different organizations, but it can be done as long as the partners develop a certain level of trust with one another.

PCT: What are your ultimate aspirations for these partnerships?

Rosenbaum: I think it depends on the partnership. The goals are different depending on how long the relationship has been in place, and the personalities and corporate culture of the partnering companies. We’re quite advanced in a couple of our relationships, while others are at the early stages of development. We launched Transport fairly quickly and we have several more products currently in development with Nippon Soda Co., so we’ve moved along quite rapidly with that relationship. Others are less advanced. Our goal is to make sure every year we have a minimum of three to five new products or enhancements to existing products in our portfolio. For 2008-2009, for example, we have 10 products in various stages of development for the specialty markets. Not all will be targeted in the pest management segment, but we’re excited about having such a full pipeline.

PCT: What can we expect from FMC in the immediate future?

Rosenbaum: We are very excited about a new proprietary formulation technology that you will see entering the marketplace soon, as well as several combination products that are awaiting EPA registration. There is little we can say at this point, until these new products are registered. But we will keep you posted.

PCT: Do you have any other plans for your current product line?

Rosenbaum: Transport Ant Bait will be launched very shortly. Efficacy results of this bait matrix look very exciting. Our mainstay brand, of course, is Talstar® insecticide. Dragnet®, Cynoff®, Prevail® and FirstLine® are an important part of our portfolio and our customer support will continue strongly on these brands.

PCT: For years there have been rumors that FMC’s Specialty Products Business was going to be sold, but it hasn’t happened. Given the fact that market consolidation is a business reality — particularly at the basic manufacturer level — can you shed any light on whether or not FMC is going to be sold in the not too distant future?

Rosenbaum: The Agricultural Products Group, of which we’re a part, accounted for approximately 40 percent of FMC’s total operating profit in 2005. Specialty Products is a critical part of FMC, and we’ve played an important role in driving the growth of the company, so it likely would not be in FMC’s self interest to sell our business unit. Yes, there’s pricing pressure in the pest market, but we also have a presence in lawn care, ornamentals, nursery and greenhouse which overall are expected to experience gradual growth for the foreseeable future. We are positioned very well in the pest control market as well as the other specialty markets. We’re very excited about the future of the pest management industry and, contrary to having any plans to exit the marketplace, our future path is one of continued commitment, investment and growth.