Ecolab CEO Doug Baker, who retires this month, may be the best-performing big-company boss in Minnesota over the last 16 years.
“I’m not going to ‘retire retire,’” said Baker, 62, a Minneapolis native. “We will still reside here. I’ve benefited from this community. I believe in doing my part. My wife has long been involved. We will be generous and we will have more time to give away.”
Baker joined Ecolab in 1989, after several years at Procter & Gamble. The numbers on his watch are impressive.
Between 2004 and 2019, Ecolab’s sales grew 334% to $14.9 billion as net income grew 500% to $1.6 billion. The share price rose from about $27.50 to $225 per share last week.
The market value has increased from $7 billion to $60 billion-plus in recent months. Ecolab expanded through organic growth and acquisitions into an international business focused on sanitation, water treatment and resource sustainability, from hospitality to office buildings to factories.
Employment grew less than 200% to 45,000 people.
Baker & Co. used scale and technology to drive profitability at an outfit also hailed for ethics and environmental stewardship. In 2019, Baker ranked 38th on Harvard Business Review’s list of the world’s best-performing CEOs.
Baker, as candid as he is unpretentious, also isn’t perfect.
For example, Ecolab invested in the oil and gas business as energy prices were declining to generational lows. In 2019, Ecolab spun off its oil-drilling chemical business. The move severed businesses Ecolab bought in an $8.3 billion purchase of Nalco in 2011 and Champion Technologies in 2013 for $2.3 billion. They slowed performance at times.
“We knew the oil and gas business was cyclical, but we didn’t predict that demise,” Baker said recently. “Champion, in hindsight was a mistake. I would still do the Nalco deal. In total we did 120 acquisitions. We’ve gotten the vast majority right.”
Baker inherited a strong business in 2004.
“There were a lot of strengths, including a good culture,” Baker said. “You gotta keep strengthening the team. Ecolab had a strong institutional-market focus. We built much more industrial. And then a large life-science business. You try to create a virtuous cycle that works.”
Now, its time for Baker’s well-rehearsed second act.
He and his wife, Julie, have been steadfast supporters of the early-child education movement for 20-plus years, based on Federal Reserve research and anecdotal evidence. The goal: get every Minnesota child ready for kindergarten. Children ready for kindergarten do better, get in less trouble and are ready for post-high school education, training or employment.
And only 16,000 of the state’s estimated 50,000 young children in poverty each year receive public or private scholarships for a quality preschool education, whether in a school or day-care center.
“Doug … was motivated by our finding of a 16-1 [return on investment] for investing in quality early-learning programs for at-risk kids…,” said Art Rolnick, retired head of research at the Minneapolis Federal Reserve Bank and one who continues to work on the issue. “He didn’t just talk about this issue. He served on three path-blazing early-education nonprofits, which he, Julie, and his company supported financially. Over the years, he spoke in favor of Minnesota’s most vulnerable kids through commentaries, speaking engagements, state capitol meetings, and news conferences..”
Baker’s Ecolab also embraced racial and cultural diversity. The ranks of people of color grew to 30% under Baker. Moreover, Baker believes bootstrap entrepreneurs, disproportionately women and minorities, drive the commercial revival of cities and inner-ring suburbs.
“I want to work in the startup community, including underdeveloped parts of the community,” Baker said. “They are capital starved. We have to make the economy work for everybody. The way you feed the world is to get people engaged in economic activity.’’
Baker is an environmentalist, whose company grew every year as its carbon-output declined.
“Climate change is undeniable,” he said. “We need to slow the progress by reducing carbon and also resilience measures. Humans are great at ignoring inconvenient facts. God knows, I’ve been guilty of it. There are lots of ways to transform the economy greener that’s better for everybody. ’’
Baker also favors a price on carbon to accelerate the transition of renewable energy and electric vehicles. He opposes complex regulations, such as fuel-efficiency standards, that exempt trucks, because they are “work vehicles,” even though most are used for commuting.
“Tax the stuff you don’t want,” he said. “Tax carbon. It will drive innovation.”