Seventh Generation: Not Coming Clean on Hollender's Departure

Seventh Generation: Not Coming Clean on Hollender's Departure

Seventh Generation's ouster of co-founder Jeffrey Hollender remains something of a mystery, even as details emerge about the sequence of events that led up to his unexpected departure last month.

The company's version of events is, in essence, that Jeffrey couldn't let go of the place to which he'd devoted the last 20 years of his life, even after he'd hired a new CEO, Chuck Maniscalco, to replace him. Jeffrey's associates say there's more to the story, but they won't be specific. And he's not talking.

I've been in email communication with Peter Graham, the chairman of Seventh Generation's board of directors (and Jeffrey's childhood friend), and I've talked with Chrystie Heimert, the firm's PR chief, as well as with an associate of Jeffrey. Jeffrey told me by email that he'd like to speak but cannot. Presumably, he's working out terms of his exit and has agreed, in the meantime, to keep mum.

A friend of his told me: "They basically have Jeffrey handcuffed and his mouth taped shut."

Chuck Maniscalco

Here are some things we know: Jeffrey hired Chuck Maniscalco in June 2009, fully intending to step back from his day-to-day work at Seventh Generation, a leading brand of green cleaners, laundry detergent, dishwashing soap, diapers, baby wipes, etc. Previously Maniscalco had been president and CEO of PepsiCo's Quaker, Tropicana, Gatorade division. (All healthy products, I might note, for those who would like to cast Maniscalco as the evil seller of sugary water in this drama. Fact is, he's spent most of his career with Quaker.) Jeffrey was enthusiastic, both about the opportunity to explore new arenas -- writing books, working with other business leaders, imploring Washington to deal with climate change and toxics -- and about the new boss. He wrote:

It may surprise you to learn that my decision was a relatively easy one to make.

…While I knew I still had many meaningful contributions to make to Seventh Generation, it became clear to me that what I could not do was supply the managerial wisdom and experience needed to steer the company on the next stage of its voyage.

In addition to this extraordinary track record as a business leader, Chuck embodies the values and vision necessary to lead us. He "gets" our company's culture, passion, and entrepreneurial spirit as well as our commitment to corporate responsibility.

So far, so good.

 

But, for reasons that remain unclear, Jeffrey returned to Seventh Generation last summer. Was he asked back? Did he just show up? If so, why?

This began what Graham has described as "a difficult period" for the company. During a mid-September board meeting, Maniscalco resigned. The board refused to accept his resignation, Heimert told me. Jeffrey was then placed on leave of absence. That must have been quite a meeting.

Graham met with the company's employees -- about 100 work at its headquarters in Burlington, Vt -- on Sept. 27 to explain Jeffrey's absence, saying, as Heimert recalls it, that

The board recognized that one decision-maker needed to be at the top. That individual needed unambiguous authority and unambiguous responsibility.

A month later -- on October 26 -- Graham told shareholders and employees in a letter that the board had "decided to end the company's employment relationship with Jeffrey." (For a copy of the letter, see Seventh Generation Sweeps Out Its Founder.) This surprised Jeffrey -- which is perplexing because his wife Sheila was and is on the Seventh Generation board. Presumably, she was excluded from the conversations about his future. She's now on the search committee for a new CEO, and Maniscalco hasn't said publicly whether he wants the job, although he's current leading the company.

Quick aside: Did you know that daytime TV dramas are called soap operas because the original radio serials were sponsored by the likes of Procter & Gamble and Colgate-Palmolive? Well, now Seventh Gen has one of its own…

Seriously, though, in his email to me, Graham, who is a New York investment banker, elaborated just a bit on the decision:

In many ways, our present circumstances mirror those at many other companies whose founders have made the decision to turn over the reins to someone else. Jeffrey acknowledged his own struggle with the process in an article he penned for the Harvard Business Review last March. Many times, those who have relinquished control wrestle with a transition that they themselves have put into motion. They find that letting go of something in which they have been so completely vested is extraordinarily difficult to do, and they struggle with the consequences.

He also said:

Jeffrey's is a legacy worthy of the highest respect and admiration, and nothing in our decision should dim that in any way.

And:

Seventh Generation's continued success cannot and does not depend on any one individual. Instead it springs from the synergy that comes when many act together to realize a singular ideal. And while others in the press have questioned whether Jeffrey's departure marks a change in focus, I assure you we have no intention of abandoning that ideal.

Except that one thing is already changing at the company, and that is its commitment to openness and transparency. Since Maniscalco came aboard in mid-2009, the company has raised $30 million in equity. From who? Neither Graham nor Heimert would say. Who represents those new investors on the board? Again, that's a question neither would answer.

So we don't know what role the new investors played in recent events at Seventh Generation. While Graham is the board's chairman and spokesman, that doesn't mean he led the effort to remove Jeffrey from the company and the board.

Blogger Lynn Miller at 4GreenPs is among those asking the company to communicate better:

For Seventh Generation, a fiercely loved brand that has held itself up as a model of transparency, the time to speak to the media, bloggers, customers, and other members of its Seventh Generation Nation is now.

In fairness, because this is a personnel (and personal) matter, there may be reasons for the company to say no more about Jeffrey's departure. But it ought to be willing to identify its major investors and directors, even though, as a private company, it has no obligation to do so.

Several concluding thoughts. First, this isn't the first difficult leadership transition at Seventh Generation. A comment on my blog directed me to this 2004 story from Inc. magazine, about how Jeffrey, back in the early 1990s, ousted the company's founder, Alan Newman. It's a good read.

Second, this company better find a leader and fast. It faces tough competition in the green cleaning space from Method and from the Clorox Greenworks brand, as well as from SC Johnson and others.

Finally, I came across this photo of Peter Graham from the 1973 yearbook of Riverdale Country Day School, which Jeffrey (and my wife Karen Schneider) also attended. Peter and Jeffrey go way back, in other words.

Notice the lyrics to Cat Stevens' "Father and Son", at right. "It's not time to make a change, just relax, take it easy…"

I'll bet that's what Jeffrey thought when the board turned against him.