Mike Wells, CEO of Wells Blue Bunny Ice Cream, revealed being the only Wells family member living in Lamar throughout the year. He discussed the challenges of representing the family and living in a small community, including familial disagreements affecting the business reputation. In a University of Northern Iowa's Family Business Program podcast, Wells shared his insights on transitioning the Wells company from a family-first to a business-first perspective, which was crucial for its sustainability. He credited adopting a more professional approach, restructuring leadership, and including independent board members for doubling the company's revenue from $700 million in 2007 to $2 billion by 2020. 

Transcription

Dan: Hello everyone. Thank you for joining us for another edition of Never Go Against the Family, our Family Business Podcast here at the University of Northern Iowa's Family Business Center. Today I am joined by Mike Wells, CEO of Wells Blue Bunny Ice Cream in Lemars Iowa. A proud 110 year old family owned company that has recently gone through some changes with ownership. Today, our topic is really gonna be about Mike's leadership of the company and some of the things he has learned about leading a family owned business, especially of the size and magnitude of theirs in their community. As well as some of the things that he has learned along the way and changed along the way, as he has put his own thumbprints on the family business. Mike, first of all, so grateful to have you on with us. Something you said to me here a little earlier was one of the big ways that you started to change the company about 15 years ago. I liked what you said, so I am going to say it again, you went from a family-first business to a business-first family and I think that's really a cool statement. I was wondering if you could expand upon that a little bit, what you mean by that and then how that was necessary in your eyes and how that manifested. So maybe just if you want to touch on that a little bit, we'd really appreciate it.

Mike: Yeah, Dan. Well, first of all, thanks for the opportunity today. And, you know I love family businesses. People often ask, if you could have done anything, what would you have done? I'm like, I would have gone into the family business. I've loved the opportunity to make a difference. My dad, who made it to 93 and passed away in 2020 taught me so much. One of the things that I share openly is, I've had an opportunity to fill almost every position in Wells over the years, as I think every family member does. But one of the things my dad taught me early on was, never ask somebody to do something you're not willing to do yourself, and that really stuck with me. So yeah, as I was sharing with you earlier, in 2006, we had some significant challenges in the business. At that time, there were 14 family members drawing a paycheck and active in the business in various roles. There were six of us that filled the senior positions in the company CEO, Vice President, President, those kinds of positions. Some fourth generations actually were filling some mid-level management positions throughout the company as a result of those challenges. It became very obvious, after some outside consulting, that we needed to get down to a structure. Rather than having, you know, five or six family members all with the senior titles and trying to run the company together, we needed to get down to a leadership structure that had a single family member run the business. A professional management team that would surround that individual. If it worked, it was gonna be as a result of hard work and a lot of really great people, and if it didn't, I was going to be the individual who was responsible. And so we restructured, and on November 13th, 2007, myself, my brother and three cousins walked to the podium. Five minutes later, the four of them walked out the front door and left me as the only active third generation family member in the business. But, we went from a family-first business, where pretty much everything we did was about how the family could benefit from the success of the business. To a business-first family, where we said we've got to make sure that the business is in a position to be sustainable because it's no longer just about the family. At that point, we were a billion dollar company, based in little Lemars, Iowa. Our success meant so much to so many people outside of the family that we realized that we needed to make that pivot, while we professionalized. We all grew up in a business, we all had college educations, we were all pretty good at what we did. But we deferred to each other instead of building the capability that we needed to. So, we made that big move and in that it brought about some big change that I would say really served us well. In those 15 years that I served as CEO, we had a chance to more than double our business. We made the strategic decision to get out of the fluid dairy business, which was not necessarily popular but was necessary. That fluid dairy business was the heritage business that my grandpa started the business back in 1913. We got out of a small business that we had, and into the fresh yogurt business. So we actually went from a billion down to about $700 million of revenue in 2007. And then between 2007 to 2020 we were able to build that up to $2 billion of revenue. We were the second largest manufacturer of ice cream in the United States and represented over 20% of the US capacity in ice cream. The way we got there was in 2007 when we made those big changes and really pivoted to a business-first family. Before we brought in some independent members under a board of directors we decided to reconstitute the stock. Prior to that though, there were six of us voting stock and really represented a family and we were the only board members to where we started to mimic almost a publicly traded company. So every share had a vote and every vote elected the board of directors, the board of directors elected the officers and the officers ran the company. One of the other things I insisted on was that I was gonna serve as the CEO. I saw that as a full time job and I insisted that the chair be an independent non-family member, so that we could really have a good governance structure and have balance. I wanted a chair that had experience across a variety of sectors and could bring a perspective that we didn't have sitting in Northwest Iowa. That really, really served us well, I felt very respected and was held accountable. You know, many of the folks that will hear this podcast can relate to the fact that it becomes personal when it's family. But it wasn't personal, it was just about what was in the best interest of the business, and many times what's in the best interest of Mike Wells's professional growth along the way. I would say people say, what do you give credit to for your success? And I think that restructuring and that really big decision on behalf of the family to say not what can we get out of it, but what can we put into it and how can we ensure its success on behalf of the community? The company has now grown to 4500 employees across the United States and in a business that really matters to a lot of people. That decision was really pivotal.

Dan: I appreciate you talking through this with me. I think I'm just gonna focus on one part of this, the board component. Our center is rolling out some services where we're gonna try to help people find board members and even do some matchmaking between some of our family owned businesses. I would say that the number one pushback that we hear, especially from either a founder or somebody in the current CEO seat is, I don't need another boss or I don't need people telling me what to do or what do they know about this company? I'm assuming there was at least one person in your family that felt that way as well. If there was, can you kind of comment about how that process went along? And then can you also think about it from your own perspective of inviting in outsiders and how that hopefully truly benefited you guys.

Mike: Yeah. So it was, and we took it slow. We brought in two independents and at that time, there were five family members on the board. That was tough because independence looked around and went well, are we just gonna end up being rubber stamps? But we did find a couple of really qualified people that saw ultimately what our intent was and wanted to help us. Over time, we got down to four family members and then we grew from two to three independents and then from three to four. Towards the end, the last couple of years, we actually had five independents and four family members. We had some positive and affirmative voting rights that were retained by the family in regards to selling the business, things that should be only family decisions. Now, one of the things that I found real success in my leadership was doing a similar thing on my management team. I tended to find successful leaders in businesses outside of our industry. I can teach people how to make ice cream, I can teach them about the ice cream business. But for me, the information that was available by bringing on a chief operating officer that had 30 years of experience in the confectionary candy business that also understood how to market, was in a commodity driven business and had experiences in global companies, could bring that kind of experience and expertise to my management team. We grew as an organization as I saw folks that came from outside the dairy industry. However, on the operation side of things, I would say it was more important that we stayed inside of our industry. When you're hiring on the inside, people would know how to run your equipment, in our case they would know how ice cream is made, but that was invaluable to me. for a senior leadership position, there was great success in bringing in outsiders. 

Dan: I think you're making a great point there. You're not bringing in people to your board that know how to do what you do better or how to make ice cream better or anything like that. But, that have knowledge about other other facets of the business, the operational side, the go to market side, whatever it might be.

Mike: Yeah, I avoided that. I didn't want another CEO sitting in the room. When we looked at board members, my chair for a number of years was Lance Crane. The Crane family printed U.S. currency for 175 years as a 1/5 generation family business and Lance had seen it all and had a passion for family business. Also brought in another guy who had experience and was at one point a CEO and worked in the Hallmark family. Hallmark had a passion for family versus financial expertise that they could share. So we looked at it, we put committees on the board and we formed committees around audit governance, compensation and really professionalized that. No offense to my family members, including myself, we had never done that. Bringing in those outside independent board members with experience outside of a category, was great because the last thing I needed was an individual sitting at the other end of the table trying to tell me how to run my business or how to make ice cream. So what I would say to other family businesses is don't go find somebody in your category and bring them in so that they can pat you on the back or challenge you. You go find somebody that has individual areas of expertise that you think can add value at the board level. Then make sure that your board stays on course. I had the pleasure that our board didn't run our company, they expected me to run the company and get the results. If they didn't, I expected that I wouldn't retain my job. In fact, I told my family early on in the big transition to a single family leader, no family drama. If in the first nine months, I'm not making a difference, I'll step aside. We're not gonna be the family that ends up in the headlines because somebody was fired and suing everybody. Nobody needs that. So I always knew that my employment was at risk if I didn't produce the numbers. As the single largest shareholder, I was interested in generating a number. So if I couldn't do it, I would be more than happy to step aside and find somebody who could.

Dan: Yeah. So those folks you brought on became advisors with specific tacit knowledge in specific areas and they also became, I'm assuming anyway, a level of check and balance for the family and for your oversight of the company as the day-to-day manager of it. Do you know what I'm getting at there? And did that actually happen?

Mike: Without being disrespectful, but I'm sure there's a few folks watching this that they can identify. It's very difficult for family members sitting on a board of directors not to have some level of self-interest. Your independent advisors don't have that self-interest. We paid them well for their time and their effort but there was no self-interest, they didn't have shares. So their only job was to help us be successful . It's almost impossible to disassociate your ownership and the benefits of ownership from your role and responsibility sitting on a board of directors.

Dan: I really appreciate you sharing that and I value your time here. I think it's so great when families can hear from other families about how they've, as you said, professionalized the business, brought in some more of those corporate type aspects, started to treat the business as its own entity and realized that the family business doesn't just exist to perpetuate the family. But that we've got to keep feeding the goose and we've got to be good stewards of this. Part of that means bringing in some of these best practices, like a board, like outside advisors and getting there. I'm sure it was painful at times and it was probably a lot of conversation and a lot of back and forth and who are we gonna pick and what are we gonna let them know about us and all that kind of thing. I know we're gonna have you on here in a couple of weeks, I think it's August 24th, for our first Breakfast series of the year. And I know we'll expand on some of these things, but I think we'll just leave it here for now as far as this great message about, bringing in some outsiders professionalizing things and recognizing that the family and the business are two distinct and separate things and they need to work in harmony with each other.

Mike: Dan, I would say one of the unexpected benefits was it really helped our family relations. We could just be people that care for and love each other. We could look at the business as a business and we could look at the family as a family instead of those things being so intertwined. I would say we're closer as an extended family than we've ever been as a result of making this move.

Dan: That's really cool! Thank you so much, Mike. Thank you for sharing some advice with our families today. We'll see you in a couple of weeks here, joining us on August 24th to talk more about the story and your journey and kind of where your family is at now. So for today, I'm gonna wrap us up. Thank you for joining us again for another edition of Never Go Against the Family and we look forward to having you join us for our next session. Thank you.

Katie: Thanks for listening to this episode of Never Go Against The Family, a podcast produced by the University of Northern Iowa Family Business Center. You can find more information about the center membership and upcoming events at https://unifamilybusinesscenter.com. As Vito Corleone advises, never go against the family.