Raging Against the Machine
In the mid-1990s, new CEO Robert Shapiro sought to revolutionize Monsanto. Through the power of his vision, he hoped to convert the firm from a chemicals manufacturer to a life-sciences company focused on "Food, Health, and Hope." Consistent with this vision, Shapiro spun off several strategic business units (SBUs) associated with the organization's chemicals business heritage, retaining only those closely tied to its life sciences focus. Simultaneously, he took the company on an acquisition binge, aggressively buying up biotech and seed companies, and accumulating huge debt in the process. The more focused—and leveraged—company then set out on a rapid growth strategy to make agricultural biotechnology a practical reality.
Shapiro also articulated how Monsanto's genetically engineered seeds gave the firm an advantage in the drive toward sustainability because they could increase farmers' yields, reduce pesticide use, and help to deliver nutrients to the world's chronically undernourished poor. In the space of a few years, Monsanto convinced farmers to plant nearly 60 million acres in the U.S. in genetically modified crops. In 1997, Shapiro also launched a new Sustainable Development Sector, empowering dozens of internal champions to identify and grow the new businesses of the future that would address global social and environmental concerns in an economically profitable manner. Between 1995 and 1997, Monsanto's stock price soared amid rosy projections of blockbuster products and rapidly expanding markets for agricultural biotechnology.
As a result of these developments, Monsanto was thrust into the public eye in a way that few companies had ever been in the past. Shapiro's portrayal of biotechnology's role in the future of agriculture generated unprecedented levels of public attention and scrutiny. This scrutiny resulted in problems for Monsanto as critics cast bright lights on incidents in which company actions did not match the spirit of Shapiro's vision.
For example, when Monsanto attempted to launch its genetically modified seeds in Europe, it met intense resistance from organic farmers and environmentalists, despite the fact that all the necessary regulatory approvals had been secured. Some Monsanto managers hired private investigators to ensure that customers (farmers) were not illegally saving Monsanto's genetically modified seed for replanting the following year. These actions and others alienated many who called into question Monsanto's true dedication to sustainable development and environmental stewardship. Shapiro's vision, in other words, did not always align with the actions taken by people in the company.
Other stakeholder groups included the millions of small farmers in developing countries such as India. These farmers protested against Monsanto in the streets, fearing that the company would enforce patents on essential grains and make them pay international prices for the seed they planted. Moreover, the farmers were concerned that Monsanto's patent ownership (via acquisition) of the "terminator" gene (seed-sterilization technology) would not allow them to practice the age-old tradition of propagating seeds from their own crops.
Regrettably, Monsanto did not enable these voices to reach business decision makers. The firm consulted with its immediate customers (large-scale farmers), regulators, and consumer groups in the United States. Despite efforts by the company's Sustainable Development Sector to access other voices, the business decision makers did not consider consumer groups in Europe or small farmers in developing countries to be legitimate or persuasive, even if their claims seemed urgent.
Instead of becoming a more open, innovative culture, the firm became more defensive and had to back away publicly from several of its biotechnology initiatives under pressure from growing protest. Indeed, in October 1999, Monsanto publicly apologized for its behavior: "Our confidence in this technology (genetic engineering) and our enthusiasm for it has, I think, been widely seen, and understandably so, as condescension and indeed arrogance."24 External support for the firm's strategy had eroded, and in late 1999, the company followed through on merger talks with pharmaceutical maker Pharamcia & Upjohn. This move effectively ended the Shapiro era of sustainability-driven corporate strategy at Monsanto.