Ken Melrose, former CEO of Toro, spoke April 15 to MBA learners about his journey in servant leadership at a special MBA Executive Session.

When Melrose became CEO of Toro, the economy had taken a downturn and had taken Toro with it. Stock prices were “in free fall.” Executives were leaving in droves. Melrose, working as a general manager for the company, was the “last man standing.”

The board hired him in 1981 because they thought “the company’s going to go down anyway,” he said. As the new CEO, Melrose took on the task of downsizing and helped save the ailing business. In the beginning, he “was at a loss” and “didn’t know what he was doing there.” He kept a sign posted by his telephone that said, “God meant you to be here…NOW.”

As he reorganized Toro, Melrose created a culture driven by ethics. He taught his workers to “DWWSWWD: Do what we said we would do.” He told the story of adding rollover protection systems for free on used, zero-radius-turn mowers, even though this move was costly. “Wall Street was unhappy,” he explained. “We were doing the right, right thing.”

He also made the decision not to lay off the workers in the parts factory in Tomah, Wisconsin, each winter; instead, the employees were sent to national golf courses to service mowers. Most of the line workers “had never seen a sand trap or a golf course mower” assembled; they only knew the individual parts they worked on. Now, they were riding Toro equipment at Augusta National, Pebble Beach, and other well-known courses. Productivity at the plant increased as the laborers caught the company’s vision: “To help customers beautify and preserve their outdoor landscapes.”

Creating a values-driven organization resulted in a loyal customer base, increased productivity, and profits. Stock prices increased by 15 times from 1983 to 2006. As the son of stockbrokers, Melrose believes that, “If it’s worthwhile, it takes time.”

Melrose formed Leading by Serving, LLC, in 2006 to promote the principles of servant leadership in business organizations. He is also author of Making the Grass Greener on Your Side: A CEO’s Journey to Leading By Serving.

This Executive Session, hosted by the MBA program, was the second in a series of two in 2008 featuring the topic, "Values-Based Leadership."

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