The Case of Kimberly-Clark How Darwin Smith Sold the Mills

How does a leader diagnosed with terminal cancer and told he's not qualified for the job outperform the greatest companies of the 20th century? This is the central question behind the Darwin Smith Kimberly-Clark story, a transformation that turned a failing paper company into a global consumer powerhouse. Smith’s decision to sell the namesake mills that defined his company’s history remains one of the most significant examples of strategic courage in business.

Before Smith took over in 1971, Kimberly-Clark was a stodgy enterprise that had fallen 36 percent behind the general market over the previous twenty years. Most people expected more of the same, but they didn't understand the quiet force that was about to take the helm.

What is Level 5 Leadership?

In his book Good to Great, Jim Collins identifies a specific type of executive called a Level 5 leader. This concept describes individuals who blend extreme personal humility with an intense, almost stoic professional will. They aren't the celebrity CEOs who grace magazine covers; they're more like "plow horses" than "show horses."

Darwin Smith was the quintessential example of this leadership style. He lived without airs, spent his vacations on a backhoe digging holes on his farm, and didn't care about executive status. Yet, under his 20-year stewardship, Kimberly-Clark generated cumulative stock returns 4.1 times the general market, handily beating rivals like Procter & Gamble and Scott Paper.

Why Darwin Smith Kimberly-Clark Success Relied on Humility

Smith was a man who famously carried no self-importance. When a director reminded him that he lacked the qualifications for the CEO role, he didn't argue; he simply set out to become qualified. This humility allowed him to focus entirely on the company’s success rather than his own ego.

He avoided the trap of personal renown and celebrity status. By focusing on the institution's needs, he was able to look at the business objectively. He didn't see the paper mills as a family legacy to be protected, but as an asset that was holding the company back from greatness.

The Reality of Level 5 Leader Stories and Professional Will

Humility doesn't mean a lack of ambition or a soft personality. Level 5 leaders possess a ferocious resolve to do whatever is necessary to make the company great. Smith proved this just two months into his tenure when he faced nose and throat cancer.

He told the board he wasn't dead yet and kept a demanding work schedule while flying weekly for radiation therapy. He lived twenty-five more years, most of them as CEO. This same iron will drove his business decisions, specifically the choice to pivot the entire company into the consumer market.

How Strategic Courage Led to Burning the Boats

Smith realized that Kimberly-Clark’s core business—coated paper—was doomed to mediocrity because the competition was weak and the economics were bad. He decided to sell the mills, including the one in Kimberly, Wisconsin, that shared the company's name. This was a massive risk that Wall Street analysts initially called stupid.

He threw all the proceeds into the consumer business, betting on brands like Huggies and Kleenex. This "burning the boats" strategy meant there was no going back. Success was the only option. By the time he retired, Kimberly-Clark had outperformed industry superstars like Coca-Cola and Hewlett-Packard.

Leading by Example and Strategic Courage

The contrast between Darwin Smith and his counterparts at Scott Paper is striking. While Smith was a quiet plow horse, Scott Paper’s Al Dunlap was a classic show horse who loved the limelight. Dunlap slashed the workforce and R&D budget to prepare the company for a quick sale, pocketing $100 million for 603 days of work.

Smith, conversely, built a culture that could survive him. He focused on the long-term health of the organization, not a short-term stock pump. After his retirement, the foundation he laid allowed Kimberly-Clark to buy Scott Paper outright and beat Procter & Gamble in six of eight product categories.

Another example of this resolve appears in the story of Colman Mockler at Gillette. During his tenure from 1975 to 1991, Mockler spent years fighting off hostile takeover bids from raiders like Ronald Perelman. Mockler refused to flip the company for a quick gain, choosing instead to protect the secret development of the Sensor razor.

If Mockler had capitulated in 1986, shareholders would have reaped an immediate 44 percent gain. However, by staying the course, those same shareholders ended up three times better off ten years later. Like Smith, Mockler’s ambition was for the company, and he worked with a quiet, patrician grace that masked an unstoppable inner intensity.

How to Build Strategic Courage

1. Confront the brutal facts of your current market position. Darwin Smith didn't ignore the low margins of the paper mill business. He accepted that the industry was mediocre and that his company would be, too, if it stayed there.

2. Strip away your ego before making major decisions. If you're worried about how a pivot will look in the press or to your peers, you aren't leading with humility. Focus solely on what will make the company the best in the world.

3. Commit fully to the best opportunity once you identify it. Selling the mills was a total commitment that left no room for a "Plan B." When you identify the arena where you can be the best, move all your resources there immediately.

Why Burning the Boats Often Fails

The "burn the boats" strategy is incredibly dangerous if it isn't based on a deep understanding of what you can actually do better than anyone else. Some critics argue that selling a core asset is often a sign of desperation rather than a calculated pivot. If a leader lacks the specific Level 5 qualities of Smith, this move can look like an undisciplined gamble.

We see this in cases where companies diversify into areas they don't understand just to chase growth. Jim Collins notes that technology alone cannot cause a transformation; it can only accelerate it. Without the right people and the right leadership, a radical pivot into a new market is more likely to result in a crash than a turnaround.

Leadership success comes from aligning your personal resolve with the objective needs of the business. This requires a willingness to abandon legacy assets if they no longer serve the path to greatness. Audit your current projects this week and identify one "legacy" initiative that is draining resources from your primary goal.