A new era at Carlson

By Deanne Stone

Third-generation member Diana Nelson has succeeded her mother, Marilyn Carlson Nelson, as board chair. The giant hospitality and travel firm has started to educate the young fourth-generation members.

This past May, Marilyn Carlson Nelson retired as board chair of Carlson, the global hospitality and travel company headquartered in Minneapolis and one of the world’s largest privately owned companies. Marilyn, 75, the daughter of legendary company founder Curt Carlson, was succeeded by her daughter, Diana Nelson.

Less than a year earlier, in August 2012, the company named Trudy Rautio as its president and CEO. Rautio, 59, has been with the company for 15 years.

Carlson is unusual in having women in its two top leadership positions; by contrast, only 21 of the Fortune 500 companies have women CEOs. Moreover, four of Carlson’s 11 directors are women. About 40% of the company’s executives, and half of its global staff, are female.

Carlson wasn’t always such an egalitarian work environment. Founder Curt Carlson was an old-school entrepreneur who regarded the leadership position as a man’s domain. It wasn’t until 1998—the year before he died at age 84—that he named Marilyn as his successor. She became CEO at age 60 and transformed the corporate culture to reflect her philosophy and sensibilities. Under her leadership, Carlson developed one of the most generous and far-reaching family benefit packages of any major corporation. Marilyn also established mentoring circles for women and an executive leadership system for senior women executives to partner with junior women colleagues. Carlson has been on the list of the 100 best companies for working mothers since 2002.

“We wanted to have a workplace that frees women to be as productive as possible without sacrificing their personal lives,” says Marilyn, 75. “Many of the policies and procedures we put in place make Carlson a good place for men to work, too. We were one of the first companies to offer paid paternity leave. We institutionalized a real meritocracy where we hire the best people for the job and structured the work environment to support their family lives.”

Trading stamp roots

Curt Carlson founded the Gold Bond Stamp Company in Minneapolis in 1938. A phenomenal salesman, he began selling trading stamps to retail food businesses as incentives to keep customers shopping in their stores. Loyal shoppers saved stamps and redeemed them for gifts. As the idea caught on, Curt widened his reach, selling to a variety of businesses across the country and, later, internationally.

The trading stamp craze reached its peak in the early 1960s. As it started to lose favor with the public, Curt launched a campaign to diversify his business through acquisitions. He bought real estate in Minneapolis, including the Radisson Hotel, large parcels of land in the Minneapolis suburb of Minnetonka and an array of businesses across the country. In 1973, he renamed the company Carlson Companies Inc.

In 1975, Curt bought the restaurant chain T.G.I. Friday’s and also entered the travel agency business. Recognizing the growth potential in the hospitality, travel and marketing industries, Carlson Companies focused on those markets. It sold off extraneous companies and shifted from owning hotels, restaurants and travel agencies to franchising them.

In 1988, Carlson Companies formed Carlson Holdings Inc., a parent company for the Carlson family properties, which includes the family’s investments, commercial real estate and the Carlson Companies. The following year, Carlson Companies moved its world corporate headquarters to Minnetonka on land Curt had purchased 25 years earlier. The building anchors a 310-acre development called the Carlson Center.

Carlson Companies—referred to as Carlson—consists of the Carlson Rezidor Hotel Group (1,300 hotels in operation and development, including Radisson Blu, Radisson, Park Plaza, Park Inn by Radisson, Country Inns & Suites by Carlson and Hotel Missoni); more than 900 T.G.I. Friday’s restaurants; and a majority stake in Carlson Wagonlit Travel, a global leader in business travel management. Carlson employs 175,000 workers in 160 countries and territories. In 2012, it reported system-wide revenues of $37.6 billion ($27.7 billion from Wagonlit Travel) and $4.4 billion in managed revenues.

Curt was a brilliant and charismatic entrepreneur who created a vast business empire. But while he talked about creating a 100-year dynasty, he was reluctant to pass on leadership to the next generation. “Curt was a command-and-control leader,” says Marilyn. “He didn’t want to give up his leadership role.”

In 1989, Curt became ill and appointed his son-in-law, Skip Gage (husband of Marilyn’s sister, Barbara), as CEO. Gage had been with Carlson since 1968. After Curt recovered from heart surgery, however, he had renewed energy to run the company. Gage resigned as CEO in 1992 and Curt returned to the helm. Six years later, on the occasion of the company’s 60th anniversary, Curt, then in failing health, named Marilyn as his successor.

Marilyn’s path to the top

Even as a young girl, Marilyn was interested in the family business. Curt liked to pose sales problems to his wife and daughters at the dinner table, and Marilyn took up the challenge. “The next day my father would tell me that he had made the sale and thanked me for my idea,” she recalls. “That made me feel connected to the company and excited by its success. He engaged me in the business long before I was old enough to think about working in it.”

Curt had a rule that family members had to get a master’s degree and work outside the company for three years before joining the company. Marilyn earned an advanced degree in international economics at the Sorbonne and, afterward, worked as a security analyst at Paine Webber. In the early 1960s, she joined Carlson and was put in charge of merchandising and purchasing for the trading stamps catalog. When she told her father that she had been recommended for a promotion, instead of congratulating her, he fired her. “I had three kids and my husband, a general surgeon, was often on call,” Marilyn says. “My father said I would be irresponsible to take on big responsibilities when I had a family.” She left his office in tears, but later realized that he was right.

Marilyn enjoyed being a mom, but she had a burning passion to find a platform for her skills. Her service on influential boards caught the attention of Minnesota politicians who approached her about running for senator or governor. Marilyn discussed the possibilities with Curt. He told her that the best philanthropy was a job and that if she really wanted to make a difference, she should work in business. “Curt hired me as Carlson’s part-time director of community relations,” she says. “I think he wanted to take credit for the work I had been doing.”

Marilyn returned to Carlson full-time in 1989, working her way up from vice chair of the holding company to COO for Carlson Companies and then to president and CEO. Being her father’s daughter didn’t spare her his harsh criticisms. If anything, he was harder on her. One day, she recalls, she asked Curt why she was still working in the family business if he didn’t think she was doing a good job. Curt replied, “When I stop yelling at you, that’s when you know I’m not interested in you anymore.”

As CEO, Marilyn transformed Carlson’s management from command and control to collegiality. More decisions were made by consensus. “Curt was used to acting alone and directing the executive team by fear,” she says. “The workforce was demoralized by his top-down rule. I wanted to lead with love and create a collaborative environment that was less linear and solved problems through integrative thinking.” She became board chair after her father died in 1999.

Marilyn’s approach succeeded. She steered Carlson through the difficult years after 9/11. By 2004, sales had bounced back and Carlson began an aggressive expansion and acquisition strategy, with an eye to the Asia Pacific market. During her tenure, Carlson almost doubled its revenues and became a truly global giant. Marilyn received numerous awards and recognitions for her leadership. Forbes named her one of the world’s most powerful women and U.S. News & World Report named her one of America’s best leaders.

Diana Nelson had already graduated from college when Marilyn became CEO, but she learned about leadership from watching her mother’s professional intensity in her volunteer projects. “My mother was a profound teacher,” Diana says. “Everything she did reflected her personal ethics. She showed us that businesses could be profitable and good citizens.”

Under Marilyn’s leadership, Carlson became the first major corporation in the hospitality and travel industries to take a stand against sex trafficking. It’s building a coalition of companies to raise awareness of the problem and is sharing its training program to teach employees how to identify and report suspicious behavior. This past spring, President Obama invited Marilyn to the White House to recognize Carlson’s efforts to disrupt trafficking of women and girls.

Unexpected changes

Marilyn retired as CEO in 2008, when she turned 70. Rather than hold on as long as possible, as her father did, she decided to follow the model of university presidents who step down after ten years. “My father made many significant contributions in his last 20 years,” she says, “but by continuing as CEO until he was 83, he compressed the career development of everyone underneath.” After stepping down as CEO, Marilyn continued to chair the Carlson board.

Curt Carlson expected Marilyn’s son—his namesake, Curtis Carlson Nelson—to succeed her as CEO. When the company’s executive and operations management teams were consolidated in 2006, Curtis was removed from his post as Carlson Companies’ president and chief operating officer and offered the position of vice chairman; he did not accept it. The board cited poor performance, which reportedly was related to substance abuse. Curtis, for his part, contended that he had been promised the CEO’s job. Curtis and Marilyn filed lawsuits against each other; the suits ultimately were dropped.

Marilyn declines to discuss the difficulties with her son or her father’s expectation that Curtis would become CEO. In her 2008 book How We Lead Matters: Reflections on a Life of Leadership, she wrote: “I painfully let go of my dream to pass on the leadership of the family business to my son. It would be necessary to go outside the family to find my successor. I would not, after all, be the ‘bridge’ between the generations that I had hoped would mark my leadership.”

In 2008 the board named Hubert Joly, president and CEO of Carlson Wagonlit Travel, as Marilyn’s successor. Joly’s tenure was initiated with a ritual Marilyn created to mark the transition of leadership. She had a wooden trunk made to symbolize the one her Swedish ancestors took when they immigrated to the U.S. “Just as my ancestors had to decide what to take and what to leave behind,” she says, “each new leader has to decide what Carlson is, what will be sustained for the next generation and what to give up or change to adapt to the new world.”

Joly led Carlson through some difficult financial times. He got the company out of the marketing sector and concentrated on modernizing the T.G.I. Friday’s restaurants and upgrading the hotel division. Joly surprised the Carlson board in August 2012 by abruptly resigning as CEO to become president and CEO of Best Buy. The board unanimously elected Trudy Rautio, 59, as Joly’s successor. Rautio had served as executive vice president and chief financial and administrative officer at Carlson for eight years and has sat on the boards of Carlson Wagonlit Travel and the Rezidor Hotel Group.

Rautio was staying at her lake cabin when she got the surprise call from Marilyn. “The Minneapolis Star Tribune headline, ‘Suddenly CEO,’ captured my sentiments and everyone else’s,” she writes in an e-mail to Family Business. “Fortunately, I had worked at Hubert Joly’s side as CFO when we were formulating the business strategies and had worked closely with Marilyn when she was CEO. So while the call was unexpected, I had solid grounding for the role, which definitely helped in making the transition.” The wooden trunk passed from Joly to Rautio.

Focus on the future

The extended Carlson family includes seven members of the third generation and 16 fourth-generation members ranging in age from the mid-20s to six. Marilyn and her daughters Diana and Wendy Nelson serve on the Carlson board along with her sister Barbara’s husband, Skip Gage, and their three sons, Geoffrey, Scott and Gregory. Trudy Rautio and three outside directors also are on the board. This past May, Diana Nelson chaired the board for the first time.

Diana, 50, mother of five children, lives in San Francisco. She is the only family member who doesn’t reside in Minnesota. An experienced director, she has served on the boards of Carlson, Carlson Holdings Inc. and Harvard University. Diana had made a conscious choice not to work in the family business; instead, she worked for Ogilvy and Mather Advertising and American Express Travel.

Like her mother, Diana has her own ideas about how she wants to lead the board, and she says she used the transition as a time for reflection. “I spent a lot of time talking, listening and getting the perspectives of all the directors,” Diana says. “For 60 years, Curt was the face of the company and my mother for ten years. Now I want to show the public a broader, more inclusive face of a strong, committed family engaged in the business.”

This past spring the Carlson family hosted its annual Family Fun Day for the fourth generation at the Radisson Blu hotel. The younger children, dressed in Radisson aprons and hats, got to see how the kitchen worked; the older ones got a lesson on the economics of running a hotel. “We’ve got every generation engaged in the business now,” says Marilyn, “and the business is serving the ever-growing family. I think we’re pretty darn close to living Curt’s dream.”

Deanne Stone is a business writer based in Berkeley, Calif.









Copyright 2013 by Family Business Magazine. This article may not be posted online or reproduced in any form, including photocopy, without permssion from the publisher. For reprint information, contact bwenger@familybusinessmagazine.com.

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September/October 2013

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