2005 Minnesota Business Hall Of Fame
"The Answer is Patience": Turning around Toro Company took years, but he's grown the company and its investor returns like a well-tended lawn.
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It’s probably no big surprise that Ken Melrose, for 22 years the CEO of Bloomington-based Toro Company, should speak of the company in the language of cultivation. After all, Toro, from which Melrose, 64, retired in March, is one of the world’s leaders in products and services for turf development and landscape management.
But when Melrose writes things like, “If you think of your turf as your domain—as the environment you operate in—then your turf becomes your area of influence,” as he did in an executive summary of a recent speech, the trope is something more than a play on words. It is an expression of his central ideas about management and corporate culture, ideas with which Melrose refashioned Toro’s culture, saved the company from near-extinction, and helped raise its share price (NYSE: TTC) 25-fold in 22 years.
An athlete who lettered in track during his years at Princeton University, Melrose is a cum laude graduate of the school who went on to earn a master of science degree from the Sloan School of Management at the Massachusetts Institute of Technology in 1965, then an MBA from the University of Chicago two years later. After working a few years with Pillsbury and as director of corporate planning for Bayfield Technologies in Minneapolis, he joined Toro in 1970 as director of marketing for the company’s consumer-products division.
Consumer products was the place to be at Toro during the ensuing decade. A series of long, wet winters and warm, lush summers were the perfect climate for growing sales of the company’s snowblowers and lawnmowers. By the late 1970s, Toro’s revenues were nearing $400 million, with two-thirds of that coming from Melrose’s division.
Then the bottom dropped out. The climate flip-flopped with warm winters followed by hot, dry summers. Already reeling from the subsequent drop in sales, Toro was devastated when the worst recession since World War II set in like a deep freeze in the early years of the 1980s. Sales cratered to $247 million in 1981, the same year that Toro posted its first loss in more than 35 years. Things looked so dire, the prospects for recovery so bleak, that by the time Melrose was appointed president that year, many experts were openly harboring doubts about whether the company could survive at all. “It took us a long time to get out of that hole,” says Melrose, who became CEO of Toro in 1983. “We lost money three years in a row, and it took much of the 1980s to re-establish Toro as a high-quality, growing company.”