Not everybody connected with Chiquita agreed with that agenda. As CEO, I was the focal point for pressure from all of the company’s stakeholders: shareholders, employees, customers, suppliers, labor unions, the media, nongovernmental organizations (NGOs), regulators, lawmakers, academics, and local community leaders. Each party had a view on what a public company should do and what its priorities should be. One of the most urgent and important issues that a CEO faces can be summed up in a simple question: Whose agenda should we follow? And a corollary: How can we satisfy the legitimate interests of all our constituencies without losing focus on our agenda?
While my previous experience included a number of turnarounds, my intellectual understanding of the challenges facing a CEO in a tough situation did not prepare me for the intense, emotional experience of being in that seat. The story of our corporate strategy and the story of my own education as chief executive are inextricably linked in my mind. Together, they portray some of the pressures facing executives of all kinds these days.
Coming to Chiquita
Chiquita has a long, colorful history dating back to 1895, when two partners — a Boston merchant and a sea captain with a load of bananas — discovered the American market for this then-exotic fruit. During the next hundred years, the United Fruit Company was one of the most active companies in Central America. It built roads, hospitals, schools, housing, and infrastructure, and provided desperately needed employment; but it also had a record of exploiting the region, with practices that damaged the local environment and the well-being of people who lived there. The term “banana republic” was derived from United Fruit’s reputed involvement in subsidizing political upheaval and manipulating governments.
After a series of mergers and restructurings in the 1970s and early 1980s, the company emerged as Chiquita Brands International in 1984. Its senior leaders consciously changed course in the 1990s, seeking a more socially responsible presence in Latin America. They established a partnership with the Rainforest Alliance, an NGO dedicated to environmentally sound agribusiness practices. Nonetheless, the company continued to be attacked publicly for its handling of workers, unions, and working conditions. Again the company responded positively, establishing a corporate responsibility program in the late 1990s and investing significantly in social improvements.
The primary cause of turmoil at Chiquita in the 1990s was the “banana wars”: an eight-year period of disputes over banana tariffs in the newly formed European Union. Before 1993, Chiquita held a 40 percent market share for bananas in Northern Europe; the company’s leaders expected the E.U. to open its borders to free trade, which could have doubled Chiquita’s markets in Europe. The company’s leaders invested accordingly in ships and plantations, putting a billion dollars’ worth of debt on the balance sheet. But the E.U. regulators imposed a quota system that favored bananas from Africa and the Caribbean over those from Latin America, substantially reducing Chiquita’s market opportunity. The World Trade Organization and the U.S. fought for open access for Latin America’s bananas, but they didn’t reach an agreement with the E.U. until 2001. By then, Chiquita had run out of options for raising cash, and later that year the company filed