This week Tyson Foods named Dean Banks as its next Chief Executive Officer.
Dean Banks was named president of Tyson Foods last December, but the media references his experience as a “ tech executive” and his time at Alphabet. Curious about this experience, I went to his LinkedIn profile.
Was he a C-level executive at Alphabet? Division President?
At Alphabet’s X (Moonshot Factory) he was, umm, a Project Lead. Oh.
According to LinkedIn, beyond his project management experience, he’s done some consulting, some angel investing. His CEO experience includes a brief stint at what appears to be <50 person company and an even shorter stint at a company with <10 employees. The assumption that he’s probably managed a maximum of $50 million P&L is likely generous.
Meanwhile Tyson Foods employees 122,000 people across the globe to generate ~$40 Billion in annual revenue.
Unless I’m missing something, this guy has the perfect pedigree to be a partner in a venture fund, run a scaling startup, or lead a newly created tech division of Tyson Foods.
It is not obvious from his resume that he is capable of being the CEO of a company of this size, scale, and complexity.
Tyson Foods is the opposite of Alphabet & its Moonshot Factory in almost every way.
Moonshot Factory makes long term plays that may not deliver results for years or even decades. (its in the name…moonshot)
Tyson Foods faces the earnings music with Wall Street every quarter.
Moonshot Factory is funded by Alphabet, a $1.02 Trillion market cap company with $18 Billion cash on hand.
Tyson Foods is a low margin, commodity business clawing its way to higher value through further processing, product innovation, and branding. This is a ‘grind it out and strengthen your balance sheet to prepare for the inevitable lean times that come with a volatile, cyclical industry’ kinda business. This is ‘hope that you are diversified sufficiently across proteins, sales channels, regions of the world to weather a black swan better than your competitors’.
But, there is one scenario under which this stretchiest of stretch hires makes sense:
Tyson doesn’t want to be a user of tech and a customer of tech companies.
Tyson doesn’t want to be an early adopter of solutions created by tech companies.
Tyson Foods intends to be a tech company.
Tyson’s biggest problem is labor, specifically plant labor. This has been their biggest problem for some time, and COVID shined the spot light on the many risks associated with labor intensive processing including access to labor, contingency plans when labor is unavailable, health & safety, and liability. Labor represents 50-60% of processing costs, a huge opportunity to drive margin by reducing these costs.
Equipment suppliers were not solving Tyson’s biggest problem in a timely manner, so Tyson Foods is taking matters into its own hands.
Over the past three years, Tyson has invested about $500 million in technology and automation including the Tyson Manufacturing Automation Center opened in 2019. Banks’ work at Moonshot Factory was in automation and robotics. Rumor has it they’ve brought in similar profiles from General Motors and similar companies.
Hiring people with tech/automation pedigrees raises the question, what’s the internal mandate as it relates to plant automation??
Is it, reduce processing costs by x% to improve competitive position? Or is it, reduce processing costs by x% and generate $y revenue in automation solutions such that tech becomes the growth business?
If it were merely a competitive advantage play, Banks would have been made head of the tech division. So it must be a bigger play in which Tyson leverages its knowledge of problems to be solved with the leadership expertise to bring about new products and an entirely new business direction.
Perhaps even a new business model for Tyson Foods.
Does Tyson Foods start selling plant robots to competitors or do they launch a Processing-As-A-Service business? Maybe they launch the processing plant equivalent of a Ghost Kitchen in which they effectively become a contract processor for other companies because their costs are 30-50% lower? That might be bit outrageous, but you get the idea – this initiative must be central to the very fabric of Tyson Foods in order to make Banks CEO of the entire company.
In 5 years, what % of Tyson Foods revenue will come from technology sales?
How will this impact operations?
How will this impact returns?
How will this impact culture?
How will this impact Tyson’s venture activity?
So many questions & only time will tell.
What a company says about their future is mildly interesting, the tell is in who they hire. And the largest meat company in the world just hired an automation tech project manager as their next CEO. Which can only mean 1 thing:
Tyson is betting the farm on its future as a tech company.