Is Grass Greener on Scotts' Side?
Green genes. The company's most revolutionary innovation is still in the bag, however. In 1998, Hagedorn spearheaded a partnership with biotech giant Monsanto to create a genetically modified grass that grows faster-and stays greener-than traditional grass. After years of work, researchers achieved the goal, engineering a creeping bentgrass that is genetically resistant to the Monsanto-developed herbicide Roundup. For gardeners, the benefits of the transgenic grass are clear: They can plant the turf and spray weed-killing chemicals without worrying about harming their lawn. Because of environmental concerns, however, the product needs federal approval, and while the Department of Agriculture is conducting an impact study, it will not say when a final decision is expected.
Federal rejection of transgenic grass isn't the only potentially brown patch in the company's business. Operating profits for the Scotts international division are down 17 percent because of increased competition and the rising costs of raw materials like urea, a key component of fertilizer. And Smith & Hawken, a retailer that Scotts purchased in 2005, is losing money because of low demand and a sinking housing market. Plus, some experts predict a slump in the gardening industry because the Internet generation is more interested in instant messaging and MySpace than mulch and marigolds.
But Hagedorn isn't worried. For one, he enjoys a good fight. As a teenager, he ran away from home after a quarrel with his parents and didn't return for two years. (He eventually reconciled with his father, the cofounder of Miracle-Gro, who helped him land a job at the company.) And even as Scotts CEO, Hagedorn cultivates his spunky side: He collects muscle cars and has a picture of himself in his office with his middle finger extended upward.
More important, Hagedorn has positioned Scotts well. If the feds don't approve the transgenic grass, he says, the company has more than enough new products in the pipeline, including a number of organic ones, to continue double-digit sales growth. He has also been addressing the money-losing divisions, with initiatives to diversify the international business and sell higher-quality products at Smith & Hawken.
As for cultivating the next generation of gardeners, Scotts bumped up advertising by 14 percent last year, much of it aimed at the Internet generation. Hagedorn also plans to start online seminars and video manuals aimed at new homeowners. "We need to make gardening seem edgy and hip," he says. That might sound like a radical change, but this, after all, is a company built on innovation.
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