Bellamy’s chief executive Laura McBain bows out: Lessons for small business leaders from the company’s woes

Bellamy’s is having far from a happy new year, but the removal of chief executive Laura McBain on Wednesday looks to be only the first step in the path to overcoming challenges at the company.

The organic infant formula company first entered a trading halt in December, with a business update at the start of that month leading to 40% of its market cap being wiped out in the following two days.

Analysts and shareholders were disappointed at lower than expected profit numbers, with market commentators suggesting regulatory changes in China around the sale of infant formula created problems for the company. However, as of this month it’s still unclear exactly what has led to Bellamy’s woes, and in a business update yesterday the company announced chief executive Laura McBain would be replaced by acting chief executive Andrew Cohen.

The update also provided some details on supply chain changes and amendments to a key contract with supplier Fonterra. 

From the archives: Bellamy’s Organic’s winning formula impresses on ASX debut

However, not everyone is happy with the change. Long-term investor and founder of Kathmandu Jan Cameron told The Australian yesterday McBain was being used as a scapegoat. In early January a Cameron-led group of Bellamy’s shareholders campaigned for a board spill to sack the company’s independent directors.

While Bellamy’s story has been played out very publicly and with the rapt attention of the public, director of Melbourne University’s Centre for Workplace Leadership Professor Peter Gahan says the events give smaller businesses a lot to think about.

While many chief executives of listed companies depart in very difficult times, good leadership at the top level does have the effect of flowing right through the business.

“Our work shows that leadership has value where it can navigate the complex environment, develop a strategy and translate that into systems and practices inside the organisation,” Gahan says.

While it’s not clear exactly what factors have lead to Bellamy’s challenges, all senior managers need to remember this is a time of significant disruption across all sectors, and Gahan says research shows not enough leaders in Australia ask those outside their businesses for advice.

“Last year we completed a study of leadership in Australian businesses, and one of the surprising results was that very few CEOs sought external advise on their current strategy or future,” he says, which researchers found surprising.

“A majority of them sought advice of independent sources already on their board.”

In any business that is growing incredibly quickly, it’s important for company founders and managers to understand their roles and seek as many sources of advice as possible, Gahan says.

“Rather than relying on your gut instinct, you need to be seeking advice from other sources to make good decisions. Australian chief executives have traditionally not been good at that.”

In an era of fast-paced change across all industries, it’s also important that businesses remember that conditions can change in an instant, and develop strategy accordingly.

“It’s batten-down-the-hatches time,” Gahan says.

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