Several years ago, I was on a statewide tour of Maryland businesses when our bus stopped to visit a poultry farm on the Eastern Shore. As we drove onto the farm, we saw a traditional-looking farmhouse dwarfed by three chicken houses — long windowless buildings that looked like Quonset huts and were estimated to be 25,000 square feet each.
The bus pulled up to the first chicken house, and the group of business leaders taking the tour hopped out and donned sterile shoe covers and lab coats before stepping from the bright sunshine into the dark chicken house, where chicks a few days old moved around in a clean and odor-free space. It was apparent that the chicken-growing process was a highly controlled one. The house had a lighting-, temperature- and humidity-control system that provided ideal conditions through the course of the day. Carefully mixed feed that produced the signature, yellow-skinned Perdue chickens dropped into troughs on a pre-determined schedule, and the chicks, who are sent to a nearby processing plant when they're 42 days old, swarmed.
I sidled over to a man in a white Perdue lab coat who had joined us. "Jim," his name tag said. I plied him with questions about how to increase yield and profits. Beyond light, temperature, humidity and feed, what about density of chickens per square foot? What about the effect of the pecking order? Were there chickens that couldn't get enough feed because the alpha chickens pushed them out of the way? (I knew to ask this from raising dogs.) Jim patiently answered my questions. After I had probed him about every possible way that yield could be increased, I hit him with my big question. What about music? Do chickens like music? Stunned silence followed. Then, an answer: No, chickens don't like music. At this point he started looking around for the exit (I've seen this look before), and he suggested I rejoin my group.
As we filed out of the barn, my group members hurried to ask me what I was talking to Jim Perdue about for so long. Jim Perdue? That was the CEO of Perdue? The guy on the TV commercials? Howls of laughter erupted when I confessed that I thought I was talking to a farmhand, and that I had asked him what was clearly the dumbest question he had ever heard. They reassured me that he probably cut off the discussion after that question to rush out and start researching the topic.
Chicken farming is big business in Maryland. Its economic impact is estimated to be at least $1.6 billion. The farm we visited raised chickens under an exclusive contract with Perdue Farms, the No. 1 chicken brand in the United States and one of the nation's top private companies with annual sales of almost $7 billion. Perdue, which is headquartered in Salisbury, contracts exclusively with over 2,200 independent growers in 12 states, a business model that has been in place since the 1950s.
Perdue employs a vertically-integrated business model that shares economic risk with such independent farms. While I am a city girl, and don't know anything about farming, I understand that a successful chicken growing venture is one that can maximize yield, pounds of chicken produced and profits, by reducing growing costs per pound of chicken.
I was heartened to read about reforms in poultry farming recently announced by Perdue Farms to make its chicken-raising and slaughtering processes more humane, especially since such reforms will no doubt be more costly. Perdue had already dropped the use of antibiotics in its feed, and now it is making changes to the chicken houses by adding windows and perches to promote more activity. (I can't help but think that music might get them dancing and moving around too.)
This strategy shift illustrates that great leadership is about doing the right thing, in this case through a thoughtful process in which the Humane Society of the United States was invited to participate. The changes made by Perdue as a market leader should be a game changer in the industry. This also moves the brand to a position more closely aligned with the organic and free range poultry sector that already commands premium pricing. Perdue has no doubt been studying this business model since it acquired an organic chicken producer five years ago. Last, it is a nod to the power of the millennial market segment and should strongly position the company with this ever more formidable market sector.
Frank Perdue, who died in 2005, was famous for saying "it takes a tough man to make a tender chicken." I'm glad to see his legacy is just as tough as he was, leading his successors to disrupt the company's entire supply chain to raise chickens more humanely.
Toby Gordon (email@example.com) is an associate professor at the Johns Hopkins Carey Business School, with joint faculty appointments at JHU's Bloomberg School of Public Health and School of Medicine.