Lawn care. The two words typically inspire white-picket-fence images of middle-aged men mowing the grass, teenagers weeding the backyard, suburban mothers pruning the rose bushes. But for Jim Hagedorn, the words mean war. He views grass and gardens as a commercial combat zone, a place where executives engage in a life-and-death battle for profits. "I run my own war every day," he says. "Instead of taking land, [we gain] market share."
Hagedorn, 51, is serious about his military metaphors. He served as an F-16 fighter pilot for seven years. And as the CEO of Scotts Miracle-Gro, he has been pushing the firm to conquer the lawn-care industry through targeted research and innovation, releasing dozens of new products from heat-resistant grass to powerful pesticides. "I would like Scotts to be the McDonald's of lawn and garden," he says.
While Hagedorn's war is far from over, he has won some major battles. Since he took the reins of the Marysville, Ohio, company in 2001, sales have jumped more than 10 percent each year and net income has grown 23 percent annually. Today the firm rakes in a third of the $8 billion lawn-and-garden-care industry's revenues. "Because of its strong brands and management's ability to execute," says Douglas Lane, a senior research analyst at Avondale Partners, "the company dominates its niche."
Dirty fun. Certainly, industry trends have helped. For decades farmlands have been giving way to housing developments, and grass now covers 40 million acres of the country, blanketing nearly as much land as the state of Washington. At the same time, aging baby boomers have been devoting more time-and money-to their lawns, and gardening has become the nation's No. 1 outdoor activity, more popular than walking or golf.
A 1995 merger between the grass seed giant Scotts and the fertilizer heavyweight Miracle-Gro made the company the largest in the industry. But Scotts has found plenty of room to continue growing, and during Hagedorn's tenure, the company has been using its technical know-how to boost sales and create new markets. After Hagedorn found out, for instance, that consumers wanted their fertilizer pre-mixed with water, the company introduced LiquaFeed, a hose-and-bottle system that automatically combines water and plant food. The product was projected to post sales of $20 million last year; it brought in twice that amount.
In its 18,000-square-foot grass research center in Ohio, Scotts has also created numerous niche products to help expand its market share. The company recently released a new turf seed called Sea Spray that is tailor-made for beachfront properties: Unlike other grasses, the company says, the grass stays lush and green after contact with salt water. Next on the research agenda? "Dog-urine-proof grass," says Hagedorn. "It's a real problem. The uric acid [from a dog's urine] causes yellow burn spots."
Scotts launches a targeted advertising campaign for each new product-and they're usually successful. "They know marketing," says Avondale's Lane. "This is a company that branded dirt." The public-relations push, Hagedorn explains, introduces new inventions to the consumer and promotes gardening as a way of life. "Our biggest competitor is people's time," he says. "We have to make it easy and fun for people to work in the garden."
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.
This story appears in the April 30, 2007 print edition of U.S. News & World Report.