Lifeway Foods CEO Julie Smolyansky successfully rebranded her family’s milk-based kefir product company by focusing on corporate, consumer and personal health.
by Sarah Sipek
August 27, 2015
Julie Smolyansky was just a year old when her family immigrated to the United States from Kiev, Ukraine, in 1976, arriving in Chicago with just $116 to start a new life. Each day since has been a lesson in true entrepreneurial spirit.
“With my parents, their business really blended into their home life,” said Smolyansky, now a 40-year-old mother of two. “We were always working part time and helping our parents when we could, even on small tasks. So we learned a lot about problem-solving and leadership and culture and innovation and risk-taking.”
It is those very skills that helped Smolyansky move past tragedy with the death of her father and attain success when, at 27 years old, she suddenly had to take over her family’s multimillion dollar company, Lifeway Foods Inc. The move to the C-suite made her the youngest female CEO of a publicly traded company ever.
Despite the doubters, Smolyansky has since grown Lifeway’s revenue as well as its brand to national prominence as the leading seller of the probiotic-laden health drink Kefir.
Her Life(way) Mission: Help Other Women
Lifeway Foods Inc. CEO Julie Smolyansky has several causes that are near and dear to her heart; one is helping other women reach the position in corporate America that she has achieved.“Being a women’s studies minor, I learned a lot of the issues around women and just their ability to be strong, empowered women,” said Smolyansky, who started her own nonprofit, Test400k, to end the backlog of untested rape kits. “One of the things I’m passionate about is getting more women into positions of power. Given that I’m one of the few female CEOs, it is sort of my obligation to support and help grow and lead that conversation so that the next generation behind me is better off so that someone is not making news for their female leadership and it’s just leadership.”Teresa Nelson, a professor at Simmons College School of Management and director of the Entrepreneurship Program at the National Women’s Business Council agrees that in order to further drive the number of successful women in business, those who have already achieved success must use their position to help others. That includes accepting high-profile positions on committees and nonprofits.“Research has shown that role models are an important factor in an individual’s decision to pursue entrepreneurship,” Nelson said in a written statement. “Media attention tends to focus on men entrepreneurs; increasing the visibility and profile of successful women entrepreneurs will normalize the idea of women founding and leading companies.”Smolyansky also serves as a producer on “Honor Diaries,” a documentary dedicated to saving women and girls across the world from human rights abuses.—Sarah Sipek
Lifeway’s beginning, like the family who started it, came from humble origins. Soon after arriving in Chicago from Kiev, which was then part of the Soviet Union, Smolyansky’s father, Michael, found a job as an engineer. Her mother, Ludmila, a Ukrainian from Kharkiv, opened a deli serving Russian and Eastern European food, Smolyansky said. Her mother’s business grew rapidly, expanding to several locations across the city, eventually growing to the point where she was supplying stores across the country with Eastern European fare.
It wasn’t until a 1985 trip to Cologne, Germany, to find new goods for Ludmila Smolyansky’s distribution network that the family came across kefir, the milk-based product that would help launch its multimillion-dollar company.
Kefir is a fermented milk drink made by adding kefir grains to cow or goat’s milk. The grains themselves are composed of yeast and lactic acid bacteria, according to the Journal of Medicinal Food. After being allowed to ferment in milk for 24 hours, kefir grains are siphoned out and liquid kefir remains. The drink is high in calcium, protein and vitamin B, and is touted as a remedy for a number of digestive issues ranging from irritable bowel syndrome and Crohn’s disease to digestive-based autoimmune disorders.
Then was no real market for kefir in the U.S. Smolyansky’s parents took a chance and bought a few bottles, intending to mass-produce and distribute the product at home.
That entrepreneurial spirit led Smolyansky’s father to take a risk and launch Lifeway Foods out of the family’s basement in 1986. Two years after starting Lifeway, he took the firm public to boost its expansion capabilities. It debuted on the Nasdaq early in 1988 as LWAY, selling at $1 per share. The proceeds from the initial public offering allowed him to open a new plant, and the company increased its sales from $800,000 in 1988 to $6 million in 1997.
As the Morton Grove, Illinois-based company grew, Julie Smolyansky was motivated to further develop the “soft skills” necessary to one day take over the business.
“I spent some time in leadership training in both high school and college and always found myself in command of different groups of people and teams,” said Smolyansky, a graduate of the University of Illinois at Chicago. “Growing up watching what my parents achieved, I think it became innate for me. I always found myself leading groups and teams and committees and being the first to raise my hand to step up to the plate for any kind of project. It’s like that idea where if you want something done, ask a busy person.”
She even worked part time in the Lifeway marketing department while pursuing a master’s degree in psychology. She figured this position would give her the opportunity to continue to learn and grow under her father’s tutelage. Unfortunately, she didn’t get as much time as she planned.
In 2002, Michael Smolyansky died of a heart attack, leaving his daughter both devastated and suddenly in charge of the family business.
Despite being raised in an environment that encouraged leadership and innovation, few people believed that she was capable of successfully running Lifeway at such a young age. Unfortunately, that sentiment is not uncommon. According to research conducted by the National Women’s Business Council, absence of support networks is a leading barrier to women’s entry into C-suite level positions in the workplace.
“The day that he died, my dad’s best friend said, ‘Sell your stock — there’s no way this girl can run a company,’ ” Smolyansky said. She chose to ignore that criticism and use her skill sets to carry on her father’s legacy.
Though many questioned her ability to lead, Smolyansky has since quashed those doubts over the past 12 years by growing Lifeway to $119 million in annual sales from $12 million. By combining leadership skills with an academic background in psychology, Smolyansky has been able to motivate her workforce of 200 employees, her consumers and herself to be healthier and more productive.
She Knows What You’re Thinking
Smolyansky credits her background in psychology with her ability to successfully rebrand Lifeway Foods. As it stands, Lifeway claims it currently controls 95 percent of the market share of kefir sales in the United States.
As an undergraduate student, she majored in psychology and minored in women’s and gender studies. The pairing of disciplines afforded her the opportunity to study human motivation, which would ultimately prove useful as she worked to redirect her father’s company after his death.
“In terms of the psych component, my real area of focus was around how people make dieting behavior decisions and advertising and how it impacted dieting behavior,” she said. “While in school, I never considered that to be a business question. I was looking at it more from the perspective of how people make behavioral choices around eating habits. I didn’t realize the business implications until I was thrown into a situation where understanding people’s motivations was relevant.”
Smolyansky didn’t stay in the psychology field for long. Early during her graduate school career, she decided to leave the field and apply what she learned in school to a position as the director of sales and marketing at Lifeway. The first issue she tackled was getting her team to be more cohesive.
“You can have great ideas, great innovation, great everything, great products, but the hardest thing is always to get groups of people to decide to work together and put their personal differences aside,” she said. “There are so many issues all the time when you put people together who maybe would not be friends or spend any time together outside of an office environment to be together for eight or 10 hours a day and work on problem-solving and building and innovation. You’re going to get all sorts of psychodynamic things that are going to happen, and egos and weird character habits and things that irk people. It’s like kindergarten.”
Even though she only held this position for five years before assuming her current role as CEO, Smolyansky’s director position gave her an entry into the business world that many women don’t get. Without the opportunity to try new positions, experts say women are unable to build a support network that helps them to succeed as they move up the corporate ladder.
Smolyansky’s experience managing people gave her the insights she needed to better manage her employees and change the direction of the company once she became CEO.
It’s the job of the chief executive to create teams that can effectively work together, according to the late J. Richard Hackman, the Edgar Pierce Professor of Social and Organizational Psychology at Harvard University and a leading expert on teams. According to his groundbreaking research in the ’90s, putting teams together that can drive organizational growth means making tough decisions about who belongs on which team to drive innovation and productivity.
“In truth, putting together a team involves some ruthless decisions about membership,” Hackman once said. “Not everyone who wants to be on the team should be included, and some individuals should be forced off.”
Smolyansky addresses that challenge by trying to communicate with her employees as much as possible. The task that has become increasingly difficult as the company continues to grow, but her employees feel she has risen to the challenge.
“She has high expectations and lots of ideas, often inspired by whatever she’s currently reading or a new best friend she just met,” said Derek Miller, vice president of communications at Lifeway. “Julie is the world’s greatest networker. I’ve never been able to confirm that she actually sleeps.“
According to Hackman, a CEO’s next-greatest task is providing a company with a compelling direction. And Smolyansky, who referenced Hackman’s teachings, succeeded tremendously.
Before her father died, Lifeway operated within a limited marketplace. To keep her company growing, Smolyansky had to persuade the American people that they should use a product that many had never heard of.
“Yogurt is not new, yet suddenly everyone is acting as if they just discovered it.” Smolyansky said. “That is because Americans were not trained to like it. In Europe, yogurt and kefir have been consumed as part of a staple diet for over 2,000 years.” The average European consumes 28 cups of cultured dairy products per person per month, she said. In the United States, the average is 10 cups.
One thing was clear: Simply promoting the product was not enough. She needed to align her brand with the needs of consumers to create a demand only Lifeway could fill.
Her time spent studying the psychology of dieting behavior taught Smolyansky that eating habits are formed at a young age. Instead of focusing all her attention on U.S. adults who had been trained to like artificially sweetened yogurts, Smolyansky turned her attention to children with a product called ProBugs, which is kefir in a pouch for youngsters.
“We are training kids to consume cultured dairy products with a tart, tangy flavor with less sugar,” Smolyansky said. “It is a big, big, hard, challenging undertaking, and it will take generations. But it’s happening, and that’s great. So much of what we have done in the previous 25 years was training adults to drink kefir. The fact that kids are now very used to it is a big step to the future of Lifeway. The bottom line is that we made Lifeway relevant. We turned Lifeway into more a lifestyle brand than just a commodity or dairy product.”
Balancing Act
Beyond the dollars and cents of creating a market and fulfilling a consumer need, Smolyansky believes her company has a social responsibility to do things that are good for the world.
“We should be leaders in all different areas, not just the kefir space,” Smolyansky said. The company and she “have the ability to bring attention to other issues that are important,” including helping women reach the C-suite (See “Her Life(way) Mission: Help Other Women.”)
To accomplish both, Smolyansky prescribes to an ideology in Wharton School of Business professor Stewart Friedman’s book “Total Leadership,” known as four-way wins. It involves making a Venn diagram — think overlapping circles — out of career, family, community and self, and finding activities that fulfill all areas at once. Doing so has helped her achieve her goals for Lifeway as well as herself as a person.
“Lifeway’s mission is to build a healthier and safer world and to empower consumers to just live that healthier life, so that encompasses a lot of things,” Smolyansky said. “I think that when you’re conscious of food and what you put into it, and you’re conscious of your body, and you’re conscious of the business, then that mindfulness creeps into other areas of life and the world, then you just want to make it a little bit better, one step at a time.”
This article originally appeared in Diversity Executive's sister publication, Workforce.
