CULTURAL SHIFT IN THE MAKING
- Mehta Brings Startup Feel to HUL
CEO Sanjiv Mehta is trying to instil the spirit
of a small firm into the FMCG giant with focus on speedy decisions and action
A year and a half after he joined Hindustan
Unilever (HUL) as its chief executive, Sanjiv Mehta is rewiring the consumer
goods giant into something resembling a startup where young managers can freely
challenge the status quo.
“We want to have the soul of a small company
where speed is the currency, bias for action is the norm, where people are
empowered on the frontline and they are not risk-averse. In many ways, it is
akin to a startup culture,“ Mehta told ET in an interview. A large cabinet in
his 500 sq ft cabin at the company's Mumbai headquarters in Andheri, located on
a 12.5 acre campus, displayed more than 30 HUL brands.
To an outsider, HUL is anything but a startup
considering it sold groceries and daily products worth more than ` . 31,000
crore last year.But the HUL culture is changing, the structure is getting
flatter to take on board the aspirations of a younger generation and the
challenges of proactively tackling the demands of, what Mehta says is, a
fast-changing market place.
“When the change outside happens faster than the
change inside, then it becomes a subject of concern. That is the reason we
continuously reinvent ourselves to remain relevant to the context,“ he said.
For instance, initiatives such as free
radio-on-demand service Kan Khajura Tesan or branding millions of rotis at the
Kumbh Mela with the Lifebuoy hand-washing message were all local decisions.
These were conceived and executed by young managers in the field within each
business unit that rejects or approves such projects, some costing hundreds of
crores of rupees.
HUL is also seeking to pick up tips from others.
In the past few months, Ratan Tata, IndiGo president Aditya Ghosh, HDFC Bank
chief Aditya Puri and entrepreneur Praveen K have addressed the employees.
A high-profile CEO of a leading FMCG company
said larger organisations are reviewing work culture and growth opportunities
because of greater rewards and challenges being offered by smaller, more
innovative enterprises.
“Today, competition and opportunities could
spring up from anywhere. The only way for even the largest company to innovate
and grow is to be nimble on its feet, take its employees along and be close to
the consumer,“ said the person, who didn't want to be identified.
A Nimble Giant
HUL seems to have shaken off the image of a
lumbering giant among stakeholders and investors since the 2008-09 slowdown.
“Almost six years ago, HUL made it easier for rivals to gain share. But today
the company is so agile that it leaves little room for its competitors to counter-attack,“
said an analyst at a domestic brokerage house.
The fourth quarter saw 6% volume growth and a
16% rise in earnings before interest, taxes, depreciation and amortisation.
“We expect acceleration in premiumisation-led
margin improvements as the investments in capability improvement bear fruit,“
Manoj Menon and Gaurav Bhatia of Deutsche Bank wrote in a recent note. “We
believe in management's stated view regarding delivering margin expan sion
every year as a result of premiumisation, as the company has successfully
demonstrated margin expansion over the last few years.“
In the past 18 months, Mehta launched several
consumer and talent development initiatives such as `Dialing Up the Big Queue'
to improve quality in every interface with the consumer from storage to store
level by helping distributors and traders manage inventory and stocks.
A long-term initiative to cut through store
clutter has also been started as part of the `Building Brands In Store'
strategy. “We are `playing to win'. We are building a performance culture where
you are continuously stretching and raising the bar,“ Mehta said.
For instance, Fair & Lovely has now hit the
`. 2,000 crore sales mark after growth had stalled. HUL then changed its
product formulation based on consumer insight. “We had the humility to accept
that we had gone wrong, changing it and coming out with our best formulation
and regaining the momentum,“ said Mehta.
It's been similarly quick in the case of its
`Winning in Many Indias' or WIMI strategy that carved the country into five
regions. This experiment was started in December 2013 in Chennai and the
concept proven by April 2014. The company refined the process and implemented
the change across its markets, shifting 100 people, setting up offices in new
clusters, and reconfiguring planning and IT systems by August-September 2014.
Culture Change
HUL also wants managers to represent another 14
regional clusters set up recently. It is looking to its social community
initiative Prabhat to strengthen employee diversity by helping those who live
close to its factories become employment ready .
“We want to ensure our internal population
represents the different clusters of the country so that we don't have just
talent from urban India but we also have people who represent the whole ethos
and fabric of India,“ said Mehta, adding that 32% of managers in HUL are women,
the highest proportion in the FMCG sector. “We are encouraging open innovations
and diversity in thought and leadership. I do not want HUL's next leader to be
a clone of Sanjiv Mehta.“
E-commerce
HUL also seems to be experimenting with
different business models, especially within the online space.For instance,
Humarashop.com, which connects shoppers with local retailers, is a pilot to
understand changes in the consumer space and build better understanding. Kedar
Lele, the company's general manager, east, has been tasked with creating and
heading an online channel.
HUL faces uncertainties as well -how to tackle
regional players and expanding the food business.
A recent Goldman Sachs report suggested that
three of its largest detergent brands -Rin, Surf and Wheel -had lost market
share to the home-grown Ghari. Also, Colgate has gained in oral care,
particularly against Pepsodent. At the same time, HUL is doing well in segments
such as foods. This has grown in double digits for the last six consecutive
quarters, driven by the company's aim to put Knorr in every kitchen and Kissan
in every tiffin.
“Competitive intensity in India will not wane,“
Mehta said. “I am obsessed about my consumers and not about my competitors.“
But will HUL's stock continue to rise? After all, it has already gained about
44% since last year. Many analysts remain bullish, with a majority having a
`buy' rating on the stock.
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Kala Vijayraghavan & Sagar
Malviya
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ET18may15
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