C O R N E R O F F I C E
Set
goal, stretch resources for innovations
Every few years, Nitin
Paranjpe, MD & CEO, Hindustan Unilever, poses a challenge to himself — one
that is stretched and not easily achievable. It’s a line of thinking that
originated after he read in a book that the ability to learn a new thing keeps
one mentally active. After much consideration, Paranjpe zeroed in on music as
he believed he was “musically challenged”. After meticulously following the
hobby for five years through weekly music lessons, Paranjpe can today
effortlessly play an old Hindi song on a keyboard.
Even as he feels a sense of accomplishment, questions are already cropping up in his mind on what could possibly be his next stretched challenge. While he prefers to keep that thought guarded, one cannot but notice how this philosophy has seamlessly seeped into his leadership style as well. Much like his own drive to attain the impossible, setting big, hairy, audacious goals — or BHAGs, as they are popularly known — comes naturally to Paranjpe. “As a leader, I think we must constantly raise the bar and not be satisfied with what we’ve been doing. Improvement will happen when you have a healthy dissatisfaction and a stretching goal,” he says, as he moves forward almost to emphasize the import of his statement from the chair where he is comfortably ensconced in the consumer product group’s headquarters at Andheri, a Mumbai suburb.
Somewhere, the man’s philosophy resonates with that of the organization as well. When Unilever publicly set the goal of doubling business and halving its environment footprint, it was termed as audacious. Grappling with challenges and finding solutions is what excites the 49-year-old. Paranjpe says he does the right things without waiting for the outcome. The philosophy came in handy when, in his early leadership years, HUL was facing growth issues that concerned the entire investor fraternity. At that was point, it decided what’s right for the consumer would be right for the business as well even if it meant making financial trade-offs. ‘Leverites’ got down to earn the requisite consumer licence by spending more time with consumers. As a result, 1,400 licences were issued last year.
Not one to be easily charmed by achievable goals, Paranjpe has raised the bar here as well. Now, every single person would have to earn the consumer licence and eventually the company would find a way to renew these licences. “If our benchmarking reveals that our product is either ‘not as good’ or only ‘as good’ and not ‘superior’, or if priced more than what it should be, then we need to act immediately. If it means improve quality, we will do that. If it means we correct prices, we will. If there is a shortterm hit we have to take, we will (take it),” he says. Over a period of time, it also made corrections and changes in its portfolio, particularly in soaps and laundry. Paranjpe says the measure of product superiority through blind tests has seen HUL’s products win and the number has trebled in the last two years.
The results were heartening. HUL’s growth numbers started to bounce back. Its market cap improved from Rs 51,770 crore in 2008-09 to Rs 88,600 crore in 2011-12, while revenues grew by 50% to over Rs 22,000 crore since 2007. Once again, HUL is the darling of the fund houses and analysts, which at one time were pounding it for lack of spunk.
Another important lever that changed the game for HUL was innovation. Innovation was important from the perspective of making its portfolio relevant to the emerging consumer. The innovation insight came from an interaction he had with Prof C K Prahalad in 1999. The management guru, who was also on the board of HUL, told Paranjpe the only driver of innovation is a mismatch between ambition and resources. “He said the real shift which you have to make is to break out of this equality. No entrepreneur who has been successful in life has ever set his goals in line with how much money he has and how much resources he has. He sets his goals based on what would make him proud. He then figures out how to stretch his resources to achieve his dream and through that innovation takes place,” recalls Paranjpe.
Small wonder then that 60% of HUL’s business was touched by innovation last year. Products like Lifebuoy Activ Naturol Shield, Magic, Comfort Green and Rin Perfect Shine are some of the recent examples.
Similarly, when HUL went on to add 20,000 outlets a year in its distribution, it was a stretched target that was made possible through this insight. During 2010-11, HUL significantly increased its direct retail coverage by adding over 5,00,000 outlets. As focus on consumer and innovation gets embedded in HUL’s DNA, Paranjpe’s next big task is being ruthless on costs. “We are working to structurally alter the cost base of the organization, which will enable us to compete better, be more agile and swift,” he says.
Even as he executes one BHAG after another, Paranjpe doesn’t forget certain critical lessons of the past. As soon as he took charge at the helm in 2008, the global crisis struck. HUL was stuck with high inventory and wholesalers with high-priced stocks. But in hindsight, the challenges of 2008-09 were a great teacher for Paranjpe. In theory, the crisis can repeat itself, but Paranjpe believes HUL is better prepared in terms of cycle time response, action and decision making. Much like a flywheel, which when stalled requires a great deal of effort to restart, Paranjpe believes that businesses can gain a good momentum when in motion only if the right thing is done and there is focus on execution.
Even as he feels a sense of accomplishment, questions are already cropping up in his mind on what could possibly be his next stretched challenge. While he prefers to keep that thought guarded, one cannot but notice how this philosophy has seamlessly seeped into his leadership style as well. Much like his own drive to attain the impossible, setting big, hairy, audacious goals — or BHAGs, as they are popularly known — comes naturally to Paranjpe. “As a leader, I think we must constantly raise the bar and not be satisfied with what we’ve been doing. Improvement will happen when you have a healthy dissatisfaction and a stretching goal,” he says, as he moves forward almost to emphasize the import of his statement from the chair where he is comfortably ensconced in the consumer product group’s headquarters at Andheri, a Mumbai suburb.
Somewhere, the man’s philosophy resonates with that of the organization as well. When Unilever publicly set the goal of doubling business and halving its environment footprint, it was termed as audacious. Grappling with challenges and finding solutions is what excites the 49-year-old. Paranjpe says he does the right things without waiting for the outcome. The philosophy came in handy when, in his early leadership years, HUL was facing growth issues that concerned the entire investor fraternity. At that was point, it decided what’s right for the consumer would be right for the business as well even if it meant making financial trade-offs. ‘Leverites’ got down to earn the requisite consumer licence by spending more time with consumers. As a result, 1,400 licences were issued last year.
Not one to be easily charmed by achievable goals, Paranjpe has raised the bar here as well. Now, every single person would have to earn the consumer licence and eventually the company would find a way to renew these licences. “If our benchmarking reveals that our product is either ‘not as good’ or only ‘as good’ and not ‘superior’, or if priced more than what it should be, then we need to act immediately. If it means improve quality, we will do that. If it means we correct prices, we will. If there is a shortterm hit we have to take, we will (take it),” he says. Over a period of time, it also made corrections and changes in its portfolio, particularly in soaps and laundry. Paranjpe says the measure of product superiority through blind tests has seen HUL’s products win and the number has trebled in the last two years.
The results were heartening. HUL’s growth numbers started to bounce back. Its market cap improved from Rs 51,770 crore in 2008-09 to Rs 88,600 crore in 2011-12, while revenues grew by 50% to over Rs 22,000 crore since 2007. Once again, HUL is the darling of the fund houses and analysts, which at one time were pounding it for lack of spunk.
Another important lever that changed the game for HUL was innovation. Innovation was important from the perspective of making its portfolio relevant to the emerging consumer. The innovation insight came from an interaction he had with Prof C K Prahalad in 1999. The management guru, who was also on the board of HUL, told Paranjpe the only driver of innovation is a mismatch between ambition and resources. “He said the real shift which you have to make is to break out of this equality. No entrepreneur who has been successful in life has ever set his goals in line with how much money he has and how much resources he has. He sets his goals based on what would make him proud. He then figures out how to stretch his resources to achieve his dream and through that innovation takes place,” recalls Paranjpe.
Small wonder then that 60% of HUL’s business was touched by innovation last year. Products like Lifebuoy Activ Naturol Shield, Magic, Comfort Green and Rin Perfect Shine are some of the recent examples.
Similarly, when HUL went on to add 20,000 outlets a year in its distribution, it was a stretched target that was made possible through this insight. During 2010-11, HUL significantly increased its direct retail coverage by adding over 5,00,000 outlets. As focus on consumer and innovation gets embedded in HUL’s DNA, Paranjpe’s next big task is being ruthless on costs. “We are working to structurally alter the cost base of the organization, which will enable us to compete better, be more agile and swift,” he says.
Even as he executes one BHAG after another, Paranjpe doesn’t forget certain critical lessons of the past. As soon as he took charge at the helm in 2008, the global crisis struck. HUL was stuck with high inventory and wholesalers with high-priced stocks. But in hindsight, the challenges of 2008-09 were a great teacher for Paranjpe. In theory, the crisis can repeat itself, but Paranjpe believes HUL is better prepared in terms of cycle time response, action and decision making. Much like a flywheel, which when stalled requires a great deal of effort to restart, Paranjpe believes that businesses can gain a good momentum when in motion only if the right thing is done and there is focus on execution.
NITIN PARANJPE
MD & CEO | HUL
Achievements | Under his leadership, HUL’s PAT increased from Rs 1,743cr in 2007 to Rs 2,599cr in 2011-12; Gross sales rose from Rs 14,715cr to Rs 22,899cr in 2011-12; Innovated various brands; Reappointed as MD & CEO for a further period of five years commencing April 2013
MD & CEO | HUL
Achievements | Under his leadership, HUL’s PAT increased from Rs 1,743cr in 2007 to Rs 2,599cr in 2011-12; Gross sales rose from Rs 14,715cr to Rs 22,899cr in 2011-12; Innovated various brands; Reappointed as MD & CEO for a further period of five years commencing April 2013
Namrata
Singh & Shubham Mukherjee TOI120714
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