BUSINESS / CHOCOLATE SPECIAL ......................Remaking Cadbury India

Remaking Cadbury India





The cascading effect of a global takeover has effectively turned this 60-year-old Indian company into a startup with new shareholders, new product categories and brands, new leaders, a new identity and culture. New CEO Manu Anand has the unenviable mandate of managing such unsettling change without taking his eyes off growth

About 5,000 employees of Mondelez India, the almost unrecognisable new avatar of what was formerly Cadbury India, left their Peddar Road, South Mumbai HQ of over 50 years, and have just moved to a new home in India Bulls Finance Centre, Parel.

The geographical relocation is symbolic of both pain and excitement that many old and new executives are respectively experiencing as the 60-year-old company emerges out of two forced, tumble-dryer style makeovers triggered by rapid ownership changes.

First, Kraft Foods acquired Cadbury globally in January 2010 in a hostile takeover. Next, in October 2012, Cadbury and all non-grocery businesses of Kraft outside North America -including Nabisco, Oreo, Trident, etc -were lumped together and spun off into a new company named Mondelez and listed on the New York stock exchange.

Consequently, in India, what was once Cadbury has become Mondelez. What was once a pure play chocolate business now includes biscuits, chocolates, gum and candies and hot and cold beverages. What was once a distinctly British, purple passion culture with abundant freedom for local decision making will now need to make way for an aggressive American, more centralised model.
One Anand has given way to another. Anand Kripalu, CEO of Cadbury for nine years, has movedoutandnewCEOManuAnandhasbeen running the company for 10 months. Seven out of 12 directors in the company are new.

In effect, the 60-year-old company has just become a startup with new shareholders, new product categories, new brands, a new CEO, new leaders and a new identity and culture.

Irene Rosenfeld, chairman and chief executive officer, calls Mondelez International the world's largest startup. Mondelez is at the same time both a 20-month-old baby and a $36-billion global snack giant. And, as it seeks to create a new culture, it has both the assets and burdens of a 100-year-old legacy.

“Within 24 months, we moved from Cadbury to Kraft to Mondelez. So, moving from each would lead to a different focus,“ says Manu Anand. “There will be new ideas and a different perspective and a blend of the old and new...a mindset change has to happen.“

And, as Anand points out, all this tumultuous change happened deep in the throes of a global economic meltdown.

Seen in this perspective, moving to a new HQ is the least of changes that have swept through what was once Cadbury India. Change Mondelez India is a complex bundle of paradoxes. Manu Anand says the organisation is still evolving. The key for the road ahead is to understand “the `why' of the change, rather than the `what' of the change,“ he adds.

Anand has the unenviable mandate of managing such unsettling change without taking his eyes off growth.

Rosenfeld wouldn't have it any other way.
She is keeping a hawk's eye on India. She spearheaded the $21.8-billion hostile takeover of Cadbury and the Kraft-Mondelez carve out after that. Mondelez shareholders expect her to deliver. Growth in developing markets including India, which already brings in 44% of the firm's global revenues, is her best bet.

“Despite economic challenges in many emerging markets, our India business continues to post strong double-digit growth,“ she told ET in an exclusive email interaction for this story. “For us, emerging markets like India are essential to drive our longterm growth and deliver top tier financial performance, she also told analysts recently.
“We've invested ­ and will continue to invest ­ in India to build production capacity, support our power brands and global innovation platforms, and strengthen our route-to-market and sales capabilities.“

Mondelez has already announced plans to invest $190 million to build the country's largest chocolate manufacturing plant near Hyderabad.

The company though is coming off a weak year (2013), when its growth rate was in the low teens, its lowest since 2005. It grew 21% in 2012 and over 30% in the preceding years.

But things have picked up this year. Its market share increased by 2.5 percentage points in a category that continues to grow about 20%. “This momentum, together with our investments to reinforce this growth, gives us great confidence in the ongoing success of this business,“ Rosenfeld told ET.

Anand is the man in charge of delivering on this.
Old Organisation, New Top Team Anand needs to steer Mondelez on the growth path even as he needs to rip apart and reshape the organisation. He is dealing with two major areas of churn.

First, almost the entire top management team is now new; Anand himself is from Pepsi and the top team of 12 includes seven who have joined from Unilever, Vodafone, Castrol, etc in the last 12 months.

“There is a new management, but the rest of the company remains the same,“ says Alpana Parida, president, DY Works, a brand design firm. “So, the challenge is how do you take two different companies, the old and the new cultures together, to drive growth and define new strategic spaces.“

The second big churn is on the product front. The former Cadbury organisation was predominantly geared to focus on one product category ­ chocolates. Now, it has to reinvent itself to sell biscuits, cold and hot bevereages, and gum and confectionery.

“This is still a young culture and evolving. What we are instilling in our organisation is a challenger mindset,“ says Anand. This, he says, is needed not only in newer categories, but also in chocolates, where it is a market leader. “There is new competition in the chocolates category. We should adopt a challenger mindset here too.“

This is a deep change. Industry sources say it is never easy for executives in a company, which has enjoyed decades of leadership, to adapt to a challenger mindset. Inevitably, there is resistance; even more so when the change is abrupt and forced as it is in a hostile takeover.

Company and external sources estimate that 200-plus senior executives across func tions such as supply chain, IT, sales, legal and finance have resigned since Kraft acquired Cadbury. Former CEO Anand Kripalu quit in September 2013. “When an organisation is acquired by another in a hostile takeover, aggressive change in inevitable,“ says a senior Cadbury official who has now settled well into the Mondelez system.

Anand, who emerged out of an intense 90day on-boarding programme to interact with employees across the organisation, says he has been spending a lot of time with the next two levels of leadership to explain the `why' of the transformation, persuading them to take the message down the line.

It hasn't been an easy task; it's even been acrimonious at times. Ex-employees alleged that Mondelez selling the Cadbury Mumbai headquarters for reportedly `400 crore in November 2013 was an asset stripping excise. Mondelez officials say the new growing organisation is hiring more employees and needs more space.

The challenge for the new management is to ensure leadership by winning the trust of all employees, says a top ranking ex-Cadbury India official. “There was commitment by the earlier Cadbury team that meant doing things beyond the call of duty, driven by motivation and not fear,“ he adds. This should be the spirit of change.

“There is no band aid solution except paying close attention to daily exchanges and interactions between the hardcore Mondelez managers and the remaining employees of Cadbury,“ says Dr S Raghunath, dean(admin) & professor-corporate strategy and policy, IIM-Bangalore.

Mondelez is trying gamely. An 18-month Leadership in Partnership module to integrate old and new members of the new leadership team is on in full swing. The top 50 members of the extended leadership team have also met together.

Rajesh Ramanathan, executive director, human resources, is a rare constant amidst all the change. He was heading the human resources function for Cadbury India and continues in that role in the new dispensation. He is also pragmatic about change. “You cannot have an aggressive culture because you can't be selling candy and be mean,“ he says.

Mondelez recently hired a couple of senior managers from Procter & Gamble.
Ramanathan says their first take on Mondelez is that it is an engaging place. “We are very conscious that we are a young-old organisation and so people have to be able to access resources very quickly,“ he says.

“The top management may have to send a strong message within the organisation that middle-level managers will have to work flexibly, show respect towards the people from the Cadbury house and acknowledge their contributions, says prof Raghunath. “They will need to negotiate and persuade, rather than command and direct to succeed with the next level of growth.“

The Products Puzzle Anand's second big challenge is driving greater synergies in a diverse set of brands and product categories that have only recently come together under one umbrella. “From a chocolate company, we are now a visible multi-category company,“ says Anand. “The scale has also changed.“

Mondelez's immediate challenge is to take the biscuits story forward, says Sunil Alagh, chairman of consulting firm SKA Advisors and former CEO of biscuits major Britannia “Oreo was a relatively easier play because of the chocolate foundation. But salty biscuits from the Nabisco range in their portfolio can be tough.“ Oreo was launched in India in 2011 and is already the fourth-largest market for Oreo in the Mondelez International World.
Chocolates and biscuits also demand vastly different distribution strategies, adds Alagh.

“The name Cadbury evoked indulgence and pleasure. Brands such as Tang and Bournvita were at some distance from the core business. It will be interesting to see what the Mondelez promise is,“ adds an industry source.

The CEO of another food company also points out that the advent of new categories and brands could dilute the company's focus on what is still its core ­ chocolates. It still brings in 90% of Mondelez India's `4,000 crore-plus revenues. “Categories such as chocolates are also struggling with input costs and growing competition. So, ensuring that they are protecting their turf there and driving growth in new, fiercely competitive categories will be challenging“ he says.

Building premium offerings to improve profitability is another challenge. “Like most MNCs, I see Cadbury also diluting formulations,“ says an industry source. “The original silk chocolate launched is not the same today. The advertisements have changed where you could lick the melting chocolate off your finger. They have put emulsifiers into it and hardened it. So, launching a good product and then diluting it later can bite the company in the back.“

“We have worked on in-store impact, installing visicoolers (devices to cool products and display them at the same time) critical for an impulse category; we have innovation in product and packaging design, merchandising and infrastructure,“ counters Anand.

“Mondelez shouldn't be pompous, but milk Cadbury for the next 30 years; it is better to lose a bit by promoting Cadbury rather than gain little by promoting a bit of different avatars of what was Kraft and now Mondelez,“ says Harish Bijoor, brand consultant and CEO of Harish Bijoor Consults.

But the unsettling change also creates opportunities for growth. “If Mondelez keeps innovating to creating opportunities to increase consumption and building a strong distribution and supply support, the going can certainly be good once the economy picks up. A completely new management ensures everyone can be easily on the same board with a similar mindset to take the strategy forward. It makes life a lot easier for Mondelez,“ sums up Alagh.

Kala Vijayraghavan ET140624

GADGET GIZMO SPECIAL ...............Who'll win the tablet war: Apple or Samsung?

GADGET GIZMO SPECIAL Who'll win the tablet war: Apple or Samsung?

When you go to war, when you plan an assault, when you enter a battle zone – the first thing you do is invade into home territory. Samsung has left subtlety and niceties in the dust and to make that point clear – they took over New York City’s iconic Madison Square Garden with a vengeance. This was a coup of epic proportions with nothing left to chance. Samsung was here to make a point, to make as much noise, create as much hype and make headline news worldwide. And that headline was simple, lucid and very clear. Apple’s reign as tablet king was over, it was time for Samsung to take over.

Once upon a time: At one time, Apple had the lion’s share of the tablet market, with literally no other brand in sight. If you wanted to buy a tablet, you only had to decide which iPad to buy! That has changed dramatically. Today, Apple’s market share is down to about 30 per cent, it has lost 10 percent market share last year and that exact percentage is what Samsung has gained. Google, with its Nexus Tabs, and Amazon, with its Kindle range, are the other giants in the game. But the battle has taken a new turn now, a dramatic assault where the war bugle was sounded right in Apple’s own turf – New York City.

Kill Competition: Every single thing on the Samsung Tabs (right) have been carefully crafted to outdo the iPad range

Dual Assault:

 Samsung launched two new tablets (8.4-inch and 10.5-inch) here and called them Samsung Galaxy Tab S. The S moniker has always been reserved for Samsung’s flagship offering and no tab has been allowed that name till now. Samsung has either played in the totally el cheapo category (mostly 7-inch run-of-the-mill stuff) or the very high-end niche section (Note and Pro). Samsung users of high-end phones like the Galaxy S5 who wanted to buy a tablet, didn’t really have a choice. Thus the coming of these two tablets was no big surprise. In fact, for the last month or so, (planted?) leaks about the product were common in the techosphere. What did take most by surprise were the products. This was not just an assault on the iPad range, it was a carefully crafted walloping thwack deep into Apple’s territory. Every single thing on these tabs have been carefully crafted to outdo the iPad range and Samsung made sure everyone got that point. They even had iPads demonstrated right next to the new Tab S range for everyone to compare. This is how the dual Samsung Galaxy Tablets S story unfolds.

SAMOLED:

 Nope that’s not a term that Samsung came up with, for their own displays. This is the biggest USP of the devices as they come with Super AMOLED screens. This is holy grail territory as this display technology gives a 100X contrast ratio over LCD screens, colours truly pop out and are very vivid, blacks are genuine and deep, and even in outdoor sunlight, these screens don’t fade out. It also throws in a RGB sensor to detect light conditions and adjust white balance. 

PPI Perfection:

The resolution on these tablets is an eye-popping 2560x1600. That’s a pixel-per-inch density of 359 on the 8.4-inch tablet compared to about 326 on the iPad Mini Retina. On a tablet, when you throw in better colours, deeper blacks, more contrast and a fantastic number of pixels – it shows! And the competition looks washed out. 

Thin to the bone:

The Galaxy Tab S 8.4-inch weighs 294gm and is just 6.6mm thick while the iPad Mini Retina is 7.5mm thick and 331gms. The Tab S 10.5-inch clocks in at the same 6.6mm and 465gm while the iPad Air is 7.5mm thick and 469gms. Samsung’s made the very term iPad ‘Air’ sound heavy and chunky. 

Your fingers are your control:

The tablets come with a hardware home button that also plays dual duty as a fingerprint scanner, but Samsung ups the ante. This can be used to enable Private Mode as well as scanning in up to eight users. Thus each can set up their own home screen and apps and ways of working and that very custom interface will open when you scan your finger in.

Sleek And Thin: The Galaxy Tab S 8.4-inch (above)weighs 294gms and is just 6.6mm thick while the iPad Mini Retina is 7.5mm thick and 331gms

Speccing it:

 Samsung’s hardware prowess can never be doubted. The WiFi-only version will have a Exynos Octa core processor while the LTE version will have a Qualcomm Snapdragon 800. Add to that 3GB RAM, 16 or 32GB storage, microSD slot, 8MP rear camera and 2MP front camera, plus about 11 hours battery life when watching a video. 

Build and Form Factor:

Samsung’s Achilles heel is turned into a bit of an advantage. This looks like a Samsung Galaxy S5 that has been stretched both ways. But somehow that speckled back and plastic makes this look and feel more robust. People won’t buy it for its looks but fortunately no one will reject it for the same reason either. 

Upping the game:

 SideSync pairs the tablet with a Galaxy S5 phone (more phones may be added). Immediately, the tablet mirrors the phone’s screen in a smaller window thus enabling voice calls, running apps as well as transferring files with a flick. Almost any app can be opened in a multi-window environment, thus enabling true multitasking. There’s Cisco’s WebEx for video conferencing, Galaxy Gifts for exclusive freebies, Remote PC to control a PC, Samsung’s very own magazine format called Papergarden with custom content from Condé Nast, Marvel and National Geographic and new covers, including one that has a built-in keyboard. 

All in all, Samsung has hit hard and fast with its dual punch out Tab S offerings by pricing them exactly like the iPads but upping everything else. With a 10 per cent gap in market share and Samsung growing at about 10 per cent annually – these two tabs may soon bridge that gap and dethrone Apple this year itself. Until you throw in the equation of the next generation iPads. When you are king and have some slick new arrows in your quiver, then the dethroning process isn’t as easy as Apple pie!  

Rajiv Makhni HT Br140622

MANAGEMENT / LEADERSHIP SPECIAL ...............How Leaders Need to be Lifelong Learners, Too

How Leaders Need to be Lifelong Learners, Too



Execs need to develop new responses & capabilities to stay ahead of the curve

Leaders need to continue learning throughout their careers. This has become ever truer in the modern world, which is as complex and ambiguous as it ever has been and even more volatile and uncertain. It, therefore, is necessary for leaders to continue developing new responses and capabilities. Years of leadership research have shown that it is indeed possible for senior executives to learn new capabilities. Their personalities do not change, but they don't need to.

Despite being armed with greater access to knowledge and training than ever before, executives still need to be able to integrate that knowledge into their behaviour.

There are 3 steps to doing that.

You must begin by identifying a need for improvement.

Next, you must achieve an initial competence in the new skills.

Most of us have been here before. When learning to ride a bike, this was the point at which we took off our training wheels and realised that we couldn't balance. We then had to master staying upright. This requires a tremendous attention, practice and persistence. Finally, you must reach a stage at which your new competence is unconscious, rather than conscious.
When practice makes perfect, it's exactly like riding a bike: Once you know it, you always will be able to do it without thinking. My research during the past 25 years has led me to identify four major obstacles: The Knowing-Doing Gap Today's executives tend to know much more than they act on. Knowing something doesn't guarantee that you can implement it. Executives sometimes confuse understanding a concept with implementing it. When they understand a concept, when the whole thing makes a great deal of sense, it seems as though that box has been checked -at least until they get a strong feedback that their behaviour doesn't really measure up.
Insufficient Investment

Too often today's senior executives underestimate how much effort is required for them to learn new leadership knowledge in a way that will be helpful. They are quickly satisfied with a vague understanding, so often they underinvest in developing a more granular understanding of a concept.

If it's not in your head, you can't use it under real-time conditions. If you want the knowledge to be in your head, you must take notes and review them. Insufficient Persistence

If you want to behave differently from a habitual response and more consistently with a new objective, you need to intercept the habitual response before it is produced, search your mind to identify a more appropriate response and produce that more appropriate response -all of this in real time and under pressure.

Insufficient Support

When executives manage to become conscious of their shortcomings and invest enough time and energy to develop and practice new behaviours, often they are tripped up by their environment.

(Writer is a professor of management practice at Insead.) 

JEAN-FRANCOIS MANZONI

NYT News Service

ET140624

BUSINESS SPECIAL................... How to Fix Manufacturing

How to Fix Manufacturing

Simple laws, better implementation and trust-building can turn our Achilles' heel into sprinter's In Germany, the skills of manufacturing managers and workers, and the quality of their relationships, are the sources of sustained manufacturing competitiveness

India's manufacturing sector has been sick for long. Despite the reforms of the 1990s, which boosted overall growth, India's manufacturing could not improve its competitiveness.

At 15% of GDP , it is much smaller than China's 30%, and smaller too than Germany's 21%, though Germany has much higher wages and a much stronger currency . The trust deficit between employees and managers within Indian manufacturing enterprises, manifest in many incidents of industrial unrest, some resulting in deaths as well, does not bode well for a recovery .

We need to understand root causes and should be careful that surgical interventions, such as recent demands to make it easier for employers to fire workers, do not make the patient even worse.
Different Roads Some suggest that we should aim for what China has: very large, labourintensive factories such as Foxconn's, which employ many thousands of people on a single site. For this, they urge the new government to amend India's land and labour laws.
We may have the same vision as China, but our paths to it will have to be different, because our starting points are very different.

China began by usurping all land rights to the state, and taking away democratic freedoms to form associations and free speech. India took a different path, of giving land rights and enshrining democratic freedoms in its Constitution.

Now, the Chinese government is slowly giving some rights, which is easier to do than taking away what is already given, which these economists are urging India's leaders to do. If India has to change its laws, it must win the support of people. For this, it needs good processes for engaging and consulting all stakeholders, not just political will to take decisions.
`Iron'ical Outcome Some say that the Prime Minister should emulate Margaret Thatcher, the “iron lady“ who stamped on the unions. The surgery did not have a happy ending. Britain's manufacturing sector became even weaker. It is Britain's financial services sector that grew with the freeing of markets.

Germany has taken a different path to grow and compete in manufacturing: much less confrontation, much more collaboration. Strong unions, with a place on high tables.
Strong and responsible industrial associations. Consultations mandated before laws are changed. An effort to maintain continuity of employment through recessions, and to use slack periods as opportunities to strengthen skills, coming out of global lean periods even stronger than the competition, as Germany did from the recent meltdown.

In the German way , skills of managers and workers, and the quality of relationships amongst them, are the sources of sustained global manufacturing competitiveness.

India's democratic and political structures are more like Germany's than China's. Also, we would rather have the outcomes that Germany has obtained for its manufacturing sector than what Britain got from its confrontational approach. Recently , France changed its labour laws. The French minister explained it was easy for the government because the unions and employers, taking a lesson from Germany , rather than Britain, sat down and worked out together what should be done, which made the government's work easy .

India's labour laws are antiquated, there are too many , and they are badly administered. The approach to the laws should follow three principles. One, simplify the laws and improve their administration: use technology , reduce procedures, make processes transparent. This is a winwin for all, including understaffed government departments.
Shopfloor Final Arbiter Two, focus on improving regulations and industrial relations closer to the ground, in states and in enterprises.
Competitiveness springs not from national laws but from what actually happens within industrial clusters and enterprises.

Three, build better institutions of representation along with better processes for consultation and collaboration. Such processes will not only build more trust amongst stakeholders but also enable the right changes to the content of the laws that meet all stakeholder needs.

There is a lot of workers' unrest, arising from a trust deficit. But it is good to know that in the last six months, the central trade unions and employers' federations have engaged, outside the glare of media attention, in a dialogue under the aegis of the India Backbone Implementation Network, a government-sponsored initiative, to improve collaboration and find solutions to problems that are the causes of this unrest. That includes uncontrolled use of contract labour on unfair terms in large enterprises, suppression of labour unions and poor social security for employees in small enterprises.

These have to be changed for manufacturing to grow. Hasty surgery by top-down law reforms will increase mistrust among workers and managements and weaken manufacturing further.

Arun Maira

The writer is member, Planning Commission

ET140624