Sanjiv Mehta, Managing Director & CEO of India’s largest FMCG major Hindustan Unilever Limited, is a firm believer in what he calls ‘brutal optimism’ in today’s volatile business environment. At the launch of the BW Businessworld Marketing Whitebook in Mumbai last week, where Mehta was the keynote speaker, he talked about his experience of turning around several Unilever businesses in many markets across the globe, the need for brands to have a purpose beyond profit and the quality of leadership and resilience needed to move ahead in a trust deficit world.
We present edited excerpts from an exclusive conversation that Annurag Batra, Chairman and Editor-in-chief, exchange4media Group and BW Businessworld, had with Sanjiv Mehta.
Anurag Batra: You are a Unilever veteran. You’ve worked in different parts of the world, including Africa and the Middle East. Which has been the most satisfying part of your career?
Sanjiv Mehta: Over the 22 years that I have been working for Unilever, it’s been an amazingly satisfying journey. It’s a company I am very proud to work for, and a place where I can be in sync with my personal values. I have been heading businesses for 15 years, and in these 15 years, there has not even been one instance where the company has asked me to do something wrong or unethical. I believe that conscience is the softest pillow in the world and I put my head on that pillow and go off to sleep.
AB: Now, I want you to talk about a specific stint in your career, which was in Bangladesh. When you went to Bangladesh, the business was not doing well and the management wanted to shut it down. Tell us about what happened there and how you managed to turn it around.
SM: That was way back in the early part of this millennium. Then, we were settled very happily in sunny Dubai. Our twin daughters were very small and we had a wonderful life going for us. And then came the Bangladesh opportunity. It was a time when the Bangladesh business was under severe stress. There was a brand called Aromatic, which came on the ‘halal’ platform and said our brands were ‘haram’ because we were using pig fat and cow fat - something which was not liked by the Muslims and the Hindus. It was a baseless allegation, but something which got completely anchored in the consumer’s mind. We had a huge loss of market-share and erosion of talent, and that was the time when I was asked whether I would like to go to Bangladesh. Then, my wife used to be a corporate banker with HSBC. I still remember us with our twin daughters going to Bangladesh for a recce visit prior to accepting the job. When we landed in Dhaka that day in September, the only thing we could see all around us was water, because it was one of the worst floods in the history of Bangladesh. Those were the days when Unilever was headquartered in Chittagong. So we went to Chittagong. Then we visited the factory, and saw the business from close quarters. It was in a very sorry state – the morale was down, growth was negative, the business model was out of shape and talent was leaving us. And then we came back and I decided to take it up, thanks to my wife Mona… she supported me in taking a decision saying ‘Where in your life will you get a chance to turn around a Unilever business?’ I remember that after I accepted the job, I had gone for a briefing session to my President in London and he said, ‘We are thinking of exiting from Bangladesh, go and see if you can turn it around’. I thought ‘I wish he had told me before I accepted!’ But that’s where it was, and he was very clear. In life we have to take risk. Business is about taking risk. And risk and rewards go together. If you don’t take risk and meet challenges, how will you prove to yourself that you can come up and take on bigger challenges? Looking back, it was a major step in my career which made a significant difference to me as a leader and as a businessman, and to our business in Bangladesh which has now become one of the iconic businesses of Unilever in the world. It is one of our most profitable and fastest growing businesses.
AB: Talking of courage and making something of an opportunity, in South East Asia, Procter & Gamble had the upper hand and was setting the ground to be a world leader. You went there and brought Unilever to leadership. Would you like to talk a little bit about that?
SM: From Bangladesh I moved to Philippines. Philippines is a very interesting country. If you were to ask me to describe it in a sentence, I’d say 400 years of church and 50 years of honeymoon! That’s what Philippines is all about. They have been ruled by Spaniards and they were a colony of the United States. So, very Catholic on one end, but very liberal and fun-loving too… I’d say very Goan style! And there, because it was an American colony, American companies were deeply entrenched. And my friend from Cincinnati had a very big business over there. Like you rightly said, we were the No. 2 players over there unlike in India where we are very dominant in terms of size and stature. There, the biggest category, even bigger than fabric cleaning is hair care. And why is hair care such a big category? You only have to look at a Filipino woman’s hair and you will get it – they have long and beautiful tresses. So the competitors had above 44% share and we had 32% share of the market. One of the things on our mind was, we have to turn this around, we have to get in there. For the first six months of my tenure there, we did intensive research. In the FMCG sector, we fight for even 10 bits of market-share… 10 bits being one-tenth of a percentage. Therefore the gap there was a huge gap. And that was one part of the portfolio with a clear gap for us, as we did not have a player in the hair care segment. So, I went to my boss and said that I clearly saw a huge potential for bringing in our brand Clear to Philippines. But my boss said right then, as Asia, we could not afford an entry, but we could revisit it in March. Come March, I gave him a call asking if we could launch it. My boss said, ‘Give me another month. And how much more money do you require?’ We had estimated that launching the brand would cost us about 6 million Euros. But my boss felt that it was a bit too high. ‘I can’t afford it, give me one more month,’ he said. After a period of time, I again went to my boss. He said he couldn’t fund the entire 6 million Euros, but would be able to share with us 2 million Euros. We were about a billion dollar business in Philippines then. So we went back to our team, talked about whether we would be able to bring in funds from other brands so that we could launch Clear. We wanted to go in with a complete launch, take the competitor by surprise. We said we would do it. I still remember - it was the third of July. What we did was famously called the ‘blitzkrieg launch’. We deployed about 3,000 people overnight to change the shelves in thousands of stores. And we took the competitor completely by surprise. Everything was done in stealth. Even the cartons which were manufactured had an outer casing of a different brand. So, very few people in our company knew that Clear was going to come into their market. We surprised them too. It was amazing communication, and a great marketing story - one of the most famous marketing stories in the annals of Unilever. In the Marketing Academy, they still teach you ‘The Clear Way’. We had launched Clear in July; by October we had taken shampoo leadership. By December, Clear had taken leadership from H&S. I still look back very fondly at the amazing creative work that my Filipino team did, and the brilliant execution. They set new benchmarks of execution. That is a very satisfying story.
MEHTA’S JOURNEY
Sanjiv Mehta took over as Managing Director & Chief Executive Officer of Hindustan Unilever Limited on October 1, 2013. He is responsible for the entire South Asia cluster that includes Pakistan, Sri Lanka, Bangladesh and Nepal, apart from India.
Mehta joined Unilever in October 1992, after a stint with Union Carbide India. Since then, he has led several Unilever businesses across South Asia, South East Asia and the Middle East. He was appointed Chairman & Managing Director of Unilever Bangladesh in 2002. In 2007, he was appointed as Chairman & CEO of Unilever Philippines. In 2008, he took up responsibility as the Chairman of Unilever North Africa and Middle East (NAME), leading a multi-country organization spanning 20 countries in the region.
During his tenure as the head of various Unilever companies, the business achieved significant success accelerating both growth and profitability. Mehta has been instrumental in building leadership talent and is credited with substantially strengthening organizational capabilities.
AB: You have been in countries like Bangladesh and Turkey, and in the Middle East and Africa region when literally all the markets there were either going through some very volatile times or presenting new kinds of challenges. Talk to us about how you managed your company there and what were some of the experiences?
SM: I was there during the ill-fated Arab Spring. I looked after 20 countries from Oman in the East to Morocco in the West. If you recall, it all started from Tunis with a fruit vendor and quickly spread across the Arab world. We had big businesses over there. And one of the big markets we have is Egypt, which was caught up in flames. I remember there was a period of three weeks, when everything had shut down in the country. The police had run away from police lines. The military had run away from the barracks. It was complete chaos. Those were the days when the mob was burning down factories and stores. The banking system had collapsed.
In that scenario, what did we do? Our team went around collecting all the receivables that we had from the trade from the wholesalers. Many of them were happy to hand over the cash because of the environment around. We collected the cash, and we went to wholesalers purchasing huge quantities of grains and brought it to our factory. We told all our partners, their employees and our own employees, that whoever runs out of grains, food, milk or tea, could come to the factory and collect it. There were hundreds of people living from Unilever’s support to them during this time of crisis. We identified people who had run short of money. We had people go and give them cash at their homes. That’s one part of the story.
On October 6, in an industrial area in Cairo, mobs were burning down factories. You know who prevented our factories from being burnt down? The same set of workers whom we had supported. They lived in that factory for two weeks to ensure that no one harmed it. In many ways, it goes back to the purpose of the brand. You look after your people, and they will look after your business.
I remember having a chat with my Managing Director in Mashreq at the time, when I told him to revise his budget for the year and increase the spends. He thought I was joking because the popular sentiment was to tighten the purse. I assured him that I meant it, and I wanted him to refresh and come back with what more we can do. He came back to me with an added spend of another million or two million Euros. I requested him to go back again and come with a revised spend of around 10-15 million Euros. He was very surprised, and he didn’t even want to do it. I told him, let’s go ahead and do it. If this money gives the results, the credit is yours. If it goes down the drain, the responsibility is mine.
If you go back to the history of some of our big competitors during that phase, their quarterly global results indicated negative impact due to the Middle East crisis. Our business during those times grew at more than 20%. People had nothing else to do except watch television. And what were they watching? Only Unilever ads, because we were the only company to put out ads. People were also reducing their distribution because they felt unsafe. Our people said, we will expand our distribution, because there were many unemployed youth in the country, great people who were looking for jobs. We expanded the distribution, and gained. Again, we go back to the purpose. I am of the firm belief that purpose leads, profits follow.
AB: Unilever is a very large corporation, across many categories, with many resources behind it. As a business leader, what is your advice to small and medium-sized companies?
SM: Whether you are an individual, a business person, or a business entity, you are part of society. You certainly have to have a purpose, and you have to ask yourself what is the role you are going to play beyond just transactions. Going back to the purpose of Unilever -- you will never find us saying that our mission in life is to create shareholder value. We never say that. We say that if we look after the interest of the consumers and the communities at large, then shareholder profit will come. That’s a byproduct of our core purpose. I would certainly urge that whatever field you may be in, you need to have a bigger purpose in life and you need to ask yourself how you can make a positive environment in your country, in your society, and the world at large. In the process, you get rewarded. The current generation of millennials is far more conscious about the company behind the brands. They want to know the company and its purpose. And then they reward it by buying more of their brands. In our stable, that has brands like Lifebuoy, Dove, Surf Excel and Red Label among others, consumers recognize the purpose.
AB: How important are speed and agility for the businesses of today? Considering the tough environment, how do you see the role of leaders? Is the role of a leader changing?
SM: There are certain traits of leadership which are timeless. You have to be trustworthy. You have to be inspirational. You need to have a strategic clarity. You should know what to do and how to do it. Those are traits applicable to all businesses and relevant for all times. But then there are nuances of leadership which have to change with the times. The days of command and control – the days of hierarchy - are long gone. You need to have flatter structures. Now, flatter structures are not just structures you have because it has become a fad, but because it brings in speed and agility in the company. The other very important trait I believe that a leader should have is resilience. In today’s fast-changing world, you will face difficulties, you will face hurdles. The question is not about failing. The question is how quickly you get up and start running. I tell my people, failure is not the opposite of success, so long as we learn from it, and so long as we don’t repeat it. So resilience becomes very important just like speed and agility. In today’s world, where there is a trust deficit, it is very important for people in the company to relate to the purpose and values.
AB: At various points in time, other brands would have posed a serious challenge to your business. For instance, there is Patanjali as a strong challenger brand now, besides a whole list of others who are creating their own niches and in some way eating into your market. How are you responding to them?
SM: First, I think we need to understand that the pie is not finite – and if someone takes a share, then the other businesses will not be losing out. In India, none of the categories in which we operate are mature, or anywhere close to mature. Even in categories like, say toilet soaps or detergent powders - which are highly penetrated and nearly everyone has it in their homes - there is huge room to grow and operate through getting into adjacent categories. So, the growth is huge. The important bit for a company like us is that a good competitor brings out the best in us, and it strengthens our resolve to serve consumers even better.
AB: Your CEO (Paul Polman) is called an optimistic pessimist – he says ‘create like an optimist and spend like a pessimist’. What is your personal leadership quotient? How would you describe Sanjiv Mehta as a leader?
SM: If you have given the tag of optimist and pessimist to Paul Polman, I would not like to use it. I would like to retain the realist tag. I think a leader in times like ours - tough times in a fast-changing world - has to have what I call brutal optimism. It is in many ways, if I may pick up Churchill’s quote, blood, toil, tears and sweat; but ultimately we shall prevail. When times are tough, you have to show the mirror to your people. There is no question about that. But as a leader, your job is not just to show the mirror - not just to tell them what the reality is, you also need to show them the way out. You will have to show them how you are going to reinvent the company. That’s the job of a leader.
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