SWIFT & AGILE
India’s largest FMCG company carries the soul of a start-up as it meets competitors head-on.
In August last year, the country’s largest FMCG company, the ` 36,000 crore Hindustan Unilever (HUL), relaunched its Ayurvedic personal care brand, Lever Ayush. The portfolio has as many as 20 products. But starting with innovation, it took the company just nine months to ‘go to market’. Such speed and agility came as a surprise as a traditional consumer products company usually takes two-three years to research and launch a product formulation.
But faced with challengers such as Patanjali Ayurved, which has been fast grabbing chunks of market share by launching innovative products virtually every month, the company had little choice. The world, after all, is moving towards an entrepreneurial mindset where agility and nimbleness rule. Another factor was its slipping status as a ‘dream employer’ as it was starting to lose young talent to e-commerce companies that promised faster growth. In order to be a high performer, the FMCG major needed
to re-wire itself structurally. So, in early 2017, it set up 15 country category business teams, or, CCBTs, to function as individual, fully empowered business units. These units included hair care, laundry, skincare and ayurveda, and so on. The average age of employees of these units is 30 years. “The CCBTs operate like a mini board. have virtually got a board around them. They have resources from all functions as team members and operate very much like my team. They are fully empowered to deliver for their business unit,” says HUL Managing Director and CEO Sanjiv Mehta.
“We set up these CCBTs to be fast, agile and nimble. So, while we may be the largest FMCG company in the country, we want to have the soul of a small company, the swiftness and agility of a small company,” says Mehta.
The strategy of having smaller business units has also ushered in a culture of experimenting and risk taking. Mehta says the company has 25 innovations in the
WE HAVE A CLEAR BELIEF THAT SUCCESS IS NOT THE OPPOSITE OF FAILURE AS LONG AS YOU KEEP LEARNING FROM FAILURES. THEY ARE TWO SIDES OF THE SAME COIN. Sanjiv Mehta MD & CEO, HUL
pipeline that have the potential to redefine consumer value creation. “These are tech-driven. Analytics and robotics are being done by young teams. We have a clear belief that success is not the opposite of failure as long as you keep learning from failures. They are two sides of the same coin. Business is about risks, and risk sometimes entails failures too. Speed, agility and risk taking have to go together. If you are risk-averse, you can’t be fast and agile. The culture of experimentation has to move with the way we have evolved the organisation,” he says.
Apart from bringing in swiftness and agility, H.D. Bidappa, Executive Director, HR, says the company also lays emphasis on making the employee’s role purposeful. “Our employees attended a series of ‘purpose’ workshops to understand what gives them joy, what gets them excited at work. It’s important to derive joy out of what you do.” So, if there are people who say they want to work in rural areas, the company facilitates their transfer to an area where there is a large rural business. “We promote agility, empower our people, and focus on their well-being so that work becomes exciting and purpose driven,” says Bidappa.
Utpal Das, Partner at executive search firm EMA-Partners, says the adoption of entrepreneurial mindset has definitely helped HUL attract and, more importantly, retain young talent. “People have realised that wealth creating opportunities could be more in traditional companies.”
In fact, the Lever Ayush re-launch with 20 products wouldn’t have been possible had HUL stuck to the earlier structure, says Mehta. The company’s change of approach has started to reflect in its performance too. After a few quarters of low growth, HUL posted a like-to-like domestic sales growth of 17 per cent in the third quarter of 2017/18 fiscal. Its net profit grew by 28 per cent.
Business growth came during a period when the economy was trying to overcome the problems of goods and services tax or GST. Mehta says HUL not only passed on the price reduction due to GST to its consumers, it also offered to pay the government suo moto the amount of ` 119 crore crore accrued as benefit in lieu of the GST rate reduction on some products effective November 15, 2017. “Everything was smooth as clockwork. I attribute a lot of that to the organisational changes that we have made.” The company’s attrition rate, according to industry experts, is a healthy 8-9 per cent; FMCG industry rates are 13-14 per cent.
The next item on Mehta’s agenda is to ensure increased diversity and gender representation. While HUL’s workforce has 36 per cent women, Mehta says, “As a company we aim to cater to the needs of people across segments of the society. We are not a city-based company, a large part of our business is from rural India, so we also need to have a workforce which is in tune with the rural ethos. So, we are spreading our net wider to have those kind of experience within the company," says Mehta,” he adds.