'Capacity to Fail - Focus on short and long term goals- Nitin Paranjpe'

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Name: Nitin Paranjpe
Age: 48
Designation: Chief Executive Officer, Hindustan Unilever
The Challenge: To reignite growth at India’s largest consumer goods company
What He Has Achieved: Sales have grown by a third, while profits are up 17 percent. The company’s market cap is up nearly 60 percent to Rs. 84,020 crore
How He Did It: He got employees to focus on both short-term and long-term goals

In 1999, the late C.K. Prahlad, who was on the board of Hindustan Unilever, had chosen to mentor some of us. During the course of the mentorship, he asked me the difference between an entrepreneur and a manager. I had given him the most obvious answer with which he wasn’t pleased.

According to him, the only difference between the two is the relationship between ambition and resources. Managers have a mindset that manages resources. So, ambition (A) equals resources (R), which is a steady state condition. There is no entrepreneur who starts off with A=R. He has virtually no resources, but he has big dreams and there is a mismatch between ambition and resources. Ambition is substantially greater than resources.

I kept reflecting on this and it led me to conclude that the only driver of innovation is a mismatch between ambition and resources. You can either constrain resources or dramatically increase ambition. What we’ve tried to do in this business is to help people understand this.

Let’s take for example our drive to treble our rural direct distribution coverage. Over the years, we had been adding a small number of outlets and patting ourselves on the back saying we were ahead of our competitors. But our competitors were narrowing these gaps.

I quickly discovered that most people don’t achieve much when you give them a slightly higher target because they operate out of a fear of failure. So, we came up with an ambitious plan to add 500,000 more outlets in a year. This at a time when we had been adding just 15,000-20,000 outlets a year. In hindsight, it was the most irrational decision, but look at what we achieved.

When you increase the target so dramatically it becomes impossible to have a rational dialogue. The trick lies in getting people to suspend belief and judgement for a while and paint them a picture that in theory it could happen. How would it feel to do what no one has ever done before? How would it feel to get there?

He [the employee] knows that if he gets 400,000 instead of 500,000 he will be a hero and everyone in the company will think he is a hero. Now, if I had asked him to do 25,000 and he had reached 20,000, I would have thought he had failed and he too. The big trick in many of these things is to think in terms of targets that put ambition so much in excess of resources that you just eliminate the fear of failure. Another change we’ve made is in incorporating the culture of ‘and’. The day you are able to get two seemingly incompatible things together, you create even superior value. People often talk about the choice between topline and bottom line. To me that is a false choice. It is always both.

Most people say we either need to do short term or long term. I say we have to run the business with a bifocal lens. Part of it is looking at this week, this month and this quarter and the other part is how do I shape this business and make it ‘future-proof’ five years from today. Both have to be done.

We found a way to speak for the business in the short term but ‘tangibilised’ it for the long term. For this, we needed to articulate in a compelling manner what we need to do for the long term and the actions that we need to do now.

Let’s see how this works. We have two tasks. First is to make sure that every brand is competitive in every geography. The second thing we said is, if we have to win in the India of tomorrow we have to first start with a point of view of the India of tomorrow. We start with a point of view of the consumer, segments, channels, geographies and categories that will become large.
If you have a point of view that says that many of the categories are small today, but I can see that many of the trends and consumers, channels will become large, then it is crucial that our shares in these categories and channels and segments of tomorrow have to be higher than the average.

We called up 12 sub-categories and said you can be sure they are going to be big categories of tomorrow — face wash and conditioners are one of them. It made us realise that the pace at which these develop might be faster than we imagine and so the resources and the intensity with which we market them need to be different and get a different sense of urgency.

We introduced a simple phrase, ‘get tailwinds’. Which means the moment I am stronger in the things that are going to be winning tomorrow, automatically, even if I hold my position in other categories, my weighted average keeps moving upwards. That is what I mean by business gets a tailwind. 

While fixing the business today is important, if you are just obsessed with that, you will never be doing anything for the future and your business will face headwinds. Everyone must be obsessed with doing things that will generate tailwinds. That’s another example of a bifocal lens.

Through all this, you’ve got to ensure that as you go through a business cycle, at a particularly challenging time, you never lose sight of the belief. A leader who has lost sight of the belief has lost his right to lead in many ways.

However challenging the time is, it is critical that you reflect, introspect, but you must always have belief. One of the things I have tried to do in my career is, whenever there is a challenging time, never doubt your ability. Addressing the issue is not as difficult as you think. It is about confronting the problem and being honest about it.

I faced such a situation in the middle of 2009. There were two quarters when we didn’t grow volume. In fact, we had a volume decline. It was very early in my CEO tenure. In that period, we had some choices and we could have addressed [the situation] that arose when we were bringing prices down and stock was with the wholesaler. We thought it would work itself through, but it didn’t. I wish we had taken a call earlier to take it back. That’s a lesson learned. 

But through the entire period we were brutal in our assessment. We took the actions that were required.

Brutal honesty simply means that you confront the facts as they are. Don’t try and justify why what you did was right, what you could have done differently. If you have a team which has that intellectual honesty and confidence, then it becomes easy. And, of course, it requires the humility to say, ‘yeah this went wrong’.

Organisations like ours recognise that there are several areas where we can learn and keep risks minimal and manage to learn at relatively low cost by restricting it to geography and learn the way we want to. But in this, rigour and speed are important. There is no trade-off. I want both. 

I don’t have an issue with failing. But if you fail, please fail early so that it doesn’t become too expensive and you learn from that failure. If we are able to learn from the mistakes and failure and we never make the same mistake again, I think the failure is well worth it and organisations must find ways by which we can get these learning experiences relatively cheap.

Many people ask me, ‘do you encourage failure?’ Absolutely not! I want to encourage winning, but to win you must also have the capacity to fail. I accept that to win you will also fail sometimes

Marketing Fundas made easy

A Professor at one of the b-schools was explaining marketing concepts to the
Students:

1. You see a gorgeous girl at a party. You go up to her and say: "I am
very rich. "Marry me!" - That's Direct Marketing"

2. You're at a party with a bunch of friends and see a
gorgeous girl. One of your friends goes up to her and
pointing at you says: "He's very rich.
"Marry him." -That's Advertising"

3. You see a gorgeous girl at a party. You go up to
her and get her telephone number. The next day, you
call and say: "Hi, I'm very rich. "Marry me - That's Telemarketing"

4. You're at a party and see gorgeous girl. You get up
and straighten your tie, you walk up to her and pour
her a drink, you open the door (of the car)for her,
pick up her bag after she drops it, offer her ride and
then say:"By the way, I'm rich. Will you
"Marry Me?" - That's Public Relations"

5. You're at a party and see gorgeous girl. She walks
up to you and says:"You are very rich!
"Can you marry ! me?" - That's Brand Recognition"

6. You see a gorgeous girl at a party. You go up to
her and say: "I am very rich. Marry me!" She gives you
a nice hard slap on your face. -
"That's Customer Feedback"

7. You see a gorgeous girl at a party. You go up to
her and say: "I am very rich. Marry me!" And she
introduces you to her husband. -
"That's demand and supply gap"

8. You see a gorgeous girl at a
party. You go up to
her and before you say anything, another person come
and tell her: "I'm rich. Will you marry me?" and she
goes with him -
"That's competition eating into your market share"

9. You see a gorgeous girl at a party. You go up to
her and before you say: "I'm rich, Marry me!" your
wife arrives. -
"That's restriction for entering new markets"

AIM Graduation Day 2009 Video

Marketing Analytics made simple....

Analytics involves the application of advanced quantitative techniques on company and third-party market research data to help you make the best possible decision in a given situation. Analytical solutions combine insights from diverse disciplines, including statistics, data mining and operations research. Across industries, companies have used the power of analytics to forecast customer behaviour and make better decisions everyday.


Now, to understand how Analytics can help you is that:

"Connect the dots" in your customer relationship data to understand complex patterns of behaviour

Take the "guesswork" out of decision making - tactical, strategic or operational

Identify the best course of action to take at every decision point during your interactions with customers

Guide managers at all levels to achieve deeper understanding of their current and potential customers

Reduce costs due, by detecting abnormal patterns of behaviour and flagging it in real time

Reduce write-offs from bad debts by identifying potentially risky customers

Increased return on marketing investments through fine-grained segmentation and precise targeting of prospects and customers
Generalizing these further, Analytic solutions can be classified into three different types – explanatory models, predictive models and decision models.
More to come soon.....

AIM Fuzzi-Olympics 2009... remembering all the fun we had during our walk-about

What an experience! :)


This is one activity that I am going to propagate in my company once I am back in the work stream.

The Walk-About gave many of us a chance to do something out of the ordinary and for me personally it was like climbing a steep ladder, slowly and steadily, day after day and finally, the view from the top is really amazing.

First of all I would like to mention how we came up with the plan. Well before that, how ‘we’ happened. My partner in crime ‘Sameer Alve’. Since we both are the founding members of the Entrepreneurship club, it was just after a very healthy discussion on how to take the club forward, that he asked what plans do I have for the HBO Walk-About. I mentioned and I still have it on record (as we recorded our meeting discussions), that I wanted to do multiple things under the Walk-About umbrella and involve the maximum people possible. We didn’t have to ask to be partners, as we both were thinking of the same thing. Here, I think the mutual trust and respect took the decision.

Next what happened was a few emails sharing ideas and we have a plan ready for the ‘AIM Fuzzi-Olympics 2009’.

So we have a Big Hairy Audacious Goal assigned for ourselves amidst our tight MBA curriculum and man, were we excited :). Nobody knew what we were doing but considering that we were the silent types many had high expectations.

Planning to get sponsors for the event happened over dinner when we went to Pizza Hut and ‘were just talking that it was so far from AIM that not many people could be visiting them and Bang! Came the idea.

Our main objective was to make sure everyone has fun and enjoys themselves. Also since there were so many DE and Walk-About taking place over the last few weeks we anticipated that people would generally be low on cash. So we wanted to make sure that we kept our registration fee at the minimum (that could cover our admin expenses). Keeping the main objective of fun in mind we made the entry for family and friends of the students free of cost. Also the entry for the faculty and staff with family were also free.

Keeping the same value of Fun in mind we sold the idea to our sponsors who were more than happy to support the effort. But we had to make sure that every potential sponsor we approached had some connection with the student community (in our case Burger King, National Book store, Subway, Power Books, Lotus Massage spa and MINI STOP. To each of these, we made a separate proposal selling them the value of associating themselves with the event and AIM. It required a lot of follow ups and meetings before we managed to arrive at the sponsorship amount and gifts.

We wanted to make sure that students who participate - compete, enjoy and take away more then just the experience. We got prizes sponsored in the form of gift vouchers and gifts from BURGER KING, POWER BOOKS, NBS, MINI STOP organised all the materials for all the games... and as an add on, we got LOTUS SPA to set up a Mini Spa in campus giving all students free of cost mini massages. To make sure we got a good deal from Lotus we also tied up with them for a two month package of providing all AIM community 50% discount for all massages, unlimited times over the period.

So basically whatever we did had a motive and motivation.

During the entire process we had our highs and our lows. Our first high was when we got our project approved but after that was a long lull. We wanted to get sponsors who were taking time to respond. Here we both knew that we both were down but we never let each other feel low and encouraged each other to concentrate on our main objective. We both motivated each other with new ideas that we can do to raise funds. And we decided to raise some funds by organizing a poker tournament in, which went off pretty well. And once that went of successfully, we had five of the sponsors confirming with the interest on the same day. ( Happy faces, Yahoo!)

In my opinion, organizing “Fuzzi Olympics” was a new learning experience for both of us managing an event, negotiating with vendors, and promoting the event. It helped us generate some funds and an opportunity to work as a team. We engaged students and staff, as we knew that it could be difficult managing everything own our own. The anxiety of losing reputation was killed with enthusiastic participants enjoying the event and many students enrolling into free massage place. The barrage of cheering emails from all the participants was overwhelming and this has geared us to do another event in the future. We have tentatively named it “the AIM Sports Bonanza 2009” scheduled for September-October 2009, again targeting students, staff and faculty of AIM.

My most important learning from organizing this event has been ‘the planning and its execution’ plus patience. I also learned to trust and delegate responsibility when there is a crunch of resources. Any project organized at this scale cannot be successful without keeping the future in mind.

We also wanted to make sure that the biggest winners at the end of the day were not just us but all the memories that we created which are going to cherished for a long time to come.

An AIM Young MBA Professional now... graduated Decembr 2009

I am a MBA graduate from the Asian Institute of Management, Philippines. I have majored in Marketing and besides earning a management degree I have also earned the friendship and network of one of the finest management and business talents around the globe. At the Asian Institute of Management we follow the case study methodology of education, where we worked on Harvard Business Case Studies and were exposed to solving and debating on management situations globally. The case room sessions are always very intriguing where we came out richer in experience on how business works in different parts of the world.

IBM Experience in a nut shell

After spending two intriguing years with top of the line media house, I got am opportunity to work with IBM India (BPO). I was part of the Business Development team and focus on International Marketing Services. My role was to prospect for new opportunities/businesses for outsourcing to IBM Managed Services. My role demanded of me to carry out relevant research on marketing analytics, create client deliverable presentations, communicate concise messages to prospects and host conference calls for delivering client solutions. Working on multiple accounts, my work needed me to coordinate with the global and domestic teams, requisite of me to work on multiple shifts. This challenge helped me develop my time management skills.

Working with prospects is an ongoing process and most of the time I was working with multiple accounts; a challenge which I quickly realized and enhanced my skills to be a very successfully systematic/ organised person, in work management. Being very true to myself, I am not an expert on Finance and Accounting, but what I am, is an expert in adapting/ learning skills and able to communicate that successfully and analytically. This coupled with my excellent communications, people and event management skills. I am looking for an exhilarating, challenging and professionally satisfying career with the aim of attaining higher goals and best results.