Sharleen Dsouza, Mumbai

3 December 2023

Hindustan Unilever (HUL)’s decision to split its beauty and personal care division and place a renewed focus on digital has been driven by its aim to serve the consumer of tomorrow, say analysts and brand experts.

HUL Managing Director and Chief Executive Officer Rohit Jawa is looking to make the company ‘future ready’, and while these bets are not for the short-term, they will eventually pay off as the Indian consumer is young and digital friendly, they add.

“Rohit Jawa comes with digital experience and he is preparing to steer HUL into serving the future consumer who is more digital friendly,” said Sachin Bobade, vice president at brokerage firm Dolat Capital.

On Friday, the consumer major also announced that it had named Arun Neelakantan its chief digital officer effective January 1. Neelakantan, who the company said was brought in to unlock growth opportunities by leveraging India’s digital ecosystem, will also join the company’s management
committee. Neelakantan is the first chief digital officer of the company who will be part of the company’s management committee.

Brand expert Devangshu Dutta, founder of business management consultant Third Eyesight, said that HUL was a traditional company but had never shied away from experimenting with different models of customer engagement.

“The profile of the younger Indian consumer is more digital friendly. This move won’t fundamentally shift the company’s business in the short term, but it is creating a connect with the younger consumer group which will be the mainstay for the future,” said Dutta.

On Friday, Jawa had said: “As we embark on our next phase of growth and transformation, we will combine our scale and discipline with innovation and agility to serve our consumers even better, and build a future-fit business,” adding that beauty and personal care continued to be a source of value creation for the company.

(Published in Business Standard)

It has been around 200 years since the birth of Charles Darwin, and about 150 years since the publication of his and Alfred Wallace’s thoughts on evolution by natural selection. In their honour, let us remind ourselves of the basic theory that all of us learn at school. (So I’m a few months late acknowledging it – please bear with me!)

On Evolution: Change Happens

(1) Species differ from each other, but individuals within a species also differ from each other quite a bit.

(2) These differences are due to changes to the basic genetic framework of the organism (mutations) which can get passed on to following generations.

(3) The environment keeps changing physically, climatically and biologically.

(4) In the new (changed) environment some of the mutations survive better than others (“natural selection”).

(5) The effect of these changes over several generation results in the evolution of species, and the rise of new species.

The primary reason I am highlighting this theory is because, to my mind, businesses are like living beings. Businesses are conceived, given birth to, they grow, and most of them die after a few years or a few decades. During their life some businesses get married (merged or acquired), and sometimes they give birth to other businesses.

About 2-3 years ago, the business climate seemed predictable and only looking upwards – the biggest challenges in the food and grocery sector seemed to be whether your ambition was bigger than your competitor’s. Many predictions were made about how the large – more “organised” – businesses would quickly kill the small.

However, with much turmoil in the business environment in the last year or so, it is evident now that it is not just the small companies that are vulnerable. The change in the environment is also giving new growth opportunities to the smaller or younger, previously vulnerable, businesses. While some of the larger businesses have died or are in the process of dying, some of the smaller businesses are mutating even more to survive better in the changed surroundings.

Although small businesses are always looking for growth, the new environment can bring such a surplus of opportunities that, in the helter-skelter growth the learnings are quickly lost and the business may actually go off the tracks.

On Process: Passing On the Genes

The challenge for the smaller businesses now is to pass on their genes down the generations; for the management to ensure that the newer stores and the newer recruits gain from the learning and the adaptations already in the organisation.

At an entrepreneurial stage, the core team handles critical activities and is on call to guide others. The team is knit quite tightly, and located geographically close together. The stores are few and in locations with a similar environment. “Knowledge” is inherent in the way you do things, guided rather than taught.

You may recall my stressing culture and organisational personality, the “people” end, in a previous article. At the early stage of the business, very often, that is all there is. But growth needs replication and predictability.

Biology again gives us a great lesson in how to replicate learnings and functionality: genes (DNA) provide the template for cell functions, and are reproduced almost faithfully from previous generations.

In a business, such replication comes from well-designed processes incorporating the intent, the activities and the desired outcomes. For growth, processes are a must; they are the genetic code of the business. Processes provide the design for how a customer would interact with the store, how the store would interact within itself and with other points in the organisation, and how the organisation would interact with external agencies.

You may ask, “How much process should we depend on, and how prescriptive or restrictive should we make them?” You may also point out that processes start off with very good intention, but with time – and often distance from head office – the processes decay.

And you would be right.

On Decay: Bad or Good

Even in bureaucratic organisations, adjustments are made to fit people or situations, and that causes the process to mutate.  Sometimes the change is temporary, at other times the process may change completely and permanently. If changes happen passively and are not channelled the existing process will decay.

I use the word “decay” carefully. While the process change itself may be good at a point (e.g. responding to a customer need), the organisation as a whole may not learn much from it, or the change may affect one part of the organisation and not others. If that happens, the organisation and its systems will become dysfunctional at some point.

For instance, it could be the little leeway that the merchandising head provided to some managers that erupts into an uncontrolled working capital epidemic across the chain. Or a margin adjustment with a vendor at a certain point in time becomes a deadly norm.

So, back to evolution: mutations are a fact of life. Adaptations are happening because of the changes in the environment. Managers need to critically question: does this change meet a current ongoing need or provide an ongoing advantage, and can it apply to the rest of the business? If the answer is no, ask people to read the rule-book (the process manual).

If the answer is yes to both, change the rules, and make sure the new process is implemented quickly and smoothly across the organisation.  Then it will be “adaptation” rather than “decay”.

After all, the conclusion that Darwin, Wallace and many others have given us is this: it is not the strongest, the biggest, the fastest, but the most adaptive who survive.

I’ve just spent a few (grim) days at the National Retail Federation’s conference in New York – the NRF Annual Big Show. (After all that grimness, I hope you’ll pardon my play on words in the title!)

However, the key message from several conversations is that this is an ideal time for the better companies to use this opportunity to take tough decisions, and to create change that is hard to push when the business is doing well.

I think that is sound advice to not just get through these recessionary times, but also to pull far ahead of the competition.

Why do entrepreneurs start companies? Why do individuals form organisations?

An obvious reason is that they cannot do everything themselves. Another is that they don’t have all the resources / skills that are needed to grow the business. If they work well, teams can certainly achieve more than individuals alone.

However, another compelling reason comes to mind for creating an organisation – the concept of immortality.

All living beings are susceptible to the phenomenon of “death” at some point of time or the other, and immortalise themselves through producing the next generation through reproduction.

Just as reproduction is a way to immortalise the genetic code of the species in our next generation, organisational development is a way to immortalise the “genetic code” containing ideas, principles and philosophies.

However, this can only happen if the leader / founder / entrepreneur faces the Big Reality: “I am mortal”. Once he or she faces that fact, there are two choices for him / her – the organisation / business can die with him or her, or there can be another generation to carry on the genetic code.

Mortality is the root / route to immortality. If one is truly wedded to the principles of the organisation, one will create the framework and the environment for the next leadership to emerge, and will nurture the next generation to the leadership position.

The route / root to Immortal is “I M Mortal”!

A couple of great resources come to mind, both from Jim Collins and his co-authors: “Built to Last” and “From Good to Great”. (A great concept from the latter book is that of “Level 5 Leadership” which is well worth a read.)