Successful for over a hundred years and still successful: HUL. Most standout achievement is being a factory of CEOS.
Five ingredients:
A middle-class soul- aspiring to grow + conservative on cost
A meritocratic culture- promotion to those with track record of performance
Have common touch even when walking with a king
Entrepreneurial professionals- go extra mile to deliver results
Unbending integrity- close operations rather than compromising on values
To succeed in India in long-term, you have to be honest.
Marketing Lessons
Great CEOs are great marketeers. Marketing is neither advertising nor publicity. It understands consumer needs and solves consumer problems.
Brands are trust marks with distinct association for many consumers. Therefore, building brands is a crucial competitive advantage.
Marketing process starts by framing jobs to be done- get who to do what.
It is easier to get consumers to adopt a new category than to get them to increase consumption.
Broad segments are more representative of reality than narrower segments.
Positioning is being clear on the brand associations you want to own.
Do not overextend your brand. Better to do what you do well rather than do new things.
The best market research is spending time personally with a few chosen customers.
An insight is a ‘contradiction that is obvious in hindsight’. Insight is the soul of marketing
Advertising and media Lessons
Communication is a critical competitive advantage in any business. Being remembered is much more important than being persuasive.
Be clear on who you are. Reinforce this in every piece of communication.
Brief creatives simply, memorably, insightfully, and most importantly- briefly.
Do a goosebump test (how do you feel) while judging creative output.
Share your understanding of a film with the director and then give her the freedom to execute.
Better to whisper to many than shout to a few.
Don’t over-segment. Buyers are far more widespread than you think.
Take economics-driven and not ideological positions on media.
Product Development Lessons
Product is the most important P in marketing. Product obsession must start with the CEO.
For great product ideas get out of your comfort zone when interacting with customers.
Good companies invest in R&D.
For every product, understand which ingredients deliver what attributes and what the benefits of each attribute are.
Does your product beat the competitor products when tested blind?
If you believe you are solving a real consumer problem with a great product, persist patiently.
What matters is the quality the consumer gets and not the quality you design in the laboratory.
Pricing Lessons
Price discounts do not recruit new customers; they merely get existing customers to buy a bit more.
Fix the price the consumer will pay, the margin you want and then get the right costs.
Assess the price consumers are willing to pay to benchmark yourself versus competitors, the market or the underlying commodity.
Build a portfolio of brands at different price points to be resilient in times of crises.
Lower price point is more important than cheaper price per kilo for low-income consumers.
Price different pack sizes differently depending on consumer profile and cost structure.
Pricing under volatile conditions requires special rules.
Sales Management Lessons
Sales is a cost and not a revenue centre.
Focus on availability of products and not on depth of stock.
Don’t hold high stocks and give excessive margins. Instead keep stocks low, margins low and ensure faster rotation.
Drive the sales system on input metrics rather than output metrics, but ensure input metrics are measured robustly and cannot be fudged.
Cut glory-seeking behavior in your sales team. Build a fact-based and not an anecdote-based culture.
Cost Management Lessons
Volumes are the biggest driver of costs.
Design for output and not input.
Keep capital expenditure really low. Cut operating costs with creativity and courage.
Spend on advertising deployment not on advertising creation.
Always have three cost options for every planned company purchase.
Pay six people the salary of eight and get them to do the job of ten.
Pay more for suppliers with a culture of innovation.
HR Lessons
Good recruitment of candidates is more than half the job done. Character and calibre are key.
Judge calibre by underlying competencies of judgement, drive and influence, and character through a very senior manager interview.
The underlying principle of management trainee is to allow trainees to live the life of the lowest-ranking company functionary in every department. Early field responsibility in either factories or sales are a must.
Breadth in early stages, depth in middle levels and breadth again at senior levels is an HUL principle of career development.
Only leaders can build other leaders. Work with people who are committed to your development however harsh they may seem.
Encourage diversity both in form and in terms of thought.
Always have simple, measurable, actionable goals for performance.
Objectively judge candidates on performance. Reward current-year for performance, but make sure potential enters the competition when planning promotions.
Take people decisions in the interest of the company, but execute them with full empathy and compassion
Values at HUL
Govern business by conscience.
The only that matters is not what we think or say but how we act. Bias for action.
Take the right decisions even in the face of high risk. Be courageous.
Everyone is human, care for them in good times and bad, more in bad times. Be caring.