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Unilever's Paul Polman on making tough choices in tough times
Trooping out of their surprise meeting with Paul Polman, the bunch of
B-school students are in a tizzy. Their minds are still trying to break
down the short but intense dunk in leadership that the CEO of Unilever gave
them. Whether it's ingenuous students or result oriented Unilever
executives or hard-boiled investors or skeptical media persons, Polman has
remained amazingly consistent in his message of purpose driven growth. Ever
since he took over on Jan 1, 2009, the first outsider CEO of Unilever has
been a sustainability crusader giving out the
good-for-society-isgood-for-business gospel day in and day out. With the
company 2012 sales crossing euro 50 billion under his watch, it appears his
formula is working. Even under tumultuous times, Polman hinged his growth
agenda around 'Unilever Sustainable Living Plan', a blueprint that will
lead to company doubling in size while halving its carbon footprint. The 56
year old, who was recently in India on a five day trip, chats with CD on
having an audacious goal, developing a new breed of Unilever leaders, and
navigating through the VUCA (volatile, uncertain, complex and ambiguous)
world. Edited excerpts:
When you took over Unilever as the first outside CEO, how did you change
your leadership style?
Coming from outside in a very difficult economic environment, I had to
find a way to be accepted in the company. I did two things: I spent a lot
of time studying the values of the company, how it was built. And I had to
find a purpose to grow for a company that was not growing. I put the two
things together. The purpose of the company has always been to improve
people's lives, has always been to make communities in which you operate
successful. I said we will create a model where we double our business.
While doubling our business, we will reduce our environmental impact and
increase
societal impact. I created a strong purpose by putting the best of Unilever
together. It was a growth agenda and the world needed that because the 2008
crisis showed a lot of shortcomings in our system.
I needed to be sure that everybody understood what I was talking about. 2008
was a crisis of short-termism and greed. So I abolished guidance and
quarterly reporting. We changed the compensation system for a longer term
and put out some clear signals to tell people that while there might be a
crisis we are investing for a long term. I made it clear that we were
investing in advertising and promotion, in people, in back end services and
product quality. When others were cutting costs, shutting down factories,
we were investing. Now we are 4-5 years further, our business is up 30%,
our share price has more than doubled. The Unilever Living Sustainable Plan
is now seen as a very good example of responsible business. And in most
countries that we operate in we are now the preferred employer because the
purpose is strong enough to attract a lot of young people. We have a lot of
challenges, the world is moving very fast, but we are well positioned to be
playing a good role for a long time to come.
You have chosen a very tough way of doing business, that too in a VUCA
world. How are you balancing the short term expectations while also staying
true to the long term direction of growth?
If the short term decisions you make damage the long term, you should
resist those. But there are many short term decisions that you need to make
to be a successful manager. Unfortunately, I saw some statistics recently
which said 75% of American
CFOs would not take the right decisions if it would
result in missing the quarterly guidance. That's why you see that average
lifespan of a listed company is only 18 years. We have been in business for
150 years and we will be in business for more.
So we made clear we will always do the
right thing for the long term. That's one of the
reasons I stopped quarterly reporting and moved it to twice a year. I
believe that's part of the reason why the company has been more successful
than most of our competitors.
How did you make sure that you had a buy-in for such a large scale
change program?
There are some basic human needs that are the same. Everybody wants to
succeed. We have a strong culture in the company that goes back a long way
of helping people; doing well by doing good. The Unilever Sustainable
Living Plan tries to internalise the external challenges like food
security; a billion people going to bed hungry; sanitation; two million
children dying every year due to poor hygiene. When we put these issues
together, you talk Unilever. That is why this company was founded in the
first place. When Lord Lever invented Lifebouy or Sunlight as it was called
then in Victorian Britain, it was because one out of two babies didn't live
past year one.
The issues of hygiene were enormous and he provided
a solution.
How do you make sure that even in a global company like Unilever, each
of the employee remains aligned to the mission?
By making the purpose strong. When you have Lifebouy Handwashing
Program, you save children's lives. The Lifebouy film says help a child
reach the age of five. It makes us all want to work on that. For the Kissan
tomato brand, farmers produce sustainable tomatoes. Right now it is 60%, we
are going to 100% next year. You want to be part of that. These things
communicate because they are there in our business model and all we had to
do was scale it by making it more holistic.
Are you creating a new breed of leaders who will run the businesses in
what is becoming The Unilever way?
We are spending a lot of time thinking about the leaders of 2020. We
have built an enormous state of the art training facility in Singapore.
It's the Crotonville of the Far East. One of the questions I have on my
mind is how do you change the culture without changing values? Seventy five
of our business will be in aspiring markets, because that where 80% of the
population is. But how do you ensure that it's not the MBA, aggressive
style of management? That doesn't work in China and India and in similar
markets. How do you ensure you get the right management talent? We are very
blessed with a lot of Indians in the management, like Harish Manwani and
Nitin Paranjpe. How do I get more from Vietnam, Indonesia, China? We spent
a lot of time thinking about leaders of 2020 and also what leadership
skills will be needed. People will have to be able to negotiate a more
volatile environment. Previous CEOs could say I don't want to talk to NGOs
or the government but now you have to talk to everyone and work with them.
We need leaders who can think longer term and are driven with a deeper
purpose. The only glue that we have in all the complexities, in all the
countries that we operate in is our purpose. That's what makes people do
the right thing and that's why there's trust.
Do you think the theory of leadership has changed in the last few
turbulent years?
I don't subscribe to 'here are the top ten tips
to successful leadership' or 'how to learn leadership in ten minutes'. A
leader is someone who gives positive energy to others which then results in
a better change than would have happened. I think everyone is a leader.
Some of our Shakti ladies are amazing leaders. They earn a livelihood, help
in social programs, take care of unfortunate people.
The basic skills of leaders are always the same: be
driven by a deeper purpose, be a human being, have a passion for what you
do and it's also about hard work and ethics. It has become more difficult
to exercise your leadership in today's world but it's also become more
needed. Never has there been a greater need for courageous leadership at
the political and business level.
During times of trouble, people become short-term,
shrink into their territories, and build protective walls. CEO lifecycles
are becoming shorter -- to less than five years -- so you have to fight
twice as hard in today's world if you want to help make this a better world
than perhaps 10-15 years ago. But so be it. It's an enormous opportunity to
learn more and develop oneself.
How have you made sure that Unilever's tradition of leaders developing
other leaders stays on course in these trying times?
No individual person built Unilever. Our mission
is simply to make others more successful and we train and develop people
who sustain that attitude. It doesn't always work as we want, but we try.
We try to be a more gender diverse organisation, a truly global
organisation. It starts with respect and dignity of everybody, everywhere,
at any level, and then focusing out there on improving the common good and
not just worrying about yourself. That's the culture you create to create
width in leadership. The leaders you can only create by letting them make
mistakes and giving them frameworks, not rules and regulations. If the
frameworks are strong enough, they develop leadership -very
entrepreneurial. American companies often tend to be driven by rules and
regulations, made by the headquarters. We are not, we have very small
headquarters.
We are very interdependent. It comes from that
respect, diversity and providing that room to create leaders. I would
suggest that from all the companies that I've been exposed to, Unilever is
one of the best for leadership development, and it gets recognized. Many
companies say that I am the number one but that's because most of these
surveys are done by American press.
Unilever is one of the few global companies where the Indian talent has
consistently got representation at the top.
In most markets we are a desired employer and we contribute enormously
to the economy. In India, look at how many people have worked in HUL and
are now building India's economy by working in other companies. It is an
obligation that we have to develop leaders for developing the countries. We
are there for the long term interest of India, not HUL. It boils down to
the values and culture. It is very hard to make that understood and the
pressures are against you from the analysts, shareholders, also your own
ego sometimes. We've been very blessed with great leaders in this company
throughout history who have understood that. Globally too, my
responsibility is that we understand that and carry it on. Yesterday I
spent some time talking to T Thomas, who was a chairman here 40 years ago
and is in his 90s. The reason I talk to them is to understand what
challenges they had to face, what their experiences were, that makes us
stronger. It boils down to dignity and respect for everybody and to be focused
on the common good not on your own interests. If you can get those two
things in place, the world would be a better place.
Vinod
Mahanta & Priyanka Sangani
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