Thursday, February 11, 2010

In niches there are riches!

Leading from the front:Harsh Mariwala, CMD, Marico

Harsh Mariwala of Marico shows the importance of clear strategy and meticulous execution..
Creating a culture in an organisation is easier said than done. It calls for rigorous implementation and the use of training. It calls for constant communication and collaboration amongst the key people in the organisation.

January 31 is a special day for people in advertising and marketing in Bangalore as it is the day the Ayaz Peerbhoy memorial lecture has been delivered to an eager audience over the years. It has been a calendar event for the Advertising Club, Bangalore for years now. This time it was the 29 th such occasion that the lecture was being delivered and the speaker was in no way inferior in achievement to his illustrious predecessors who had delivered it earlier - a who's who of Indian industry, people such as R. Goplakrishnan, C.K.Ranganathan and Kishore Biyani, to name just a few. Harsh Mariwala, Chairman and Managing Director of Marico Ltd, spoke about the exciting corporate journey of innovation that his company had taken over the years with little nuggets of wisdom and experience that had the audience thinking and perhaps wondering why they were unable to do the same with their own companies. The man embodied what his company stood for - understated, yet with the ability to think differently and inspire a whole bunch of MBAs to leading the company from a modest turnover of Rs 5 crore not too long ago to Rs 2,800 crore today.

Strategy is key

One of the most abused words in management literature is that curious word ‘strategy'. I say curious because different people have different perceptions of the word strategy. In the case of my students in business school, they have heard the word repeated so often by so many different people, that they have it coming out of their ears and often are clueless as to what it actually is. But less of my students and more of Marico Industries. Strategy, as any expert will tell you, is basically sacrifice, as when you choose one particular segment you ignore others, and at times the grass can always seem to be greener on the other side. Marico has consistently stayed in areas that have seemed niches (mind you, some of them have become pretty large over the years), areas where it could dominate and where it did not have to contend with MNCs with deep pockets and staying power.

The company that was primarily in the low-value commodity business transformed itself consciously over the years into a high value FMCG company. Often, people in marketing, thanks to their preoccupation with the brand and sales promotions, do not acknowledge the importance of culture and people to the brand's success. Mariwala placed the transformation of the organisation's culture and the dissemination of values as the key factors behind the success of the company and the brands driving it. It is often the ‘blinding flash of the obvious', but simple things such as sharing of information, being on first-name basis with the senior management, higher responsibilities or cross-functional exposure, though often talked about, are not practised with the same zeal with which they are spoken by companies. Clearly, Marico has been doing it, with great success, so that it has become internalised now.

A lot of Marico's success has been due to Parachute, the leading coconut oil brand. Parachute is a brand that most Indians, particularly in the South have used and continue to use, those with hair at least. When Mr Mariwala spoke about some of the innovations that the brand had been doing over the years, my mind wandered (as it seems to do more often these days). Often enough, copywriters in agencies turn up their noses when asked to create advertising for certain products saying these are ‘dull', and my response usually has been, “There are no dull products, only dull writers!”

Similarly, it is easy to view coconut oil as just a commodity, but the company has not and the results are there to show for it. The company did a number of packaging innovations starting with HDPE and also through its specially designed pack prevented freezing, something that is very common in the North of India. The seal guarantee also made it difficult to duplicate, even for the experts that India seems to unearth so often in this wonderful world of fakes and imitations. Parachute entered the rural market through laminated pouches and its flip-top and mini-packs brought in a new category of users. Innovations continued with the promotion of the concept of ‘ champi' with Parachute before shampooing. Suddenly, the category had become visible and attractive to the Levers of this world. And as Hindustan Lever (as Hindustan Unilever was then known), acquired Tomco, it promoted Nihar aggressively and threw its weight of distribution and promotions behind it. Levers even tried to take over the brand and Marico's stock price fell dramatically.

But the company counter-attacked, held on to its market shares, eventually did a David and also did the unthinkable (at that time, at least) by acquiring Nihar in 2006. Strike one for an Indian company against a large multinational! Innovation can often be a treadmill and the companies that are on it refuse to get off and the attempts to morph Parachute from a coconut oil brand to a beauty brand continue with variants, new fragrances and new formulations.

From the head to the heart

Very few people of my age can get away without using Saffola, thanks to the benefits of relaxed lifestyle built around addiction to the couch and the picture tube and a tremendous ability to postpone anything that suggests even the mildest physical activity. We are the people that keep doctors and the makers of Saffola laughing all the way to the bank. Just to put things in proper perspective, Saffola, all said and done could have been just another cooking oil, but it strongly positioned itself on the heart platform, taking the stance of a leader on World Heart Day and propagated walking every day.

True to company culture, innovations continued, like the 15-litre tap to enable ease of usage. But Saffola realised it had the capability and the competence to build on the equity in the health segment as it introduced oil blends and brand extensions such as low sodium salt and products in the area of diabetes and cholesterol management. Over the years the brand has moved from being just another edible oil brand to a health brand.

Marico has moved on to skin care with a bevy of Kaya skin care centres that are making waves all over India as young Indians get more conscious of the way they look and are opening their wallets to the new concept all over the country.

Significantly, the company has been avoiding the franchise route as it wishes to control the quality of service and the output that customers receive.

Creating a culture of innovation

Creating a culture in an organisation is easier said than done. It calls for rigorous implementation and the use of training. It calls for constant communication and collaboration amongst the key people in the organisation. The company too has been empowering its people by committing resources and ensuring that new members are carefully integrated into the organisation. The key thing about innovation is not only about ideas but about their implementation.

So what are the learnings for people who are leading organisations or teams?

Do you believe in your people?

Are you open to ideas?

Can you build a team of ‘constructive yes men' and not ‘boring yes men'?

Can you create a culture where there is a willingness to experiment and learn from failures?

Can you keep being innovative over a period of time however difficult and however expensive?

Success stories are good to read about after they have happened and there are lots of things to be learnt from examples like these. I have probably made it out to be a lot simpler than it actually has been for the company and the people who made it happen. They had a leader who believed in the team and who led from the front without actually getting in the way of his charged troops. It is certainly not a rags-to-riches story but a story that demonstrates that if you have a clear strategy and meticulous execution then niches are certainly the way to riches.

(Ramanujam Sridhar is CEO, brand-comm, and the author of Googly - Branding On Indian Turf.)

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