HUL's Nitin Paranjpe is rewiring his organisation for the digital marketing era. And he's leading from the front
Award: Best CEO MNC Name: Nitin Paranjpe, CEO, HUL Age: 49 Why He Won: For resurrecting HUL’s position as a premium multinational, after almost a decade in the wilderness. And for bringing the focus back on execution and profitable growth with a significant expansion of its distribution system.
When I met Nitin Paranjpe early in December last year, he very clinically dissected the difference between a successful entrepreneur and a manager. He told me, "The only difference is the relationship between ambition and resources."
It was something, he said, that was drilled into his head by legendary management thinker CK Prahalad, who was brought in by the board in 1999 to mentor a few people destined for larger roles at Hindustan Unilever (HUL). "Managers," Paranjpe learnt from Prahalad, "have a mindset... where ambition (A) equals resources (R), a steady state condition. There are no entrepreneurs who start off believing A=R. They have virtually no resources, but dream big."
To understand how the insight Prahalad offered played out during the course of Paranjpe’s career, it is important to put a few numbers into perspective. Since the time he took over as CEO four years ago, sales jumped 45 percent to Rs 22,800 crore; growth in profits averaged an eye-popping 25 percent; the company’s market capitalisation zoomed 60 percent to over Rs 1.14 lakh crore; and in January this year, the Nielsen Campus Track reported HUL had reclaimed its spot as the most preferred employer among B-School grads.
Compare this to what things were like when Paranjpe was offered the corner office four years ago. He was 44 then and the youngest chief executive HUL ever had. Growth in sales and profits were stagnant. Its stock had stayed around Rs 200 for eight years. The company had lost its position as the recruiter of choice at premier B-Schools. For an entity that once used to be known as the training ground for future CEOs in the country, this was as humiliating as it could get.
After architecting a now well-documented and dramatic turnaround, it is easy therefore to imagine a smug 49-year-old man on the lecture circuit telling people how things ought to be done. What you have instead is a man back to school. Why? Because by his own admission, he couldn’t understand the brave new world his children inhabit. What the hell are they doing spending all their time on social networking sites like Facebook and Twitter? In any case, what are these places all about?
As he looked around, he realised his kids aren’t the only ones who live in this world. There are 121 million internet users in the country -- the third largest user base in the world. Not surprisingly, their media consumption patterns are changing dramatically. It is only a matter of time, he figured, before their numbers overtake that of those who consume media on print and television. If that be true, he argued, HUL would have to work at moulding itself as the largest digital marketing firm in the country.
"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," he argues.
While dealing with the short term part of the business is now easy for him, it is the long term he was beginning to get paranoid about. If HUL had to maintain the lead he had managed to create in his four years at the helm, both the company and he would have to change. "At a consumer goods company, if the consumer is moving in a certain direction, how can the head of the company say he doesn’t get it?" he asks rhetorically.
So, he got himself a 'reverse mentor'. A young 25-year-old at the firm was put in charge of tutoring the CEO on how to navigate the social media. How do you tag a person on Facebook? How do you write on somebody's wall? How do you tweet? Most people at his level lead seminars. But he figured if he had to participate in the world his children were now a part of, he’d have to “go back to school” and attend digital workshops led by his brand managers, read the materials they insisted he read, and submit assignments they asked him to complete. When we last checked, he had 251 friends on Facebook; on Twitter though, he remains a passive participant.
Even as he embarked on this personal exercise, he initiated discussions with the management committee, an eight-member body that runs the day-to-day affairs of the company. At these meetings, he communicated how paranoid he was that HUL maintains its lead in the market place.
Marketing Director Hemant Bakshi says Paranjpe was clear the strategies that helped them win so far may not necessarily be what will help them win tomorrow. "Because the skills and capabilities with which I grew up as a marketer are dramatically different from the skills and capabilities needed in the future," Paranjpe explained.
These arguments eventually won over the other members on the committee. Some chose the path of reverse mentoring like Paranjpe; others struck out on their own. On his part, Paranjpe reckoned it was time he dived headlong into uncharted waters. He moved on to plan his own online advertising campaigns, allocating budgets for them and seeing how the efficacy of such ads among audiences is measured. That, in a nutshell, is how HUL got into the digital marketing journey.