Purpose Leads, Profits Follow: The Unilever Way

Sanjiv Mehta, managing director & CEO of India’s largest FMCG company Hindustan Unilever, is a firm believer in what he calls ‘brutal optimism’ in today’s volatile business environment. At the launch of the BW Businessworld Marketing Whitebook in Mumbai in July, where Mehta was the keynote speaker, he talked about the need for brands to have a purpose beyond profit, quality leadership and resilience to move ahead. Excerpts from an exclusive conversation between Mehta and Anurag Batra, chairman and editor-in-chief of BW Businessworld.

Unilever is a very large corporation, with products across several categories. As a business leader, what is your advice to small and medium-sized companies?
Whether you are an individual, a business person, or a business entity, you are part of society, and you have to have a purpose. At Unilever, you will never find us saying that our mission is to create shareholder value. We believe that if we address the interest of consumers, customers, employees and the communities, shareholder profit will come. That’s a byproduct of our core purpose. Whatever field you may be in, you need to have a larger purpose in life and you need to ask yourself how you can make a positive impact in your country, in your society, and the world at large. In the process, you will get rewarded. The current generation of millennials is far more conscious about the company behind the brands. They want to know the company better and the purpose it stands for. And then, they reward it by buying more of their brands. In our stable that has brands such as Lifebuoy, Dove, Surf Excel and Red Label, among others, consumers recognise the bigger purpose and, not surprisingly, these brands have been doing very well. A business driven by quarterly profit and loss will lose perspective of long-term goals. Think long term and remember, purpose and values are timeless — purpose leads, profits follow.

How important are speed and agility for businesses today? Considering the tough environment, how do you see the role of leaders?
There are certain traits of leadership which are applicable across businesses and situations. For example, you have to be inspirational, bring strategic clarity, be sound in execution and be a leader of business and leader of people i.e. know what to do and how to do it. But then there are nuances of leadership that have to change with the times. The days of command, control and hierarchy are long gone. You need to have a flatter structure because companies need the speed and agility that such structure brings. The other important trait a leader should have is resilience. In today’s fast-changing world, you will face many difficulties, hurdles and setbacks. The question is not about failing, but how quickly do you pick yourself up and start running again. I tell my people, failure is not the opposite of success, as long as we learn from it, and don’t repeat it. Resilience, like speed and agility, is very important. More than ever, in the present times where there is trust deficit, it is critical for people to trust their leaders.

At various points in time, other brands would have posed serious challenges to your business. For instance, Patanjali is a strong brand now, besides a whole list of others who are creating their own niche and in some way eating into your market. How are you responding to them?
First, I think we need to understand that this is not a zero-sum game and the pie is not finite. So if someone grows, the other businesses will not necessarily lose out. In India, none of the categories in which we operate are mature, or anywhere close to maturity. Even in categories, say toilet soaps or detergent powders, which have penetrated deep and nearly everyone has it in their homes, there is a huge room to grow through premiumisation and offering higher order benefits or getting into adjacent categories. So, the growth potential is huge. The other important aspect is that a good competitor is not only good for consumers but it brings out the best in HUL and strengthens our resolve to serve our consumers even better.

Your global CEO (Paul Polman) is known as an optimistic pessimist — he says “create like an optimist and spend like a pessimist”. What is your personal leadership quotient? How would you describe Sanjiv Mehta as a leader?
If you have given the tag of optimist and pessimist to Paul Polman, I would not like to use it. I would like to retain the realist tag. I think a leader in times like ours — tough times in a fast-changing world — has to have what I call ‘brutal optimism’. It is in many ways, if I may use Churchill’s quote, blood, toil, tears and sweat; but ultimately we shall prevail. When times are tough, you have to hold up the mirror to your people. There is no question about that. But as a leader, your job is not just to show the mirror — not just to tell them what the reality is — you also need to show them the way out. You will have to show them how you are going to make them win. That’s the job of a leader.