MMA organised a talk by Mr Anand Kripalu, MD & CEO of Diageo India and Member, Diageo Global Executive on 18th July 2020 for the benefit of MMA members and management professionals. In the speech, Mr Anand traced his corporate career spread over 35 years across some of the leading corporate houses and shared the challenges he faced and FIVE inspiring lessons from his overall experience.
I started life in a very happy and a very middle-class army home. My father, who is 94 now, was commissioned in 1947 during the Indian independence. That middle-class mentality—working hard with integrity and conscience, doing more with less, not wasting and trying always for a better deal—have always shaped my thinking and behavior through business and life. That middle-class upbringing is very important to the way I operate. Post my education, I have been working for over three and a half decades now, all in FMCG consumer goods.
I spent broadly a third of my career in sales, a third in marketing and the rest in general management: 22 years in Pond’s/HLL/Unilever, eight in Cadbury and now about six and a half in Diageo. I have been involved with many categories starting from talcum powder—the good old Pond’s—to oral care, detergents, chocolates and now alcohol. My progress has seen me moving up on the scale of indulgence with every move that I make. I’m not sure if I will go any higher than where I already am!
Connecting the dots
Steve Jobs said in his 2005 Stanford commencement speech that it is hard to connect the dots of your career looking forward. So many people try and plan their careers meticulously and it is really hard. But it is easy to connect the dots of your career as you look back to see the things that made, shaped and helped you to become what you are. So that’s what I’m really going to do.
From IIM campus, I joined Ponds India in sales. For most of my seven years at Ponds, I worked in the dusty markets of India from the south region to north region. Irrespective of my designation, the first call to the last call was with my frontline salesperson. That taught me empathy for people in the front. They are the ones who bring home the bacon and sweat it out in the sweltering Indian summer. It also taught me how to lead and motivate people who are far more experienced—often old enough to be my father.
Pond’s, in many ways, reinforced my middle-class values. We travelled by train even though we were entitled to fly. We took a cycle rickshaw from the station to the hotel or from the hotel to the distributor shop. It did not matter how senior we were.
Pond’s goes to HLL
During this time, Pond’s was taken over by Hindustan Lever and I ended up moving to marketing in Mumbai and it was culturally so different. I struggled initially to adapt but finally I settled in and prospered. I learned the fundamentals of marketing and brand management and also how to influence multifunctional teams in a large company that don’t report to you.
After five years, much against my wishes, I went back to sales and learned how to influence and motivate much larger teams that don’t report to me directly, yet you need to influence indirectly. Thereafter, I came to head Market Research, a job completely outside my comfort zone. I then went on to become the Head of Marketing for detergents and learned how to manage a portfolio of brands rather than just one brand. Finally, I became the Head of Sales for detergents to lead one of the largest teams in the company. I learned from my mistakes, particularly the importance of strong communication when one leads big teams.
Mission East Africa
My first experience with general management was when I was asked to go as MD for Unilever East Africa covering Kenya, Tanzania, Uganda and a few smaller countries around them. That business had not grown for a decade and had lost money every year. The Regional President called me and said, “Anand, this is our last attempt. Either you turn this business around or Unilever will withdraw from East Africa.” That was no pressure, indeed!!
I landed in Nairobi and learned that Indians were not liked in East Africa because the locals thought that the Indians had exploited them for over a century and taken over all their businesses. They questioned my posting, “Why do we need an Indian to come here and tell us what to do?”
I am OK. You’re not OK
I also soon realized that everyone was a victim in that business and they happily externalised every problem. The economy was bad, Indian companies were non-compliant and the regional Unilever office was not giving them any freedom to operate.
Essentially, it was all about the ‘I am okay; You are not okay’ mindset. I spent three months using the lessons from Pond’s, travelling across the length and breadth of the country that I was overseeing, went to people’s homes and talked. I soon covered more ground than many of the locals and bit by bit, I earned their respect. We put together a very simple ambition and strategy for that business—things like focusing on a few key brands, driving lower unit price packs like the one rupee shampoo of Pond’s and a comprehensive program to lower cost because that was the nature of the income profile there.
Indian gyan and a tearful farewell
A lot of advice in Africa used to come from people in Europe. I was able to give examples from India that was relevant in terms of cost and efficiency. We unveiled our plan to the larger company and created a scorecard to ensure that we measured whatever we wanted to get done.
The business started turning around and at the end of the year, it was delivering double-digit growth and actually turned profitable. This sustained for at least a decade though I chose to leave Unilever at that time to return to India to join Cadbury. Importantly, by then, people had started believing in themselves and delivering. That was my legacy. My lasting memory in Africa was, when I left, many of the people who rejected me when I arrived wept at my farewell.
I landed in Mumbai from Nairobi to join Cadbury as the Managing Director for the Indian subcontinent comprising India, Pakistan, Bangladesh and Sri Lanka. The company was just coming out of the worm infestation crisis in 2003- 2004. People forget good news but bad news is rarely forgotten. The team at that time did a great job of resolving the crisis through changes in packaging and getting Amitabh Bachchan on board as the brand ambassador for Cadbury.
The business was back to delivering close to 10% growth in 2005, which was the historic rate and everyone believed it was great. Cadbury was after all a mature brand in a mature category and had been around for 60 years.
The Mantra: 20% till 2010
At the time I joined in 2005, the economy was beginning to open up. I felt we could grow much faster, but most others in the company did not. Along with a few people who were more open-minded and who believed that this was possible, we put together a plan to grow at 20% per annum CAGR for the next five years, against 10% in the past decade. So, 20% till 2010 was the mantra. People thought we were stupid.
We underpinned that ambition with a clear strategy of focus again. We killed a third of the brands in my first year. In fact, we killed more brands in that business than we gave birth to! We halved the number of SKUs and halved the number of innovations. Growth started improving.
We cut promotional costs and put it back into strategic brand investment, like marketing, which would grow the category. With 65% market share, the category would not grow with promotions but only through relevance of the category. As things started improving slowly, but surely, the naysayers in the business started coming on board.
The conundrum: Less is more
We focused on just one or two innovations per year that could make a big impact and made sure that those were fully funded. Big innovations that came out of that time were Cadbury Dairy Milk Silk, a premium variant of Cadbury Dairy Milk, and Oreo biscuits.
It really confirmed the philosophy that less is more and more is actually less. Over eight years, the business grew by a CAGR of ~25% in top line and ~25% in bottom line. Our factories ran out of capacity. What if I had to do this again? I would have aimed for 30% growth. But who was to know?
Cadbury was taken over by Kraft Foods. They then split the company into two parts: Kraft Foods and Mondelez. That’s when I decided to pack my bags and seek new pastures, joining Diageo in due course.
A spirited new start
Diageo is the world’s largest premium spirits company with iconic brands; like Johnnie Walker, for instance. Diageo was awarded Britain’s most admired company. In July 2013, Diageo took control of United Spirits (USL).
I was approached to lead the integrated USL and Diageo India business, which was a 100% owned subsidiary. Did I want to join the alcohol industry in India? At first, I got cold feet. Alcohol is a category that people love to enjoy in the evening but don’t want to be associated with in the day. On the positive side, Diageo was a great company and spirits was a category with very low per capita consumption. It was ripe for growth. Attitudes and barriers to alcohol were also breaking down. So it seemed like one of the most exciting opportunities in the larger consumer goods space.
At one level, I did not want to get tainted after 30 years of having worked in multinational companies, but then, at that stage of my career, I also had the opportunity to lead the industry, change its reputation and perhaps create a legacy for people after me. So I took the plunge and the challenge. It has been a much bigger challenge than what I expected because we had to deal with a host of legacy issues. While dealing with all that, we also started setting out our plan for the business. We put our mind behind a handful of the 150 brands that we owned. We supported that with sharper positioning in advertising and put an innovation structure in place to bring some excitement to a category where there had been very little excitement at all.
We changed the sales organization from push to pull and told them that in a ‘media-dark’ market, the retail store is your television screen. We not only needed to generate demand there, but also build brand equity inside the retail store.
We transformed our cost base and halved the number of factories from 94 to under 50. We invested in ethical marketing of alcohol. We killed brands called ‘diet mate’ as we thought it was unethical marketing of alcohol. We invested in road safety and in building corporate citizenship.
Inclusion and diversity
We tried to transform the organization in terms of its structure, its ways of working and culture. We halved the number of white-collar employees and enhanced the focus on inclusion and diversity. Today in my leadership team, four out of eight are women—in an alcohol business! Almost a third of our top 50 are women. When I joined, there was not even one woman in the management committee. That is the kind of change we have tried to drive in this business.
Today, it’s easier for me to attract talent and most importantly, we have changed the way business is done in this industry. Many people told me that it would be impossible to clean this industry and that one cannot be compliant in alcohol and that if we tried, the business would close. I said, “Let us comply and see.” We are still living to tell the tale. Fortunately, all these happened as we were transforming the growth and profitability of the business.
My 5 Lessons from Three Innings
What are the lessons we can draw from these three experiences of mine at leading businesses? One was a turnaround situation in Africa; the second was about accelerating growth of a company that was already doing well and the third was about a transformation of a business where I needed to transform everything about that business. I have learned five very important lessons which I will share with you:
1) Setting the right ambition
Ambition is the starting point of anything. It determines effort and resource. If you have an ambition that your son or daughter must pass the IIT entrance exam, you will put in effort, arrange coaching class and do a lot of planning. If you aim lower, then you will do things very differently.
When you intend to grow a business by 10%, there are certain things that you do, but if have an ambition to grow at 20 or 25%, you do totally different things. It is one of the most important decisions that a leader must make to set up the ambition for that business. But why is it so difficult? Ambition is the marriage of science and a dream. If you set the ambition too high, you set yourself up for failure. If you set it too low, as I did with Cadbury, then you leave money on the table. That is why, it is so important to set the right goal and vision for your business.
2) The power of focus
Indians love to multitask. I have heard this so often from colleagues and multinational companies. We like to become jack of all trades and often masters of none. To reach international level in any sport, you need mastery and mastery requires focus. How many people can you think of who are at the international level performing across multiple disciplines of sports? That’s really hard because you need focus and intensity to succeed. It’s very hard to find time to do more than one and master it. It is a simple truth, but easily forgotten.
The most important resource in a company is management time. What you make your people do is the most important decision you make. If you get them to do too many things, you squander their resources. So you have to choose your battles in life, doing the few big things that are much more impactful than doing many small things. The latter keeps you busy, but the former transforms your business.
3) We make growth happen
In business, when things go well, your teams immediately appropriate that and say that it happened because of them. The moment they don’t do well, they blame the economy, monsoon, lockdowns or strikes. They’ll blame everything but not themselves. Even the most intelligent people do this. Many of the world’s great companies were born during slowdowns and recessions. GE, IBM, General Motors, Disney and even Microsoft were companies born during tough times. When I joined Cadbury, I asked my team to map company performance with GDP. The correlation was negative. Analysis showed that two-thirds of the drivers of growth were internal and just one-third was external. So the message really is: forget your circle of influence or your circle of concern but focus on your circle of control. What can you do to change your business and never be a victim? Take charge.
4) Be future-ready
In a fast-changing environment like ours, I am reminded of the saying that God has given us two eyes—one to look at today and one to look at tomorrow.
Consumers are changing faster than marketers. Consumers want more. Things are changing by the hour, day and month. You need people who are agile. If people don’t adapt and change their skills and capabilities, they will fall behind. You have to create an organization that has a culture and a mindset that is not just ready for today but for tomorrow. It is much tougher, but if you don’t do that, you will become the dinosaur of your industry.
5) Win the right way
I was brought up with strong values. Whether it was my upbringing in my family or the way we were nurtured in Pond’s, Unilever and thereafter, I have been trained to do the right things. It is possible even in India. Somebody has to put their neck on the line and say, “I’m going to do it right and I will not compromise. I am happy to fight anyone in a fair fight as long as we all play by the same rules.”
Often people will tell you that the cost of compliance is very high. I have had people telling me that for a small amount, we can fix problems. But then what is the cost of non-compliance?
How many examples are there of companies that have failed due to poor governance like Enron? Life is not about just building a company; it is about building an institution; and institutions are built on values and conscience, not on numbers. There is no choice today other than to be a good corporate citizen, do the right thing and live in harmony with the environment and the community that we serve.
So to summarize, my Five Lessons are: (1) Set the right ambition; (2) Have the power of focus; (3) We make growth happen; (4) Be future ready; and (5) Win the right way.