summary of CEO factory

Transcript

1. Summarized by - Diya Vasanwala
2. Middle Class Soul Is a hunger to grow and an inborn conservatism in costs and is aspiring to grow. Meritocracy This is much more supportive. And people with a track record of performance promoted. Comfortable in Lakhimpur and in London ‘Walk with kings – nor lose the common touch’. It means that the managers at home in the remotest villages while also speaking to investment bankers in South Mumbai. Secret Sauce of HUL
3. Entrepreneur Professional ‘Most leaders are high achievers in their academic career, they bring confidence that is reinforced by the institutional self-confidence they encounter’. They will go the extra mile to deliver results. Unchanging Value System Final ingredient is old-fashioned goodness. The company would rather close operations than compromise on promises.
4. Marketing • Marketing is not just advertising. Marketing is about understanding consumer needs, developing right product for that need and finally letting people know about the product. Advertising is one of the pieces of marketing. • For a company it is easier to grow if it is under penetrated means unsolved consumer problem. It becomes more difficult to gain market shares from the competitor who has already solved the problem. The HUL have witnessed this in FMCG sector. • In HUL there are very few successful examples of brand extensions like dove, surf excel, and red label.
5. Be Famous Before Being Persuasive • Production is the final stop in the advertising process. • Great advertising is a secret sauce for success that only a few can master, and hence it is a competitive advantage. But even more important than the quality of advertising is getting your message across to as many people as quickly as possible. In other words, good media planning and deployment. • Communication is a critical competitive advantage in any business. • Being remembered is much more important than being persuasive. • Take economics-driven and not ideological positions on media.
6. Get the product right, the brand will follow • 4 P’s : Product, Price, Place and Promotion. • Product is the most important P in marketing. That is why every CEO needs to be the chief product officer as well. • The important thing in product development is not to obsess about the revolutionary nature of change in a product but to focus on understanding and fulfilling consumer needs. That is where value is created. • Good companies invest in R&D; in the best companies everyone is involved in R&D.
7. Product Development . Understand the consumer needs in depth Create a product and innovation culture in the company Test before you launch Persist patiently and finally Obsess about delivered product quality
8. The Art and Science of Pricing • The biggest myth in pricing – practiced by most e-commerce companies – is to ‘price at a discount, recruit consumer and then take up the price’. • Pricing is not a tool to recruit new users, it is a tool to maximize long-term value for shareholders. Long term is the key phrase. It is easy to price up in the short term even if one loses some volumes. But a loss in volumes has a long-term impact on profitability. Most companies either fix a profit margin they want to make and price accordingly or fix a price they believe the consumer is willing to pay and adjust the margin accordingly. • Lower price point is more important than cheaper price per kilo for low-income consumers. • Price different pack sizes differently depending on consumer profile and cost structure. • Pricing under volatile conditions requires special rules.
9. Why Sales Is Not a Revenue Function Sales director ‘Tan’ Sundaram, “Sales is a cost Centre and not a revenue Centre. Once you are clear on this, everything else about managing a sales and distribution system is easy”. There are two lessons here. One for salespeople, who should sell just what is adequate till their next visit. Second for marketing people, the more the products you launch and insist that they find their place on the shelf, the more retailer capital you block and the more likely it is that you core products will go out of stock. Sales is a cost and not a revenue Centre. Range reduces the availability of what you really want to buy. Focus on availability of products and not on depth of stock.
10. As long as there change, there will always be hidden costs and one needs to scrutinize such process and costs. Cost reduction, is never a ‘cul de sac nr a dead end’. There is always more to do. The 50:25:25 rule says that the 50% of new capacity should come from de- bottlenecking, 25% from efficiencies like factory workers productivity, and 25% from new capital. HUL excels in cost management by treating all costs as variable, emphasizing low employee costs, and achieving a high return on capital employed (ROCE). Respect for Money
11. Throwing Toddlers in the Deep End HUL measures calibre using three criteria: judgement, drive and influence. Drive is the most important trait in junior management, influence in middle management and judgement at senior levels. The abiding principles in leadership development is 70:20:10 – 70% of development is by leader building a leader on the job, 20% formal interventions by the boss and 10% the classrooms by external family. Values are so key to HUL’s success. The HR systems at HULL have contribute more than anything else into making callow, young trainees into future CEO’s.
12. THANK YOU