Paul Polman – A refreshing true leader in an 150 year old firm. This interview came in the Economic Times – corporate dossier and was an absolute pleasure to read. Paul speaks of sustainability, basics of leadership and gives jargon-less practical “gyan”. Reading this interview also made me believe again in the value of purpose, passion and ethics as cornerstones for a successful leader. Krishnan has always held Unilever in very high esteem, especially after his stint with Lipton. The emphasis that Unilever places on developing people has remained unchanged – no wonder, Unilever is a CEO factory. One of the important responsibilities any leader has is developing new leaders. Maybe the team that wrote “Firms of Endearment” has to do some research on Unilever to see if they qualify to be a firm of endearment now, especially as Paul Polman’s strategy takes shape. Paul Polman stopped the quarterly guidance to the stock market and has got a giant to focus on sustainable products – and it’s paying dividends. Also the focus on the long term and not making short term decisions that mess with the long term strategy. Unilever seems to be bringing to life the triple bottom line – profit, people and planet. Strength to them !!
Resist the short term decisions that damage the long term: Paul Polman, CEO, Unilever
Trooping out of their surprise meeting with Paul Polman, the bunch of B-school students are in a tizzy. Their minds are still trying to break down the short but intense dunk in leadership that the CEO of UnileverBSE -0.86 % gave them. Whether it’s ingenuous students or result oriented Unilever executives or hard-boiled investors or skeptical media persons, Polman has remained amazingly consistent in his message of purpose driven growth.
Ever since he took over on Jan 1, 2009, the first outsider CEO of Unilever has been a sustainability crusader giving out the good-for-society-is-good-for-business gospel day in and day out. With the company 2012 sales crossing euro 50 billion under his watch, it appears his formula is working. Even under tumultuous times, Polman hinged his growth agenda around ‘Unilever Sustainable Living Plan’, a blueprint that will lead to company doubling in size while halving its carbon footprint.
The 56 year old, who was recently in India on a five day trip, chats with CD on having an audacious goal, developing a new breed of Unilever leaders, and navigating through the VUCA (volatile, uncertain, complex and ambiguous) world. Edited excerpts:
When you took over Unilever as the first outside CEO, how did you change your leadership style?
Coming from outside in a very difficult economic environment, I had to find a way to be accepted in the company. I did two things: I spent a lot of time studying the values of the company, how it was built. And I had to find a purpose to grow for a company that was not growing. I put the two things together. The purpose of the company has always been to improve people’s lives, has always been to make communities in which you operate successful. I said we will create a model where we double our business. While doubling our business, we will reduce our environmental impact and increase societal impact.
I created a strong purpose by putting the best of Unilever together. It was a growth agenda and the world needed that because the 2008 crisis showed a lot of shortcomings in our system. I needed to be sure that everybody understood what I was talking about. 2008 was a crisis of short-termism and greed. So I abolished guidance and quarterly reporting. We changed the compensation system for a longer term and put out some clear signals to tell people that while there might be a crisis we are investing for a long term. I made it clear that we were investing in advertising and promotion, in people, in back end services and product quality.
When others were cutting costs, shutting down factories, we were investing. Now we are 4-5 years further, our business is up 30 per cent, our share price has more than doubled. The Unilever Living Sustainable Plan is now seen as a very good example of responsible business. And in most countries that we operate in we are now the preferred employer because the purpose is strong enough to attract a lot of young people. We have a lot of challenges, the world is moving very fast, but we are well positioned to be playing a good role for a long time to come.
You have chosen a very tough way of doing business, that too in a VUCA world. How are you balancing the short term expectations while also staying true to the long term direction of growth?
If the short term decisions you make damage the long term, you should resist those. But there are many short term decisions that you need to make to be a successful manager. Unfortunately, I saw some statistics recently which said 75 per cent of American CFOs would not take the right decisions if it would result in missing the quarterly guidance. That’s why you see that average lifespan of a listed company is only 18 years. We have been in business for 150 years and we will be in business for more. So we made clear we will always do the right thing for the long term. That’s one of the reasons I stopped quarterly reporting and moved it to twice a year. I believe that’s part of the reason why the company has been more successful than most of our competitors.
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VINOD MAHANTA & PRIYANKA SANGANI, ET Bureau Nov 8, 2013, 05.11AM IST
(The basic skills of leaders…)
Trooping out of their surprise meeting with Paul Polman, the bunch of B-school students are in a tizzy. Their minds are still trying to break down the short but intense dunk in leadership that the CEO of Unilever gave them. Whether it’s ingenuous students or result oriented Unilever executives or hard-boiled investors or skeptical media persons, Polman has remained amazingly consistent in his message of purpose driven growth.
Ever since he took over on Jan 1, 2009, the first outsider CEO of Unilever has been a sustainability crusader giving out the good-for-society-is-good-for-business gospel day in and day out. With the company 2012 sales crossing euro 50 billion under his watch, it appears his formula is working. Even under tumultuous times, Polman hinged his growth agenda around ‘Unilever Sustainable Living Plan’, a blueprint that will lead to company doubling in size while halving its carbon footprint.
The 56 year old, who was recently in India on a five day trip, chats with CD on having an audacious goal, developing a new breed of Unilever leaders, and navigating through the VUCA (volatile, uncertain, complex and ambiguous) world. Edited excerpts:
When you took over Unilever as the first outside CEO, how did you change your leadership style?
Coming from outside in a very difficult economic environment, I had to find a way to be accepted in the company. I did two things: I spent a lot of time studying the values of the company, how it was built. And I had to find a purpose to grow for a company that was not growing. I put the two things together. The purpose of the company has always been to improve people’s lives, has always been to make communities in which you operate successful. I said we will create a model where we double our business. While doubling our business, we will reduce our environmental impact and increase societal impact.
I created a strong purpose by putting the best of Unilever together. It was a growth agenda and the world needed that because the 2008 crisis showed a lot of shortcomings in our system. I needed to be sure that everybody understood what I was talking about. 2008 was a crisis of short-termism and greed. So I abolished guidance and quarterly reporting. We changed the compensation system for a longer term and put out some clear signals to tell people that while there might be a crisis we are investing for a long term. I made it clear that we were investing in advertising and promotion, in people, in back end services and product quality.
When others were cutting costs, shutting down factories, we were investing. Now we are 4-5 years further, our business is up 30 per cent, our share price has more than doubled. The Unilever Living Sustainable Plan is now seen as a very good example of responsible business. And in most countries that we operate in we are now the preferred employer because the purpose is strong enough to attract a lot of young people. We have a lot of challenges, the world is moving very fast, but we are well positioned to be playing a good role for a long time to come.
You have chosen a very tough way of doing business, that too in a VUCA world. How are you balancing the short term expectations while also staying true to the long term direction of growth?
If the short term decisions you make damage the long term, you should resist those. But there are many short term decisions that you need to make to be a successful manager. Unfortunately, I saw some statistics recently which said 75 per cent of American CFOs would not take the right decisions if it would result in missing the quarterly guidance. That’s why you see that average lifespan of a listed company is only 18 years. We have been in business for 150 years and we will be in business for more. So we made clear we will always do the right thing for the long term. That’s one of the reasons I stopped quarterly reporting and moved it to twice a year. I believe that’s part of the reason why the company has been more successful than most of our competitors.
How did you make sure that you had a buy-in for such a large scale change program?
There are some basic human needs that are the same. Everybody wants to succeed. We have a strong culture in the company that goes back a long way of helping people; doing well by doing good. The Unilever Sustainable Living Plan tries to internalise the external challenges like food security; a billion people going to bed hungry; sanitation; two million children dying every year due to poor hygiene.
When we put these issues together, you talk Unilever. That is why this company was founded in the first place. When Lord Lever invented Lifebouy or Sunlight as it was called then in Victorian Britain, it was because one out of two babies didn’t live past year one. The issues of hygiene were enormous and he provided a solution.
How do you make sure that even in a global company like Unilever, each of the employee remains aligned to the mission?
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VINOD MAHANTA & PRIYANKA SANGANI, ET Bureau Nov 8, 2013, 05.11AM IST
In most markets we are a desired employer and we contribute enormously to the economy. In India, look at how many people have worked in HUL and are now building India’s economy by working in other companies. It is an obligation that we have to develop leaders for developing the countries. We are there for the long term interest of India, not HUL. It boils down to the values and culture. It is very hard to make that understood and the pressures are against you from the analysts, shareholders, also your own ego sometimes.
We’ve been very blessed with great leaders in this company throughout history who have understood that. Globally too, my responsibility is that we understand that and carry it on. Yesterday I spent some time talking to T Thomas, who was a chairman here 40 years ago and is in his 90s. The reason I talk to them is to understand what challenges they had to face, what their experiences were, that makes us stronger. It boils down to dignity and respect for everybody and to be focused on the common good not on your own interests. If you can get those two things in place, the world would be a better place.