Hindustan Unilever Limited (HUL) is a company that has gone through periods of extreme economic crises and has always managed to come out on top. HUL executive Sudhir Sitapati tells us about some of the principles and business strategies that make HUL almost recession-proof.
1. Entrepreneurial approach
Most people think of HUL as a process driven, slow company without much entrepreneurial instinct. If you study the history of HUL, there have been 7-8 inflection points where the company has really taken off in the last 60-70 years. Each of those inflection points has people associated with it and acts of great entrepreneurship. It is not a company that makes wild decisions every year, but one that makes big entrepreneurial decisions every decade or so.
2. A shock-resistant portfolio
HUL’s portfolio straddles many categories and many price points. So it has its presence across foods, personal care, home and hygiene, and also across the low, middle and high price points. That allows HUL to basically flex its portfolio so that for every point in time you have something to offer. A diverse portfolio helps the company stay afloat in the most difficult of economic crises
3. A Middle-class soul
Like the consumers it talks to HUL has managed to keep a culture that is quintessentially Indian middle class. Hard-working, frugal, aspiring and humble. Hierarchical, stolid and generally unimaginative. It starts with the people it recruits: middle-class young men and women who have made it through the gruelling Indian education system. As a consequence, middle-class frugality is built into the company, which manifests into the hunger to grow and an inborn conservatism in costs.
4. Changing with the times but remaining rooted in the HUL’s purpose and values
Business is a paradox of lasting stability and continuous change. HUL’s business thrives on deep consumer empathy and understanding. HUL’s deep reach into Indian households is a result of this. Their consistent understanding of the Indian consumer’s unmet needs and bringing them to life in the products they create is the most crucial aspect of their business. Focus on these fundamentals in peace time allows HUL to move better through war times.
5. Unique management training programme
Bright freshers from the best management institutes spend a year doing work where the rubber meets the road. One has to spend 3-4 months acting like a salesman selling from shop to shop. One has to do a rural stint where one lives with a villager. The underlying principle of management training is to allow trainees to live the life of the lowest-ranking company functionary in every department. It builds rapport between front-line teams and top leaders, which is critical for building strategies that aren’t written in ivory towers. Such kind of strategies prove to be useful during recessions.