Thursday, October 6, 2005
At his first media interaction after taking over as Hindustan Lever’s non-executive chairman, Harish Manwani was asked whether the company’s practice of compulsory rural posting for its managers had outlived its utility.
The question was relevant in the context of the increasing perception that the FMCG major is fast losing its celebrated status as the Mecca for top B-school students who are now reluctant to go through the mandatory heat and dust of rural postings.
Manwani didn’t pause for an answer. “Rural India is in the company’s DNA and such postings will continue, come what may. There is no way but to listen to the real markets,” he said. Manwani proceeded to give an example of the company’s intense training processes around the globe.
In Brazil, where he was once posted, he told a group of management trainees (all from that country’s elite business schools) that the company was planning to organise a celebratory dinner at a rundown school building in a remote place, and it was up to the trainees to organise everything.
The management would not name any project leader and would only provide logistical support and a limited budget. The trainees looked lost and thought the job was daunting, almost impossible.
But it took just two days for them to regroup themselves and organise everything – they cleaned up the place, provided electrical connections, painted the walls and organised the caterers – all within the budget provided.
The entire top management attended the dinner and the icing on the cake came when the school authorities thanked the trainees profusely for the makeover of the building. “This is the kind of experience that a management trainee in Lever gets – something that would give them invaluable lessons for future leadership roles,” Manwani said.
Exposures like these help managers to realise that they are not ivory tower theoreticians and understand the real message: take your products to the market – whether it’s the weekly cattle market or the well where village women wash their clothes.
That’s why every Lever management trainee begins his or her career by spending a couple of years in a rural village, eating, sleeping, and talking with the locals.
Marketing executives make frequent visits to low-income areas where Lever’s conventional hub-and-spoke distribution model, which works wonders in urban and semi-urban markets, isn’t cost-effective.
Giving intense rural exposure to its future leaders is also grounded in the sound business logic that the bottom of the pyramid is not marginal anymore and that’s where the market is. Rural markets account for about 30 per cent of Hindustan Lever’s revenue and the potential is limitless.
Parent Unilever anticipates that by 2010, half of its sales will come from the developing world, up 32 per cent from its current sales. The rural people in India, who comprise 12 per cent of the world’s population, presents a huge untapped market. So, going rural isn’t just about lowering prices. It’s about creativity: developing products and processes that do more with less.
Thus, when the company wanted to promote Lifebuoy in remote villages, the solution it hit upon was to make facilitator teams comprising its young managers go into village schools and teach youngsters about the problems that can be caused by invisible germs and how they can be largely eliminated by washing hands with soap.
Or, consider Project Shakti under which about 15,000 poor women are selling the company’s products in 50,000 villages with a population of less than 2000 people each in 12 states, and account for about 15 per cent of the company’s rural sales in those states. Lever plans to scale up Shakti to cover 100,000 villages across the country by this year end.
A typical Shakti entrepreneur earns a sustainable income of about Rs 700-Rs 1,000 per month, which is double their average household income. Project Shakti could account for as much as 25 per cent of the company’s total rural sales within the next three to five years.
As part of the training programme for these women, all Lever management trainees spend about four weeks on the project in rural areas with NGOs or self-help groups. So what began on November 28, 2000, in a meeting hall in Nalgonda in Andhra Pradesh in the presence of 150 impoverished women, has now become a gigantic exercise. Hindustan Lever says it isn’t making much profit from Shakti yet, because of support, marketing and other start-up costs. Still, the distribution gambit pays for itself and it is growing. More importantly, the project is giving birth to women like Kusumben – an uneducated impoverished mother of four – who is now earning a tidy sum of nearly Rs 4,200 every month.
By the year-end, Lever expects to have 25,000 Shakti-ammas like Kusumben who will be direct-to-home distributors of the company in these small villages.
Manwani is indeed right: his young managers have proved how state-of-the-art marketing can meet the dirt road to give profitable results for the Shakti-ammas; for the company; and, more importantly, for themselves.