Case Study 1: Unilever

Today, Unilever is one of the world leaders in the production of FMCG goods. The
company products are sold to more than 170 countries with 160 million purchase
units worldwide using a Unilever product, and on any given day over two billion
customers enjoy the company brands. Unilever products are broken down into 4
product categories: personal care products, household maintenance products, food
products, and refreshments. Personal care products category covers
antiperspirants, skin care products, hair care products, and oral care products. This
category includes Dove, Lux, Rexona, Sunsilk, Axe, Close Up, and other brands.
Unilever household maintenance products category comprises softeners, washing
powders and detergents, soaps, and dish washing and cleansing agents. In this
respect famous brands are Omo, Surf, Comfort, Radiant, Cif, Domestos, and Sunlight.
Food products segment consists of soups, sauces, snacks, mayonnaise, salad
dressings, margarine, and spreads6. Well-known brands in this category comprise
Knorr, Blue Band, Rama, Hellmann’s and Amora. Refreshment category comprises of
icecream, tea-based cold beverages, weight loss products, and vitamin enriched
staple food products sold in emerging markets. The category brands sold worldwide
are Heartbrand, Lipton, Slim-Fast, Becel, and Flora.

Unilever decided to replace its Chief Executive Officer Steve Smith with Tim Allen as the
world’s largest consumer-products maker struggled to rekindle growth at home and abroad.
It was losing out heavily to its competitor Procter & Gamble, its sales had fallen drastically,
and it was struggling to maintain its position. There was a crisis of confidence, and it was
mainly because of the leadership of Tim’s predecessors. CEOs Ed Harris and Mick Jager were
as hard-driving as leaders come — and intimidating too. They knew how to line up
followers, but inspire the troops to become leaders? They struggled to do that. And another
CEO in between the Harris and Jager regimes, John Bolton was well-liked but was not tough
enough. So, Unilever had lurched through leaders who just weren’t right.
 The day Tim Allen took over as the CEO of Unilever in 2010, the stocks dropped by
$4. The financial markets were unimpressed by Tim’s rise to the spot of a CEO. Tim,
who started his career as Unilever in 1977 as a brand assistant for Lux dishwashing
liquid. To the markets Tim ‘did not seem to have the stuff of which CEO legends are
made’. The media was quite unimpressed by this announcement.
Quiet, unassuming, and understated with a shock of white hair, wire rimmed
glasses, he looks more like a thoughtful college professor than a stereotype of
visionary, charismatic and dynamic CEO. The Forbes magazine described him as a
“listener, not a story teller, he is likable not awe inspiring...he is the kind of guy who
will get excited in the mop aisle at a grocery store...he has rallied his troops not with
big speeches and dazzling promises but modelling the way for them, he behaves as
he expects them to. He remains calm, respectful and builds trust of his employees.
There is nothing that he expects them to do that he wouldn’t do himself. He is their
role model. That has been his way”. Tim had his work cut out for him, his
predecessor; Smith had just lasted 17 months after failing to improve Unilever’s
performance. For a decade Unilever had struggled to introduce new brands,
considered by many to be the lifeblood of a large consumer products company.
There were many new projects for developing new products as the company
believed in the innovation concept and was striving hard to be the leader in
developing new products.

The company was struggling, and Tim realized he had to move fast. He strongly
believed that change and challenge are what propel growth. He couldn’t just sit
around with others around him worrying that the stock price had dropped by half.
He had a clear vision and decided to articulate it for the organization. One of his first
acts was to issue a manifesto of “10 things I believe in”. At the top was to “lead
change” followed by “the consumer is the boss.” He formed a special team of senior
management employees who would be guiding others in bringing about this change.
As he saw it, Unilever did not need a radical makeover, it just needed to focus on
selling more of its basic brands such as Omo and Dove. He chose the 10 bestselling
brands of Unilever each of which generated more than $ 1 billion in sales and told his
managers to focus on selling more. These brands would get the bulk of Unilever’s
resources. It was a message everyone could understand, selling more Omo was
easier than inventing the next great brand. Tim went further pushing his managers to
add value to Unilever’s established brands by listening closely to what consumers
wanted, this approach worked, and they gained market share in detergents against
long-time rival P&G (Procter & Gamble). His style of motivating and encouraging his
employees paid off well.

Simultaneously Tim moved to cut costs, within months he had eliminated some
9000 jobs and closed down several new product development projects that were
consuming resources and not adding any value to the organization. He withdrew
newly introduced products from the market that had not generated sales. His
bottom line was to cut costs and save money. He also sold product divisions that he
did not see as a strategic fit with Unilever. This including selling of Ragu, a big brand
that sold pasta sauces. It was a classic case of triage where Tim focused on what was
selling, poured resources into those brands, and cut the non-selling brands.

Commenting on his cost cutting, one of Unilever’s board members noted, “He
knows how to lay down the rules when he needs to. Quiet people tend to be the
toughest. He does not micromanage, however he does step in whenever there is a
need for him to do so” Indeed, in a culture traditionally characterised by
cooperation, consideration and warmth, where employees seemed like a family, Tim
has not been shy about pushing his managers to improve their performance. He has
communicated a clear vision of the goals of the organization and now focuses on the
achievement of specific targets such as sales growth, profitability and market share.
Each quarter at a meeting with top managers, Tim reveals everyone’s financial
results- good or bad. He notes, “It motivates people who are performance oriented.
For the people who are not motivated by this, we are probably not the right place for
them, we can only motivate the ones who want to achieve.” By this he has been able
to inspire and motivate the high performers in his organization.

Another goal of Tim was to break down the barriers within Unilever, getting
employees from different divisions to exchange ideas. He emphasized on bringing
 about change in the organization like getting R&D and marketing people from
different divisions to talk to each other. He encourages them to be creative and
come up with new ideas and believed in empowering his employees. He wanted to
remove barriers between units as he believed they hindered change. He also decided
to get the company back on the “innovation track” after the company has stabilised.
He initiated some changes for which he took the initiative himself and to do this, he
started a highly visible symbolic redesign of the famous 11th floor executive suites at
Unilever’s head office. The oak panelled walls were torn down, the 19 th century
paintings that once decorated the office was donated to local art museum and the
CEO and other top executives were assigned cubicles on half of the floor. The other
half was transformed into a centre for employee learning. He went out of his way to
establish personal connection with his employees and ensure that they could speak
to him directly whenever they needed to. He is more than willing to listen to his
employees and demonstrates genuine concern for them. Many of his senior staff
that he groomed eventually became successful CEO’s of other organisations.

In a recent interview Tim articulated his ideas about people and change:

“Allocate human resources in a way that identifies and develops good people
for today and tomorrow. “Effective CEOs make sure that the performing people are
allocated to opportunities rather than only to ‘problems.’ And they make sure that
people are placed where their strengths can become effective.” (Drucker)

Allocating human resources in a strategic manner is a key aspect of the CEO’s role,
because it involves not only considering what we know today but also anticipating what
skills and experiences leaders will need to run businesses that may not yet exist. There
is no substitute for personal involvement with the people who are being groomed for
the future. I know the top 500 people in the company and I am personally involved in
career planning for the 150 who are potential presidents or function heads. I review
their assignment plans at least annually, assess their strengths and weaknesses, and put
them in front of the board at meetings, lunches, and other company events. Little if
anything else that I do as CEO will have as enduring an impact on Unilever’s long-term
future
The task of the CEO is to interpret the organization’s values in light of change and
competition and to define its standards. This was a top priority in my first year as a
chief executive. At Unilever we’re purpose driven and values led. Focusing first on
what would not change—the company’s core purpose and values—made it easier to ask
the employees to take on what I knew would be fairly dramatic changes elsewhere. The
challenge was to understand and embrace the values that had guided Unilever over
generations—trust, integrity, ownership, leadership, and a passion for winning.

Tim also articulated the need to “reach outside for ideas”. His goal is to get half
of Unilever’s new products from external sources- up from 20 percent when he took
over. Unilever is entering alliances to co-develop new products and increase its
market share. Tim encourages his employees to be creative and innovative and
challenges them with new tasks. The results of Tim’s leadership have been
impressive. Unilever’s core brands have been gaining impetus. In 2014, 10 out of
Unilever’s top selling 11 brands gained market share. Costs have fallen and sales and
profits are rising fast. The stock price has doubled and so have the earnings. In 2010
Unilever earned $5.53 billion on sales on $ 40 billion, in 2014, it earned $10.4 billion
on sales of $57 billion. Tim decided to celebrate this by rewarding his employees and
consolidating resources for more change.

___________End of Case_________