29th January 2009, ECONOMIC TIMES
(The road maker is the best anonymous servant of humanity. He drives great broad thoroughfares from town to town and for generations men travel over the road, with all their hopes and fears, with all their cares and joys, never once asking who it was that made their way easier for them……Lord Leverhulme).
Industrial growth draws its strength from a number of roots, which are economic, social, or even personal. Unilever’s business history offers at least two lasting lessons to managers.
First, the evolution of HUL over many decades demonstrates the power of a simply stated and consistent purpose. Even in its 75th year in India, Unilever states its purpose as simply as “meeting everyday needs for nutrition, hygiene and personal care”–different words, but similar to what William Hesketh Lever stated in the 1880s, “to satisfy the washing needs of the teeming millions of India.”
Second, like human beings, a company too has a sanskar. This sanskar shapes the corporation over a long period.
Born in September 1851, William Hesketh Lever started the Lancashire business that became Lever Brothers in 1877. The export of Sunlight and Lifebuoy soap into India began in the 1880s, facilitated no doubt by the empire. By the time Lever died in May 1925, he had built a global soap empire with great brands like Lifebuoy and Lux.
In the 1920s, advertising agency J Walter Thompson had cannily associated Lux with Hollywood film stars like Ginger Rogers and Rita Heyworth. In 1940, the first non-western actor, an Indian, was signed up to model for Lux—Leela Chitnis. It was hugely risky but smart to associate an unknown and upcoming actor with an international brand.
Lever amassed a great fortune; during his lifetime, Lever gave away large sums of money for local purposes with very little publicity. Just prior to his death in 1925, he wrote a remarkably brief will. The Leverhulme Trust was thus able to continue his works of philanthropy.
At his centenary in 1951, it was said of him ‘that the ruling passion of his life was not money or even power, but the desire to increase human well-being by substituting the profitable for the valueless.’ Lever himself likened himself to ‘the road maker who is the best anonymous servant of humanity. He drives great broad thoroughfares from town to town and for generations men travel over the road, with all their hopes and fears, with all their cares and joys, never once asking who it was that made their way easier for them.’
On 1st January, 1930, Unilever was created through the biggest corporate merger until then–between Lever Brothers of England and Union Margarine of Netherlands. It was governed by 32 directors at the top. History records that “it did not take long to realize that this traveling circus was too big to be effective and that its perambulations wasted an unnecessary amount of everyone’s time….There were committees on everything and everybody was looking over somebody else’s shoulder, while too many people were minding everybody’s business but their own!”
Until 75 years ago, India’s needs were met by export from England. The peculiar problems of the primitive illiterate market were covered by ingenious methods of salesmanship. A 1920s report read, “An essential part of our selling organization is the lorry crew…which consists of a chauffeur, a propagandist, a coolie….We are able to popularize our goods and show their use anywhere the lorry can go, which in India is practically anywhere.”
William Lever was a creator, but his son was a coadjutor, who did not desire dynastic succession in the firm or the trust. Lever’s son engineered a managerial revolution by 1929 by transiting from ‘owner-manager’ to ‘management-without-ownership’. Professional chairmen were appointed to the Netherlands and British subsidiaries.
Unilever was a shrewd marriage of business convenience and also a great experiment in international relations. With regard to India, chairman D’Arcy Cooper observed in 1933 that “India was too large a gap in the world’s surface….to leave uncovered.” It was the same purpose expressed by Lever, but in a more contemporary language.
Lever Brothers India was thus incorporated in 1933 to expand and actively promote local manufacture and selling.
By the end of the Second World War, Unilever worked as a ‘commonwealth’ rather than as an ‘empire’ centered on London or Rotterdam. This meant continuous efforts to build up a mood of tolerance and understanding by consultation and communication as illustrated by the following anecdote.
India was the first among overseas countries to promote local nationals into managerial positions occupied by Europeans. Prakash Tandon joined HUL in 1937 and rose to be chairman in 1961 when Lord Cole was the chairman of Unilever.
Despite his colonial background, George Cole was not autocratic and brought to Unilever a risk-taking and trading mentality, born out of intuition. Cole was born in Malaysia, educated in Singapore and joined Unilever’s subsidiary in Africa at age 17. He had said of Unilever, “Firms are compared to ships. Unilever is not a ship, it is a fleet—several different fleets, several hundred subsidiary companies—and the ships are many sizes, doing all kinds of different things, all over the place.”
In 1965, when India was caught up in the license-permit Raj, Lord Cole lectured Prakash Tandon to exert his influence with government to free the business from excessive controls. Years later, Tandon would chuckle about the cheeky response he got away with, “George, my influence in Delhi is not very different from yours in Whitehall. I have the same problems in Delhi as you have with the Harold MacMillan government.”
When Unilever started its Unilever CMDS (Company Management Development Scheme) in 1950, India too did so with the recruitment of Vasant Rajadhyaksha (later chairman), Ranjan Banerjee (later Personnel Director), and Jagdish Chopra (later Marketing Director).
Independent India was charting its own economic agenda and desired the Indianization of capital. Finance Minister, TT Krishnamachari arm-twisted Tandon and Unilever to dilute the 100% foreign holding; thus it was that in 1956, Lever Brothers became Hindustan Lever with Indian shareholders.
With the enactment of the 1972 Foreign Exchange Regulation Act (FERA), an obvious option was for Lever to dilute foreign holding to 40%. Chairman T.Thomas realized that the long-standing Unilever vision and commitment to India would get substantially eroded if this were to happen. He was convinced that it would also not be good for India.
To ensure that Unilever retains 51% and management control, Thomas mounted an intensive and exacting communication exercise in 1974; this was continued later by Ashok Ganguly and both were ably assisted by the redoubtable ‘Pepsi’ Suman Sinha. At that time, it was considered to be an exercise in futility. It turned out to be a professional act, completely consistent with the long-standing purpose of ‘washing the teeming millions of India.’
Thus thousands of employees over the years have been the road makers, whom Lord Leverhulme called the anonymous servants of humanity. Inevitably future travelers will not remember those who made their journey possible. In this 75th year, it is appropriate to remember those ‘anonymous servants of humanity.’
