Sucheta Dalal :Keki Dadiseth - A rare interview to MoneyLIFE
Sucheta Dalal

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Keki Dadiseth - A rare interview to MoneyLIFE  

September 12, 2008

"I look forward to my second innings with as much enthusiasm as I did with my first"

 

India is now the centre of global attraction. And if there is one manager who is at home at a time like this, it is Keki Dadiseth. He studied in London, worked in the Unilever group, rose to become the chairman of Hindustan Lever in India and then became a member of the Unilever board. He is now on the boards of a few carefully chosen global and local companies. MoneyLIFE is privileged to present the first ever interview in which he talks about his three decades of management experience and reveals rare glimpses of his strategies and vision. Excerpts of an hour long uninterrupted chat with Sucheta Dalal and Debashis Basu on a Sunday morning, which also happened to be the Parsi New Year day

 

ML: Could you tell us something about your childhood and your early days?

KD: I was born in Pune and hence have a great attachment to it even though the Pune I was born in was a far cry from what it is today. My father ran a small business. I went to Bishops School and have great memories of my Alma Mater. I either walked or cycled to school with my elder sister since we did not own a car. Unfortunately, my school life was frequently interrupted for the medical treatment that I had to have for Polio that struck me long before there were vaccines. For many years I had to come to Mumbai during Christmas to have surgery and looking back I marvel at the skill of my doctors who performed pioneering work with the technology available then. I am also truly grateful to the teachers who worked so hard to help me make up for my long absences from school.

 

ML: Did you have any clear plans and ambitions then?

KD: I was very driven even at that stage and had deep ambition, although what I wanted to do or become, changed from time to time. At one stage I wanted to be a metallurgical engineer, but my grades in Math soon put paid to those dreams. However, by the time I finished school I was almost certain I wanted a business oriented education. The first step was to get a commerce degree from Sydenham College where I spent four enjoyable years. Thereafter, along with a group of 5 or 6 friends, I went to the UK to do my articles and qualify as a Chartered Accountant.

 

While I was still at college I met my wife Alloo. We got married while I was still studying for my accountancy degree. I often joke with her that she made a good long-term investment in me even though I was penniless at the time we married. I certainly did, as she was a great source of encouragement and help to me in looking after the home and a job while I concentrated on my studies.

 

ML: Was she working at the time?

KD: After we married she worked with Air India at their London offices and apart from adding to my meagre income of 10 pounds a week, the concessional tickets helped to bring us back home from time to time. We lived at Woodford Green in Essex, the constituency of Winston Churchill, in a small but charming flat. We had some really fun times together with some of my equally impoverished bachelor friends who came home frequently for a hot meal. Still, we had a decent living and we both feel that it was those hard days that truly cemented our relationship.

 

After I completed my CA degree I was offered a good job in a small audit firm in London, however my wife’s father was seriously ill and I felt it was unfair to deprive her of time with him, so we returned to India. I joined the Bombay Dyeing Group and am grateful to Mr Neville Wadia, even today, for giving a start to my career.

 

ML: Which year was this and how did your career shape up thereafter?

KD: This was in 1973. After about seven months my wife and I saw an advertisement for finance managers in Hindustan Lever and I applied for the job. I was delighted when I received a call to meet them. During the interview they told me that the job needed experience, but I assured them that everyone has to start somewhere and thus began a long and wonderful journey. Just after I joined, profits took a hit due to price controls and I remember the chairman addressing what was called a ‘communications meeting’ to inform us of the difficulties that lay ahead. It wasn’t good news to hear that this great company I joined would suffer a loss.

 

Levers was a defining part of my life. It shaped me into who I am by providing exposure, training and experience. Looking back, the innumerable roles I had were the best training ground I could ever have hoped for. I joined as an internal audit manager and later worked as a group auditor. I then moved to the Sewree factory as the accountant. That was a happy period. I loved the buzz of the factory, of working, talking and interacting with people. I was faced with the challenge of “closing” the factory accounts on the due date -- something that was never done before. My team included D Sundaram, the current Finance Director and we took up the challenge. Without the benefit of computers, we worked our socks off and were proud to be the first to present our accounts to the Head Office. It was a great learning experience for me, as a manager, on how to get the best out of people. I was fortunate to have a wonderful boss in Dr Ashok Ganguly; he influenced me greatly and I learnt to be tough yet supportive as a manager. He allowed one to grow by allowing mistakes to become the breeding ground of leadership and learning.

 

I later returned to Head Office as a commercial manager and subsequently became the financial controller. A couple of years later I was seconded to Unilever, initially as bag carrier for a senior Unilever Director. That taught me a lot about the global functioning of the company. I later headed Mergers & Acquisitions for the overseas part of Unilever. We bought companies in the Ivory Coast, Taiwan, Korea etc. Just before I returned to India I became Financial Director for the Unilever overseas world. It was a role that my boss wisely described as one ‘that would be ignored at the peril of any financial director of a region’. This statement has always stayed with me - people usually look for visible stripes but the most powerful stripes are not those you can always see.

 

ML: So when and why did you return to Hindustan Lever again?

KD: I was offered positions in the Unilever world, but I was ready to come home. One of the reasons we opted to return was that it was important for our daughter to know her roots. It was a difficult concept to explain to an English colleague who told me that one could grow roots anywhere. When I told Dr Ganguly that I wished to return, he said he could only offer me a position in Personnel. Personnel, in those days, was perceived as a place to put people when you didn’t know what to do with them. But I accepted and joined Hindustan Lever’s board as Personnel Director. The chairman wished me luck, but also reminded me that I knew nothing about labour and would have to deal with whatever came my way. This was another key learning for me. Since I was not pre-conditioned by specific knowledge or history, I put forward some fairly bold views that I would probably have hesitated to take, had I been a trained HR man.

 

One of the most painful decisions I had to help the company take was to lock out the Sewree factory in 1987-88. The labour situation had unfortunately gone completely out of hand and was having a negative effect on our productivity and business. Labour wanted to take management decisions and something had to be done. As Personnel Director the answers had to come from my department. A lockout was the answer and the board, most notably Dr Ganguly was a pillar of strength. My group dealt with the nitty-gritty and he with the fall out. It was a difficult year and we faced much criticism from the local and foreign press; but in the end we wrested back the right to manage the company and not to be dictated to by the Unions. Our legal team headed by MK Sharma drafted agreements which all the workers agreed to sign and the factory was reopened. It was a momentous day for me, but things could easily have gone horribly wrong, for the company and for me.

 

ML: We were junior reporters those days and I remember that HLL handled the communication battle very well. I remember all of us being rather shocked at the high salaries earned by drivers and janitors.

KD: You are quite right. We communicated openly at that time. Normally Industrial relations is all very hush-hush; call it naivety if you will, but we ended up winning by being open in our communication.

 

ML: Were you personally worried during the strike about what it could do to your career?

KD: I was clearly told that this was a major issue that could impact my career. But some things had to be done and since I carried no baggage of past personnel history, I was genuinely not too worried. The only concern was when I had to have security for my family and myself. My nightmare used to be board meetings when the first thing on the agenda was Industrial relations. Happily, that changed once we resolved the issue. To win mega battles you need to align everybody in the company and we did this by producing a one pager on the developments everyday and circulated it within the organisation. Aniruddha Lahiri, then the Industrial relations head, Gurdeep Singh, factory manager at Sewree and Irfan Khan, the communications head, were key figures in the communication exercise. This epic lockout was a defining moment for HLL because it re-established our right to manage and also sent a powerful message to other factories and unions.

 

ML: You were in a key job function when economic liberalisation was initiated in the 1990s. How did HLL react to the change on the inside? We only saw the outward manifestation in a series of acquisitions.

KD: We felt completely liberated and made some good acquisitions. Tomco (Tata Oil Mills Company), our first acquisition was a superb fit giving us increased market share and growth opportunities. They were strong in the South where we were not and they had brands that did not need repositioning into our portfolio. Though they were not doing well they were asset-rich. It was a tricky acquisition since the unions had opposed it. Also, until it was approved by the Supreme Court, we were effectively running Tomco “on trust” and may have had to give it up.

 

When we were doing the deal Dr. Homi Sethna the Tomco Chairman often mentioned that HLL did not understand technology. But after 12 to 14 months, while the integration process was still on, he called me and sat me down and said “Maybe I have been too harsh on you lot.” He then graciously took out a Titan watch with JRD Tata’s signature and gave it to me. It felt great to be appreciated and finally understood. After Tomco we approached Mrs Simone Tata with our plan for Lakme. We acquired Lakme and it turned out to be a superb acquisition. The brand is worth a great deal today.

 

ML: Post the acquisitions, how did your career develop?

KD: I then ran the personal care business, which saw the well-known oral care battles during that time (this was the time when HLL’s Close-up & Pepsodent brands made smart inroads into Colgate’s large market share.) After that, I became head of the detergents profit centre before becoming chairman. Two or three years down the line, the then Unilever Chairman Niall Fitzgerald told me of his intention to induct me to the Unilever board as head of personnel.

 

In 1991 I almost turned it down due to personal circumstances involving my wife’s health. But Niall wisely told me to wait before I made a final decision and I thank him for his patience and faith, which later allowed me to take up the assignment. London healed us all by allowing us to get away from memories that we wanted to forget, and setting up a new home helped to keep us busy. It also allowed us to have our children with us as our son-in-law did his MBA at the London Business School.

 

ML: As HLL Chairman, we remember that you focused sharply on corporate growth; the main acquisitions had already happened.

KD: Yes. Ultimately business depends on growth. It is not about a single initiative like cost cutting. So I tried to emphasise the growth targets and transparently shared my vision of doubling the size of the company every five years and profits every three years to align everybody. And we did achieve those targets and market shares reached their highs.

 

ML: Kissan was an acquisition that was not too successful was it?

KD: In restrospect, yes. The categories we bought were profitable but we have perhaps not been able to exploit the brand fully. Modern Foods proved to be more difficult and in ice creams we were naïve in thinking that the western model would work in India.

 

ML: You had mentioned that Modern Foods would be another building block, so to speak.

KD: The vision I had was that of a cascading horizon, starting with wheat flour and going onto bread, chapatis, biscuits etc. But some things look appropriate at a certain point in time and not so appropriate at another. A good manager must have the capability to cut and run when the model is not working, but it is always better to do something and fail rather than be afraid of failure and not try at all.

 

ML: Could you give us other interesting insights and learnings from your time as Chairman of HLL?

KD: There were many, but one that comes to mind was a discussion with Harish Manwani when he was director Personal Care. One evening he came to my room and told me that a competitor was launching a product that would impact us significantly. He said that he would have to use the whole year’s marketing budget in two months if we wanted to stop the competitor in its tracks. At the time we had about half the market share in that product category. I asked Harish whether he had done his homework well and he assured me that he would deliver his results, but not over deliver. He gave me the additional support budget, which was indeed equivalent to the whole year’s number. We took about ten minutes to agree to go ahead. These are the kind of things that one never forgets, where decisions involving tens of crore rupees have to be taken in a matter of minutes - because speed is of the essence. What eases such decisions is the confidence that one has in the person presenting his case. Harish and I still talk about it to this day. Incidentally, we increased our market share in that segment by about 10% in the next six months. For me the most important issue as chairman was to drive the top line and make sure that the profit model was sustainable.

 

ML: The 1990s were also a period which saw the growth of regional brands. If you take them collectively as a category, they were growing faster. Is there something inherent in the business that favours smaller brands that HLL cannot match because of high costs?

KD: Well it depends on whether you see a glass as half full or half empty. When Karsanbhai Patel of Nirma - a man I have a great deal of admiration for - started out initially, he helped the entire market to grow explosively. But as he grew bigger, competitors entered and it became much tougher even for him. The market also makes a lot of demands on a business and at the end of the day you cannot have a profitless business. My business mantra has always been that profits are best measured by cash flow and not the profit and loss statement. You can always be seduced into thinking your business is doing well when the market is growing, but what you need to be concerned about in a fast growing market is whether you are at least holding market share. So there are two things, one is cash flow and the other is market share. If you focus on these two things your business will come right in the end. Regional brands have some competitive advantages but our fabric care business grew irrespective; and our popular detergents business was growing and commercially competitive - and so we got it right even against regional brands.

 

ML: Which is more or less what HLL has managed…getting it right in the end.

KD: Yes. HLL has always had a fantastic group of people. One of the qualities I admire most in the company is that you could be sitting down to discuss what seemed to be an insurmountable problem and after a lengthy discussion you may not have a solution but you would have the genesis of one, and pretty soon you have the solution itself. This is something I don’t see in many companies.

 

ML: Can you tell us something about your days at Unilever? That is a period when we did not follow your career very closely.

KD: Unilever is truly a global company that does not bother about what background you are from, or whether you speak with a clipped accent or what you wear. In fact I joke that at HLL we wore suits more often, and I had a surfeit of them when I reached London. But at Unilever we were all dressing down so I had to incur additional costs in getting a new wardrobe of casual wear. We only wore suits to board meetings.

 

My time at Unilever was both interesting and exciting. When I accepted Niall’s offer of a board position I thought it would be in Personnel. But he called one day and asked me to fly out urgently to London since he had something very important to discuss. In a way, Alloo and I were hoping there would be a delay in starting the London assignment, since we would not have minded a little more time in Mumbai. What Naill had in mind was quite different, he wanted me to join the Board and Executive Committee by May of that year in order to conduct a study to restructure the business to make it more profit responsible. That is the time when we set up two divisions in Unilever. The seven months I was given to complete the job soon came to an end and I was given responsibility to manage Home and Personal Care which was a $25 billion business across the world.

 

There is always the temptation to replicate internationally what one has been doing locally; this may work at times but it is usually not appropriate. I took a while to discover that there was a great deal of duplication happening in Unilever's international operations. So we started by paring down the organisation. For example, we had a few thousand projects in our innovation funnel but in reality there were only 50 key projects, the rest were minor variations. Without a proper innovation structure these got diffused, so we set out to de-duplicate the organisation . I also recommended the creation of two new positions - a President for Marketing Worldwide in Foods and another for Home and Personal Care; this played an important and crucial role in the way Unilever reacted to markets.

 

Another initiative was what I call the Alignment Grid. When one does a global job there are three things one must align. Firstly, the strategy of the business, particularly if you are not a conglomerate you can align the strategy because you sell similar soap, toothpaste or shampoo all over the world. Secondly, one aligns the structure to implement the strategy. Thirdly, and by far the most important, is the emotional alignment of people. By this I mean that people must not work independently but inter-dependently. This was the model that we established of Global Innovation Centres, located in different geographies. So Brazil, for instance, became the global leader for product X and had to deliver to the world. India became the global centre for product Y and had to do the same. The most difficult task is to get emotional alignment and interdependence to work; at the end of the day people do tend to think only for themselves. Over the period I was at Unilever, Home and Personal Care grew by about 4-5%, which in global market share terms was about the same or slightly below where we were and the margins improved.

 

ML: Were you at any point in your career tempted to leave the company or do something else?

KD: No never. There are times when offers for jobs come along but I was never tempted. I worked for a company where I felt totally comfortable and one for which I had the greatest respect, and importantly it respected me. It was a company that would back me to the hilt irrespective of profit or loss, provided I did the right thing. Unilever is a great employer, it teaches you to operate through and with people. You learn to trust and not look over other people’s shoulder. There is no intrigue and one can speak ones mind without fear of reprisal. Why then would I have ever wanted to leave?

 

ML: What about your post-Unilever career. You are into a wide spectrum of activities, how did these happen, what was your thought process?

KD: Let me explain. This was not happenstance but happened by design. When one starts a second career one wants to ensure that the grey cells keep ticking by doing new things. I wanted activities where I was required to think rather than react instinctively. I also wanted to work with people who I felt comfortable with and respected. I therefore carried on with the house of Tatas as a director of Indian Hotels. I joined Ajay Piramal’s group because I have a great amount of respect for his business and we became good friends when we were at Harvard together. Deepak Parekh is a college friend and when he requested me to join Siemens I gladly accepted. The Wadia group, as I mentioned before is where I started and have affection for, hence my association with Nusli Wadia. I am also Reuters’ (Naill Fitzgerald, former chairman of Unilever is the chairman) nominee director for the Times Now channel though this has still to begin.

 

ML: What about your directorships on international companies?

KD: I am a director of Prudential plc which is a leader in insurance in the UK, Asia, parts of Europe and the US. I am also on their joint venture boards in India.

 

I have just joined Omnicom, which I know I will enjoy a lot because it brings out the brand manager in me and at the end of the day every general manager is a brand manager at heart. Omnicom is a global leader and the number one communication company in the world. It is exciting to help in articulating a strategy for them in India. It is already well positioned with global clients and we have to build capabilities through our strategy. I will enjoy being part of this process.

 

When I met their chairman John Wren who is truly charismatic, I found his philosophy of business one that I too believe in. That is to ‘leave businesses to run and not overrule them, but to hold them accountable’. I have known Hank Paulson who is now U.S. Treasury Secretary for many years when he was chairman of Goldman Sachs. It is the best brand name in financial services and investment banking with awesome capabilities and truly outstanding people. When he offered me a position with them as an international advisor, I readily accepted. And I am thoroughly enjoying it and hopefully contributing.

 

So I have joined two service organisations that are global leaders, a financial organisation in Prudential, and I am an advisory director to Marsh & MacLennan group of companies, which is a large insurance brokerage firm.

 

I was on the advisory board of Daimler Chrysler, which was recently disbanded - where I enjoyed and had the honour of interacting with world leaders like George Bush Sr., Lee Kwan Yew and Ernest Zedillo former president of Mexico. It was exhilarating to discuss world matters with them.

 

ML: So now you are in Media, Insurance, Advertising, Finance and Marketing.

KD: Yes, it sounds a lot but in the context of why I chose them, they were aligned with my plan.

 

ML: When you look at India now, there is enormous foreign interest in its robust economy. How do you compare today’s climate with what it was when you were the chairman of HLL?

KD: I can give you a categorical answer. In the 6 or 7 years that I have been away there has been a huge change. Today, to say you work in India or are from India is a statement of pride and recognition, this was not the case some years ago. The interest in our country is tremendous and people want to learn more about it. India still has a long distance to travel. And, as a country, we have to take some risks; the question is are those risks worth taking? In my opinion they are - given what they can do for the country in the long run.

 

ML: What are your feelings when you look back?

KD: So far as I am concerned life couldn’t be kinder. I have a loving daughter, son-in-law and extended family. With God’s grace, Alloo and I are in good health. I get much enjoyment from visiting my homes in Khandala and Pune and I am looking forward to building a small one in the Nilgiris where my wife can walk down to the 5th hole on the golf course and I can sit a satisfied man and read a book. My Second Innings is one I look forward to with as much enthusiasm as I did with my first.

 

 

 

 

 

 


-- Sucheta Dalal



 



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