The large corporation with the soul of a small company. that is the organisation for the new millennium into which CEO K.B. Dadiseth and his hand-picked team of 42 are transforming the hindustan lever that we know today. BT lifts the veil on corporate India's most audacious experiment yet with change.

By Chhaya & Radhika Dhawan

No transformation could be more total. No cannibalisation more complete. No self-destruction more stunning. In spite of being at the most successful stage of its life so far, India's mightiest marketing superpower, Hindustan Lever (Levers) is determinedly plotting to immolate itself. And to rise, from the ashes, a Phoenix that's stronger, nimbler, and more customer-driven than ever before. It was 6 months ago that CEO K.B. Dadiseth, 54, unveiled before his colleagues the design for the New Levers that is very, very different from the present monarch of the marketplace. Working with a select team of insiders and consultants-among the latter are strategy guru C.K. Prahalad of the University of Michigan, and McKinsey & Co.-Dadiseth has decided to rebuild his colossal organisation as a configuration of empowered virtual companies, each built around a single category of products. So quietly was the concept of this change being blueprinted that barely a handful of people, leave alone the entire organisation, was aware of it till the board met in Goa on January 13, 1999, for a preview of the New Levers. For new, read lean, read decentralised, read agile. These are the appellations that Levers wants to be known by in the coming millennium. Declares Dadiseth: ''Project Millennium is a look into the future, to see what is required for high-growth performance, to internally live up to our ambitions, and to externally meet people's expectations.'' Adds Prahalad, 58: ''I call it creating entrepreneurial drive at the closest interface between customers and the organisation.''

At this very moment, the Millennium teams-12 dedicated managers, and 30 who are on the project part-time-are at work inside Levers, envisaging the future that they would like for the company, and plotting ways to create just such a future. In every single business line, every single department, every single function, and every single location, groups of cherry-picked young people, chosen because their age and their brightness have singled them out as the ones who will manage the megacorp in the next century, are dividing their time between everyday responsibilities and Project Millennium. Says Dadiseth: ''It's a crack team of young, yet experienced, managers for analysing future trends and suggesting ways to further strengthen growth.'' With Harish Manwani, 46, Director (Personal Products), as the process-owner, they are determining what tomorrow's and, more important, day after tomorrow's Levers will look and work like. Says he: ''What is going to emerge is going to be simple. At the end of it, we want our people to say, 'hey, that's really obvious.' ''

The objective is not just to anticipate the future, but also to formulate the broad strategies that will enable Levers-and not one of its competitors-to shape that future. And, ultimately, Project Millennium also aims to create an organisation that is capable of continuous lateral thinking and innovation instead of being ruled only by the systems that Levers is famed for. As different strategies require different structures, Project Millennium will necessarily lead to a completely reconfigured Levers-where several different organisational structures could be nestled within, atop, and alongside one another. Says Wayne Brockbank, 57, Associate Professor, University of Michigan Business School, who has been working with Levers on a parallel culture-building exercise: ''In the midst of an all-time successful year, in the midst of being acknowledged as the most admired company in India, they are saying, let's not just leverage what we have, but let's build a new trajectory of growth. That way of thinking is truly remarkable.''

Sure, this megacorp is by no means a monolith since its business units already operate with considerable independence. Parent Unilever, which spans more than 400 operating companies and over 1,200 brands, runs its gigantic empire through 12 regional Business Group Presidents who are wielding increasingly greater autonomy. Thus, the New Levers, in fact, represents a logical progression for the Indian company in its drive towards acquiring the spirit of a small company with the power of a big one. Actually, this isn't the first time Levers is trying to reconfigure itself into smaller companies. Ashok Ganguly, the Chairman of the company between 1980 and 1990, had attempted a similar exercise. But the imperatives weren't strong enough then.

Today, both business strategy and managerial moves have collaborated to increase the impetus for change. For starters, Levers' Rs 87-crore dairy products business has been sold off and the Rs 272.28-crore animal feeds business is on the block while a third, the Rs 155-crore speciality chemicals, may be hived off. That will leave 18 different businesses, grouped under 7 different divisions: detergents, beverages, personal products, frozen foods, culinary products, agri-business, and oil-fats. Rationalising the structure of the divisions vis-à-vis the businesses is, thus, an imperative. Second, Levers has lost 3 directors in the past 7 months: former Vice-Chairman R. Gopalakrishnan to the Tata Group in July, 1998; former Director (Speciality Chemicals) Debu Bhattacharya to the Aditya Birla Group in December, 1998; and former Director (Culinary Products) Pranab Barua to Reckitt & Colman in March, 1998. Since none of them has been replaced, the board is already leaner.

WHY DOES LEVERS NEED
TO TRANSFORM ITSELF?
Yesterday's strategy, structure, and systems will not excite its people and delight its customers sufficiently to deliver the quantum growth that it is determined to achieve.

However, there are other, more urgent compulsions for Levers to conclude that, unless it rebuilds its organisation, it will not be able to create the turbulence in the marketplace that tomorrow's champions must be the source of. The end that it seeks to avoid? That of the leader who becomes so obese that it loses sight of the customer-both external and internal-and collapses.

THE GROWTH COMPULSION. It may have been a powerhouse of growth in the past, but the roads followed then may be petering out. The spectacular M&A moves that former CEO S.M. Datta employed to boost the company's turnover from Rs 1,240 crore in 1990, when he took over, to Rs 6,718 crore in 1996, when he handed over the baton to Dadiseth, can hardly have an encore. However, Levers' 2 main businesses-soaps and detergents, and beverages, which contribute 56 per cent of its net sales-have achieved levels of penetration that are too deep to allow high growth any more. Which is why the value chain of Project Millennium starts with the creation of new opportunities for growth like the Aviance business in personal products. It then links these new opportunities, and the growth businesses it has already ventured into, backwards to the capabilities that Levers needs to exploit these opportunities. Further, it associates them to the specific talent, knowledge, technologies, and operating processes that will drive those capabilities. And, finally, it seeks to create the internal structures, systems, and strategies that will enable this purpose to be fulfilled. Concludes Dadiseth: ''We need to develop distinctive insights by understanding how on-going economic and social change is affecting the business environment. We must also have the ability to foresee the future and prepare for it so that when opportunities arise, they can be fully captured.''

THE HUMAN RESOURCES COMPULSION. The manager's mecca is losing its sacred status. The slow journey to the top that even the fast-trackers-potential CEOs-face has suddenly made Levers a less coveted employer than it used to be even 5 years ago. While many other companies now offer turbo-charged growth paths through the organisation, thanks in part to fewer layers of hierarchy, rising through Levers is a long drawn-out process in comparison. At a pre-placement presentation made by the company to the Class Of 99 at the Indian Institute of Management (IIM), Bangalore, a student expressed his concern about the organisation's size and over-dependence on systems, and asked whether there would be scope for creativity and innovation-and, of course, whether he would be able to reach a reasonably high-level notch in the Levers hierarchy ''before his teeth fell out?''

Even the brightest trainee, for instance, can expect to be, at best, a Vice-President-2 rungs below the CEO, and 1 step away from the board-by the age of 40. In another transnational, she could well be the CEO. The benchmarks: Muktesh Pant, till recently the CEO of Reebok, is just 42. Salil Punoose was appointed the CEO of Corn Products Co. at 42. And K. Venkatachalam, who has been the CEO of Kellogg India for a year now, is only 45. Admitted Gurdeep Singh, 54, Director (Corporate Affairs & Technical), Levers, in a conversation on a different subject: ''Managers are concerned about their career-track slowing down as the organisation gets larger.'' To prevent the talent-drain that, earlier, used to be visible only at the top-when those who felt they would not make it to the corner-room left to head other companies-from spreading down the ranks, Levers needs to offer faster growth and greater chances of meeting its people's CEO-ambitions. Avers Dadiseth: ''Growth is created by the people of an organisation. To win in the New Millennium, we must continue to attract and excite the best talent in the country. Our people will be vested with unparalleled power to imagine, innovate, and implement new ideas. Our business model will make Levers not just a great company, but also a great employer.''

THE SIZE COMPULSION. Today's Levers is actually an amalgamation of 6 companies. Between 1993 and 1998, it has absorbed the erstwhile TOMCO, Lipton, Brooke Bond-the 2 were first merged with each other-Kissan, Lakmé, and Kwality. Thus, inorganic growth accounts for some 49 per cent of Levers' current revenues. The consolidation of so many different businesses under one corporate umbrella has, naturally, created a gigantic monolith. But the different kinds of businesses that Levers runs-especially the younger ones, such as colour cosmetics, fragrances, or foods-move to rhythms that are different from those of the mature markets that the megacorp's other businesses-soaps, detergents, and beverages-operate in. Their demands on the company's capital and intellectual resources vary widely too. Says S. Raghunath, 44, Professor (Strategic Management) IIM, Bangalore: ''The needs of the large businesses in a company can easily overshadow those of the smaller ones.'' So, instead of forcing every business unit to keep time to the same metronome, Levers needs to ensure that different product categories set their own cadences.

THE CUSTOMER COMPULSION. Thus far, the famed Levers system has kept the gears of its marketing machinery greased despite the sheer bulk of the superstructure: 2,000 suppliers and associates, 110 brands, 950 different packs, 36,000 employees, 10 lakh retail outlets, and 28 factories. Competitors' launches have been pre-empted, brand-blitzes have been unleashed with grim efficiency, and new consumer- and price-segments have been precision-engineered out of existing markets. But, worries Dadiseth, pulling such responses out of the book, no matter how competently, might not be fast enough for the future. For, tomorrow's Levers must worry less about competitors, and more about the customer: the path to growth lies not in beating rivals, but in managing customers-in getting them to move through the company's product portfolio, to use more of Levers' products, and to find a need for the value-propositions that its brands offer. That applies to its new growth businesses in particular. Says J.C. Chopra, 65, CEO, TCS Consultancy, who retired from Levers after a 30-year stint: ''Food, for instance, is so culture-specific that you have to be really in tune with what the customer wants.'' For that, Levers needs to move its decision-making machinery closer to the customer.

The single solution that he has devised to meet all these compulsions: using Project Millennium to rebuild the megacorp as a collection of many individual corporations. And yet, the answers of just how this will be achieved are far from in yet. Says Manwani: ''We're currently trying to put together the information we have been able to collect. We have identified the common themes and platforms. Now, we have to shape these ideas, evaluate them, and ensure that we are able to synthesise them in a manner that makes sense to the organisation.''

So, Project Millennium is as fixated on asking the right questions as it is on finding the answers. Does the 40 per cent of the population that is below 21 present a new marketing opportunity? If 70 per cent of the growth is coming from rural markets, how can the company cash in on that? Since foods offer a vital growth area, what technologies does Levers need to employ to exploit it? It is by systematically raising such issues-and forcing a quest for answers-that the Millennium teams are refashioning the megacorp. The spirit, thus, is more exploratory, less ritualistic, relying on the creativity of hundreds of managers and not just on the wisdom of the planners. Sums up Manwani: ''It is all about evaluating change, and, in the context of that change, creating a view about the future, and then putting together an organisation that is able to capture those opportunities.''

As is obvious, this means adopting a holistic, enterprise-wide approach since the changes will emerge everywhere in Levers, and not just in select businesses, departments, or functions. That's why hundreds of people were interviewed, a 20-page questionnaire was sent out to all Levers employees, and scores of workshops conducted to involve and include the ideas and the thinking from all across the organisation. Former and potential future employees-the latter from the ranks of B-school students-were sounded out.

As a result, the process involves a constant interplay of ideas and linkages between different parts of the organisation so that a collective blueprint for change emerges. For instance, to predict the future of distribution and retailing, the Millennium teams are consulting former and present managers involved in that part of the value chain, the company's own distributors, and, of course, customers. Says Manwani: ''A lot of people think the Millennium team is sitting behind computers, reading all kinds of books on management theories, sitting down with McKinsey, and putting these great matrices together. Of course they are doing a bit of that. But what they're really doing is, they're sitting in Chindwada, they're sitting in Mumbai, they're sitting with the commercial group, they're sitting at the innovation centres-and they're talking to people about their perspectives on growth opportunities, on talent, on operating efficiencies, on knowledge platforms. This is the process that makes it rich.''

The Millennium teams are ensuring that there are contact-points within each business, facilitating the process of dialogue and trying to capture the collective imagination of Levers first. As a result, every idea of the past is being challenged systematically. For instance, the classic premise of being a high-advertising spender-Levers spent Rs 669 crore in 1998-is under threat, with the alternative of investing more on retailing being suggested. So too is the notion that all employees must go to office every day when it is possible to do so much work through a Net connection at home.

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