HOW WILL LEVERS CONFIGURE ITS
BUSINESSES AFTER THE CHANGES?
The company will search out and cultivate new businesses with growth opportunities. And dozens of smaller Levers will be created, one for each existing and new business.

Working closely with McKinsey & Co. to map its present and prospective businesses to the different levels of growth and profits that they can yield, Levers has divided its portfolio into 3 sets, which Project Millennium refers to as Horizons 1, 2, and 3. The first encompasses the mature businesses. The second refers to those with palpable growth possibilities, where the company has already made a start-popular foods, deodorants, and ice-creams, for instance. But it is seeking out the Horizon 3 businesses that is one of the principal objectives of Project Millennium. For, these are areas with either small, or no, markets at the moment, but which could explode soon. That's the thinking behind, for instance, the direct-selling framework for which Levers has created the Aviance brand of cosmetics. Says George Thomas, 38, Director (Confectionery), Warner Lambert: ''There are several businesses (at Levers) which are just waiting to be unleashed. All it needs is the entrepreneurial spirit.''

True, Levers' businesses already operate with a high degree of autonomy, enjoying many of the self-contained powers of the independent company. They have their own sales-forces, commercial systems, and manufacturing, all of which they are free to deploy in any manner they want to. For instance, distribution systems are different in the detergent and the personal products divisions: while the former uses mass distribution, the latter believes in a more selective network. However, the fates of different products in the same business unit are still determined in a centralised fashion. In the New Levers, however, each of these product categories will be treated as an independent business.

Thus, the giant soaps and detergents business-its revenues of Rs 3,565 crore would make it, as an independent company, India's No. 1 FMCG-marketer-could get unbundled into 3 separate units: one that will look after the mature market products like toilet soaps and popular detergents with the existing structure, and one each for emerging opportunities in premium detergents, and in scourers and homecare products. Replicating the freedom of the business unit, each of these categories will devise and implement its own strategic and operational plans. The logic: since the needs of each big category and those of the emerging sub-categories are different, they should be addressed by different, dedicated units rather than by one unit which is collectively responsible for all of them. Says Tarun Sheth, 61, Senior Consultant, Shilputsi Consultants: ''This is along the lines of what Unilever did 2 years ago, when territorial divisions were given a go-by and category management came in.''

Importantly, however, this atomisation will not necessarily fragment the operations of the business unit entirely-it will also consolidate some activities. How? For instance, the separate streams of brand-management that were followed even within a product-category might now see a confluence, with the entire product-category being treated holistically. But what of the centralised activities-such as sales-teams or distribution networks-that were shared by all product categories within a division? The configuration of these services actually presents a dilemma for Levers. On the one hand, creating separate service units for each mini-company will provide greater flexibility. On the other, that will rob the businesses of the economies of scale that the critical mass of those services provided. That's why one of the key objectives of the experiment is to work out a balance between the two models. Expands Dadiseth: ''People must have the freedom to implement their business ideas in a manner most relevant to their customers. But they must also be accountable to the strategic framework of the organisation. This approach of freedom within a framework of accountability requires us to review our organisation structures and people-management systems. The aim will be to drive decision-making to empowered teams as close as possible to the frontline.''

WHAT BENEFITS WILL THE
TRANSFORMATION GENERATE AT LEVERS?
Its people will be re-energised. Its strategies will flow from the front. Its operations will become nimble. The combined result is meant to be the Holy Grail: the big-small corporation.

For starters, Levers expects its HR strategy to be transformed. In fact, recruiting, retaining, and exciting suitable people is one of the explicit goals of Project Millennium. Asks Manwani of himself: ''What kind of talent will Levers require to grow at the pace that we want to, to capture the opportunities that we have defined? It may not be the same paradigm on talent that we have had so far.'' Specifically, Levers wants much more diversity in its talent-pool than today, much sharper divergences from a certain standardised way of thinking and acting that has, over the years, come to be associated with its managers. That's because the 3 different horizons on which its businesses will operate will need different kinds of capabilities. Maintains Manwani: ''We can no longer say that we need the same kind of person from IIM-A for all our needs.''

The implication is momentous: tomorrow's new Leverite will not be from one mould at all. Adds Manwani: ''The B-schools are our hunting grounds. But what is the value proposition that we need here? We don't want to go with a me-too proposition. What we are trying to define is what it is that will motivate people-a differential proposition which will be as compelling as, say, a consultancy or a financial services company. And it has to be uniquely ours.'' And a person trained to be a nuclear scientist or an architect could be on Levers' rolls tomorrow because of her unconventional-from a managerial perspective-ways of thinking.

Moreover, fast as it can be in the marketplace, Levers has still been unable to quickly evaluate and act on-or even elicit-the hundreds of innovative ideas that its 36,000 people are capable of generating. Setting up innovation centres to institute such a process has only been part of the solution. And one of the major hurdles is that senior managers have not been able to engage the minds and hearts of young people in the organisation. That's what Project Millennium is expected to change. Says Dadiseth: ''The young people who, we believe, are really the future of the organisation must have a say in the future.''

Besides injecting speed and flexibility, Project Millennium will, of course, accommodate individual aspirations better. Creating dozens of centres of gravity instead of just one will, reckons Dadiseth, enable different groups of people to come together with different sets of ambitions and challenges, and have the power and the autonomy to fulfil them. The key to that lies in the new management structure that the new configuration will lead to. Levers' present management hierarchy begins, obviously, at the level of the board, which comprises 2 genres of internal directors besides the chairman: the 4 heads of cross-business functions: legal, personnel, finance, and exports. And the heads of the 4 largest businesses: soaps & detergents, personal products, beverages, and frozen foods.

Then, each division also has a board of 4 executives-designated vice-president, general manager, or marketing controller-who report to the director in charge of the business. One outcome: the managers at this level are not in complete charge of the business that they are nominally responsible for. Under the new format, however, the level of divisional head could either take on a new role, or disappear. It is possible that each of the newly-created units will be headed by a president-or executive director-with virtually as much independence, powers, and, of course, accountability, as the CEO of a company. Observes Prahalad: ''You have to create leaders. If you can create people who understand the business and leadership, you ought to be able to create systems. And you must identify leaders early, in their late 20s rather than in their early 50s. So, if you give them the opportunity, it allows them to lead large organisations by the time they are 45-or even 40. Therefore, they don't take years to make an impact.''

The board of directors too will be recast simultaneously. For, as its business units morph into self-contained virtual companies, the structure and responsibilities of the Levers board will change sharply. The Chairman, the Personnel Director, and the Finance Director may remain as the only executive directors-although an alternative blueprint envisages the existence of 2 or 3 more executive directors, each with overall responsibility for a large block of businesses. So, the business heads will not report to anyone but the Chairman-or a Director. That, effectively, could create anything over 18 virtual CEOs at Levers-in the process opening up the very career opportunities that at present appear blocked to top talent in the company and in B-schools, provoking them to look elsewhere.

As for the board, it will widen its ambit to issues that will require the representation of external directors-currently consisting of just Deepak Parekh, the CEO of the Housing Development Finance Corporation, and V. Narayanan, the former Managing Director of the erstwhile Pond's-to rise. Explains Parekh, 53: ''Right now, I am the only truly non-Levers person on its board. For an objective perspective on issues like compensation, internal audit, and corporate governance, we need external directors.''

WHAT RISKS WILL
LEVERS RUN?
It could lose the competencies it has built. And its people could suddenly lose their moorings.

Of course, none of this is entirely new. Back in 1987, Levers created an organisation within an organisation to manage Wheel. Nor is independent category management exactly foreign to Levers. Both the Aviance and colour cosmetics businesses, for instance, are treated as autonomous units despite being part of the larger Personal Products division. Analyses Manwani: ''Our approach has always been to start with business opportunity, define the business system required to exploit that opportunity, and create a structure for it. We are now revisiting what we have done.'' Adds Prahalad: ''The structure is not new. But what is new is attempting to grow behaviours, values, and disciplines that allow you to simultaneously leverage broad business units and corporate scale. It is not either-or, but both-which isn't easy.''

In fact, it will require today's Leverites to transit to a display of the very characteristics that tomorrow's managers want a platform for if they are to join the company. That's why the HR initiatives designed to bring about this change were initiated as far back as in September, 1998, starting with a 3-day workshop conducted by Brockbank in April, 1998. A cross-functional team from the soaps and detergents unit were put through a rigorous set of exercises to ascertain the individual capabilities that the independent businesses will need to compete in future. The 3 prime qualities that emerged as vital needs: restless creativity, teamwork, and consumer intimacy. These are the qualities that Levers will now try to inculcate in its people through training. Pronounces former Levers manager Utpal Sengupta, 49: ''Adapting to this kind of restructuring will not be difficult at all since category-management in a conceptual sense has been around for some time.''

Like the project itself, the process of disseminating its ideas and its conclusions is also a continuous one. Instead of one Big Bang revelation, it is being managed as an open-ended sequence of feedback, synthesis, and dissemination, run constantly. And debates are being held regularly. In fact, the contrast with the shroud of secrecy in which the concept was engulfed in its initial days is striking. Says Manwani: ''All good output comes from good debate, from fire and ice-not from a calm exchange.'' But, already, Project Millennium is generating strategic moves that range all along the continuum between enterprise-wide and brand-specific. For instance, it was the search for new customer needs that led the company to devise ready-to-cook packaged chapatis, targeted at working women on their way home, who may not have the time to go through the entire tedious process in their kitchens.

True, the destination of Project Millennium is still emerging. It has by no means been frozen in stone. But that doesn't mean Levers is waiting for the entire picture to be visible before it starts acting. Scores of small experiments with change have already been triggered off across the company to explore the vast spaces of possibility. One pilot project, for instance, in the Personal Products business is trying to reconfigure the distribution chain by equipping salespeople with hand-held computers to record orders. Another one is looking at ways to build a parallel selling-channel using the Net, even exploring the possibilities of creating new products for it. Also under discussion is the question of just how small is small enough for each of the virtual companies to be nimble.

Will the project deliver? And can it really unleash change on such a grand scale in an organisation that is so steeped in its own rigid systems? Answers K. Balakrishnan, 59, Senior Professor (Business Policy), IIM, Ahmedabad: ''If there is any organisation in India that is equipped to drive the profit-centre concept further down, it is Levers.'' Adds Pranab Barua, 49, Managing Director, Reckitt & Colman: ''They have incredible quality of people. If anyone has the capability to make a huge change, it's Levers.'' Echoes Brockbank: ''There are 3 steps involved. You have to have a clear vision. You have to understand the steps through which this is to be realised. You have to have the institutional and personal discipline to make this happen. Most companies lose out on the third step. But there is no danger of that happening at Levers.''

Perhaps. But the company must also ensure that, in chasing the unknown, it does not sacrifice the very elements that have brought it success until now. Acknowledges Dadiseth: ''We have to create a big corporation with the soul of a small company without destroying our current capabilities. For instance, we have no wish to lose the functional excellence that we have built over the years.'' Nor can the sheer might of its machinery be allowed to weaken. Warns Levers alumnus Siddharth ''Shunu'' Sen, 59, CEO, Quadra Advisory Services: ''Levers has to take advantage of its size while giving each business a distinct management focus.'' Or, as Prahalad puts it: ''There must be some value added because a large company must behave differently from a stand-alone small company. So, common capabilities must be built so that the multiplicity of businesses can draw from it. There are a whole series of opportunities that a larger company has to leverage corporate size, variety and capabilities. But there is constant pressure to balance the business-unit orientation-and, therefore, seizing the opportunities for market-creation deep down-with the need to create a discipline for sharing a wide variety of services and knowledge. And this is an on-going battle, not a one-time solution.'' Fortunately, this is what he is telling Levers too. Predicts Ganguly, 64, who is currently the Chairman of ICI: ''Levers is a pioneer in these things. It will not do anything foolish. It will not lose the traditional strengths of the organisation. The changes will be powerful, creative, and original. Everyone will be left gasping. Just wait and watch.''

Ironically, success might increase the very dangers that decentralisation breeds. Warns P.N. Singh, 57, the Chairman of HR consultants, Grid Consultancy: ''As unilateral independence increases, the chances of a unit's breaking away completely become high.'' Adds Sheth: ''While Levers is bringing in this change to cater to the aspirations of the young manager, on the flip side, it must be careful about promoting talent that might not yet be mature. You could become vulnerable as the competition could have more experienced people in charge.'' What's clear, however, is that trying to retain the muscle of a megacorp while growing the soul of a small company is an experiment whose outcome will impact more than just Levers' future. For, its parent, Unilever is watching the process closely: if it succeeds, Levers will become a structural role-model for its parent's businesses too.

Moreover, Project Millennium is already setting benchmarks in terms of the uniqueness of the strategy creation process. For decades, corporate strategic planning has either been reduced to an end-of-the-year rain-dance or left to strategy wonks working in splendid isolation in corporate planning departments. Worse, in multi-business corporations, existing business unit structures place further impediments in the path of formulating an integrated corporate strategy-which, instead, becomes the sum of the strategies evolved by each of the individual units. The fate of opportunities which fall in the gaps? No one takes responsibility for them. As C.K. Prahalad and Gary Hamel write in Competing For The Future: ''In our experience, strategic planning, typically, fails to provoke deeper debates about who we are as a company or who we want to be in 10 years' time... Strategic planning almost always starts with what is. It seldom starts with what could be.'' The result: incrementalist planning, which, in a world of profound change, is often inadequate. But that's the mould that Project Millennium aims to break out of.

Most important, Project Millennium could even demolish the assumption that a company has to accept trade-offs when it makes strategic choices. For, its very mandate is to make Levers not an either-or-either profits or growth; either focused or diversified; either systems-driven or entrepreneurial; either centralised or decentralised-corporation. It is, instead to make it the And Corporation, which can reconcile the contradictions between strategic choices. As Michael Porter might have said, Project Millennium may set a template for strategy innovation. That's why, if the last-and biggest-corporate experiment in the country works, the very notion of the 21st Century Corporation will stand redefined.

Issue Contents  Write to us   Subscriptions   Syndication