Business Today 14th January 2018 - Page 84

The Best Management Lesson I Learnt We do understand the importance of brand building and advertising; it is a must...If you have a product, you need to shout to let your consumers know. But one has to also see how much is spent on the shouting new players looking to operate by premium pricing. I clearly remember what my boss and ex-MD of Amul, J.J. Baxi used to say: “Only the one with a nose for money is a successful manager.” Essentially, this single penny negotiation is aimed at reducing waste- ful expenditure and providing better returns to our farmers and consumers. If I am going to Ahmed- abad from Anand, for example, to catch a flight, and another executive is going on tour to Ahmedabad, we always pool our cabs. Such small things also con- tribute to creating a flat organisation and facilitate effective brainstorming in informal settings. Aligned with the same principle, our advertising spend is always less than 1 per cent of our annual turnover. If the consumer is buying a pack of Amul butter at ` 46 and finds that, of the amount, ` 0.50 pays for the TV commercial she saw last night, she will be fine with it. However, if she learns that out of the ` 40 spent on her soap, ` 10 went to pay for an emotional commercial along with its celebrity endorser, she is certainly going to feel cheated. We do understand the importance of brand building and advertising; it is a must. Dr Kurien realised the need of advertising in the 1950s, when only MNCs used to advertise. If you have a product, you need to shout to let your consumers know. But one has to also see how much is spent on the shouting. A s a cooperative we are built on founda- tions of equality. Our planning process is a holistic bottom-up approach that ensures everybody is involved. It is called Hoshin Kanri (a Japanese term meaning policy deployment) where strategic goals are decided collectively and drive progress and action at every level. We have two such Hoshin Kanri meetings yearly, attended by all key employees, to plan, strategise and review. Con- sequently, the entire organisation thinks and works in the same direction and there is high level of own- ership across all levels. In one such Hoshin in 2006, we were discussing the government’s intent of al- lowing foreign direct investment in retail. One of our area sales managers suggested having our own priority stores to guard against foreign retail giants who may dictate terms in the market. The idea was brainstormed upon in the same meeting and within two months we started one Amul Preferred Outlet (APO) each in Delhi, Mumbai, Kolkata, Bangalore, Ahmedabad and Chennai. Today, we have 8,000 APOs across the country. Interestingly, Amul, a ` 27,000-crore brand, does not have a separate R&D vertical. All our products are developed by the shop floor in-charge at plants. If we want to explore a new product or variant, we brief two or three of our plants and ask them to work on it. They come up with three to five combinations; we taste them; the best one is frozen and its recipe is shared with all plants. As the production in-charge treats the new product as his baby, launches happen swiftly. Research sug- gests that out of 10 new products launched, only one or two succeed. Fortunately, our success rate is about 80-90 per cent – the reason being we know the pulse of consumers. All our products are for the masses i.e., the middle-class. Amul is owned by middle-class people, farmers. Its headquarters is located in a small town, Anand; most of us working here are also middle-class. So we can relate to the needs of the masses. Anyone in o