Institutionalising Innovation- Harsh Mariwala

Slide 1:

A Presentation By HARSH C. MARIWALA Chairman & Managing Director Marico Limited INSTITUTIONALISING INNOVATION

BOMBAY OIL INDUSTRIES:

… family managed Turnover Rs. 5 crores …amongst three businesses No Professionals BOMBAY OIL INDUSTRIES

BOMBAY OIL INDUSTRIES:

& Edible oils in bulk… BOMBAY OIL INDUSTRIES Contributing Rs. 50 Lakhs sales turnover…….

FORMATION:

Acquired Consumer Products Division of Bombay Oil Industries Limited in 1990 - opportunity to take a quantum step Opportunity to re-design the organization structure and address skill gaps Staffing - attracting managerial talent FORMATION

DIFFERENTIATION THROUGH A UNIQUE CULTURE :

DIFFERENTIATION THROUGH A UNIQUE CULTURE Induction of professionals from different companies Manifestation of different styles Melting Pot of Diverse Cultures

CULTURE & VALUES:

Draft note - ‘Corporate Values’. Top Management Discussions Work with a group of 3 levels of managers Communicating to members CULTURE & VALUES

MARICO CULTURE:

Sharing of Information OPEN First names – artificial barriers not there INFORMAL Consensus, task force – group work PARTICIPATIVE Autonomy within direction EMPOWERING No Gossip !! APOLITICAL Influence does not work – loyalty not rewarded MERIT BASED Higher responsibilities, cross functional exposure LEARNING Stimulus to organization & person JOB ROTATION MARICO CULTURE

PARACHUTE JOURNEY…. THROUGH INNOVATION:

Created the coconut oil usage explosion in consumer packs with HDPE Parachute WM created all season usage ease PARACHUTE JOURNEY…. THROUGH INNOVATION

OUR INNOVATION JOURNEY:

First edible oil in laminated pouches Helped establish a new rural category for Parachute OUR INNOVATION JOURNEY

PARACHUTE JOURNEY…. THROUGH INNOVATION:

Parachute Flip – Top – enables ease of identification of genuine Parachute and leak – proofing of pack Market expansion through : PCNO pouches Parachute Mini ‘B’ Pack PARACHUTE JOURNEY…. THROUGH INNOVATION

THREAT FROM HUL:

HUL entered the coconut oil market through the acquisition of TOMCO In 1999 HUL acquired Cococare Clear expression of interest in category Could Marico survive an MNC onslaught ? Would Marico sell out ? THREAT FROM HUL

MARICO’S RESPONSE:

1999-2000: Nihar from HUL positioned as challenger to Parachute: Backed by disproportionate advertising spends Strong distribution muscle A mind set to be leaders in the category Acquisition threat by Levers to take over Marico entirely Marico shares in the stock market fell dramatically MARICO’S RESPONSE

MARICO’S RESPONSE:

On all fronts… Product Distribution Promotion Superior product quality of Parachute Our Passion “Contemporarizing” purity with the Shuddhata ki Seal Hi Value promotions on Parachute Ramping up our own distribution Parachute Ki Kasam launched for internal sales force MARICO’S RESPONSE

OUTCOME:

Nihar met with little success: Only took share from smaller players Marico acquired Nihar in 2006 Critical take-aways Single-minded focus can overcome brute force Motivating people down the line critical in crisis times An emotional & psychological victory for Marico. OUTCOME

INNOVATION ON PARACHUTE CONTINUES:

Drove the concept of ‘champi’ with Parachute before shampooing Building “additional” values to the Champi. “PERSONAL” CHAMPI “HOT OIL” INNOVATION ON PARACHUTE CONTINUES

Slide 17:

From a Coconut Oil to a Beauty Brand

FROM A COCONUT OIL TO A BEAUTY BRAND:

Innovations in the look and packaging of hair oil Aftershower-Gels & Creams Starz-Flavored shampoo & oil for Kids Night Repair Crème-contemporarize use of Parachute Therapie-First scientific solution for Hairfall Jasmine – Expand the market through lighter, fragrant oils FROM A COCONUT OIL TO A BEAUTY BRAND

OUR INNOVATION JOURNEY:

Built strong equity of Oil on a Heart Platform Saffola OUR INNOVATION JOURNEY

OUR INNOVATION JOURNEY:

Strong equity of oil on Heart Platform 15 ltr tap – to enable ease of usage Blends – creating a First in the industry Saffola Gold Losorb Saffola OUR INNOVATION JOURNEY

CREATING THOUGHT LEADERSHIP via INNOVATION:

From Cooking Oil to a Thought Leader Thought leadership stance on World Heart Day Core equity of Saffola Propagated ‘Walking everyday’ CREATING THOUGHT LEADERSHIP via INNOVATION

: FROM AN EDIBLE OIL TO A HEALTH BRAND:

From an Edible Oil to a Health Brand : FROM AN EDIBLE OIL TO A HEALTH BRAND

SAFFOLA : FROM AN EDIBLE OIL TO A HEALTH BRAND:

First to introduce oil ‘blends’ – Kardi, Corn Oil blend etc. Diabetes & Cholesterol Management - Entry into the Functional Foods Space Low-Sodium Saffola Salt Edible Oil Lifestyle Products SAFFOLA : FROM AN EDIBLE OIL TO A HEALTH BRAND

OTHER INNOVATIONS:

Instant Starch for the harried housewife - Revive Mediker launched in an oil format for greater acceptability OTHER INNOVATIONS

ENABLERS TO INNOVATION:

Culture & values Openness – Meritocracy – Informal Experimentation/ Learning from failures Flat Structure Cross functional forums ENABLERS TO INNOVATION

BRAND WORKSHOPS:

Emergence of an experimentation culture Experiments over the years: New Product prototypes Marketing programme experiments BRAND WORKSHOPS

GROWTH IMPACT:

Jump in strike rate of new product launches: example: MALO, Shanti Amla,Saffola Gold, Silk-n-Shine Growth in existing brands: Parachute, Saffola and Mediker GROWTH IMPACT

INNOVATION PRACTICES:

C laim E xpenses A gainst S elf A uthorization (CEASE) ‘Members’ maintain their own leave records on the Intranet 1000 Crore Celebrations 2000 Crore Celebrations INNOVATION PRACTICES

INNOVATION PRACTICES : HUMAN RESOURCES:

Organization Structure Two Bands – Manager & Partner Not more than 5 levels from bottom to top Remuneration Structure Individual freedom to choose - Flexi INNOVATION PRACTICES : HUMAN RESOURCES

JOURNEY FROM INDIAN TO GLOBAL:

IBG – Initial Days.. A total Indian- Centric approach driven by : Access to clusters of Indian expatriates in Gulf, US, Canada, Singapore & Malaysia Common Ethnicity/ Hair Oiling habits Bangladesh, Nepal, Pakistan, Bhutan JOURNEY FROM INDIAN TO GLOBAL

JOURNEY FROM INDIAN TO GLOBAL:

Shift in IBG strategy over time Using common ethnicity/ Hair oiling habits Fiancee & Haircode – hair care brands in Egypt Consumer Products Division of Enaleni – in South Africa Code 10 – Hair Creams & Gels in Malaysia Developing New Categories Promoting Own Brands Aggressive Acquisitions India Centric Developing Localized Offerings JOURNEY FROM INDIAN TO GLOBAL

JOURNEY FROM INDIAN TO GLOBAL:

Largest Indian Company in Bangladesh Parachute is the biggest brand in the Personal Products category in Bangladesh IBG over the years 17 % 56 % JOURNEY FROM INDIAN TO GLOBAL

JOURNEY FROM INDIAN TO GLOBAL:

JOURNEY FROM INDIAN TO GLOBAL

INCUBATION CELL:

INCUBATION CELL Emergence of new businesses like

JOURNEY FROM PRODUCTS TO SOLUTIONS:

Journey from Products to Solutions What is a solutions approach? This will enhance the efficacy of service Home Care Product Zeroing on the Customer need and Finalizing the solutions required Personal Diagnostic This will be the in clinic service Service Will include diet, lifestyle related advice Advice JOURNEY FROM PRODUCTS TO SOLUTIONS

RAPID GROWTH OF KAYA:

Revenue – Strong Growth Present in India & Middle East RAPID GROWTH OF KAYA

KAYA:

KAYA Critical Takeaways Create room for nurturing innovative, new ideas Remove escape buttons for people when you want an outstanding result Seek opportunities continuously

INNOVATION : THE MARICO EXPERIENCE:

KEY INGREDIENTS FOR CREATING CULTURE OF INNOVATION Mindset creation for all – training is a good medium Experiencing success critical to buy in High collaboration - continuously align all stakeholders Over commitment of resources - no escape buttons Persistence - keep integrating new member Beyond great ideas - need high rigor in implementation & detailed execution Creation of in-house facilitation Perpetual reinforcement – Top Management reviews of brand plans, sales plans, workshops INNOVATION : THE MARICO EXPERIENCE

FUTURE INITIATIVES :

C&D Model Diversity Co-Creation FUTURE INITIATIVES

RAPID GROWTH:

RAPID GROWTH Turnover - 1991 to 2009 100 400 700 1000 1300 1600 1900 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Rs. Crore Sweekar and Launch Parachute Cream Kardi Corn Blend CAMELIA & Bangladesh & HAIR CODE - Egypt Hair & Care Revive Dubai Office Saffola Salt MBL formed New Business entry - Kaya Sundari Advansed Parachute After Shower Parachute Relaunch Saffola Gold Silk - N - Shine Parachute Jasmine Parachute Hair Cream - Gulf SIL MEDIKER OIL OF MALABAR AROMATIC - NIHAR MANJAL FIANCEE Acquisition in SOUTH AFRICA 2400 2009

SHAREHOLDER VALUE:

SHARE PERFORMANCE ON STOCK EXCHANGES SHAREHOLDER VALUE

THE MOST AWARDED FMCG:

Kaya Ltd. won the ‘ Most Admired Retailer for Health & Beauty ' at the Images Retail Award 2009. Parachute was ranked the 2 nd Most Trusted Brand in Bangladesh - The Bangladesh Brand Forum Marico was awarded NDTV Profit Business Leadership Award 2009 - in the FMCG (Personal Hygiene) category. Parachute was awarded the Super Brand Status in the UAE by the Super brands Organization in 2009. Mr. Harsh Mariwala wins the Talent Management Award at the CNBC TV18 India Business Leader Awards – 2009 Mr. Harsh Mariwala wins the Ernst & Young ‘Entrepreneur of the Year Award’ 2009 in the Manufacturing Category Marico is awarded the IMC Ramkrishna Bajaj National Quality Award (RBNQA) 2009 – Outstanding Achievement Trophy, in the Manufacturing Category THE MOST AWARDED FMCG

SNAPSHOT OF MARICO:

Local Global Low margin High margin Low value add High value add Oils FMCG Products FMCG Products Beauty and Wellness solutions SNAPSHOT OF MARICO

ENTREPRENEURSHIP (Start Up Phase):

ENTREPRENEURSHIP (Start Up Phase) Skill Gaps Consultants Doing it yourself Ambiguity Flexible Courage of Conviction Resilience Evolving Business Model Hard Work Learning Curve High uncertainty about future

ENTREPRENEURSHIP (Consolidation Phase):

ENTREPRENEURSHIP (Consolidation Phase) Medium & Short Term Organisation Structure, In House Functions CQA, Safety, Legal, HR Culture Building Systems Team Building Image Building Delegation – Trust

ENTREPRENEURSHIP (Scaling Up):

ENTREPRENEURSHIP (Scaling Up) Sustenance Public Company Investor Relations, Quarterly Pressures, CSR Board Management Vision, Values & Culture Safety, Health & Environment Succession Planning Acquisitions Starting New Business Kaya, IBG Culture of entrepreneurship in a large organization Understand Family dynamics and leverage

ROLE OF CEO / TOP MANAGEMENT:

Show interest in softer aspects Strong Belief in People Be open to ideas Operate from trust paradigm Build constructive “no men” & not “yes men” Willingness to experiment & learn from failures ROLE OF CEO / TOP MANAGEMENT

To SUM UP……:

To SUM UP…… Needs a lot of hard work, rigour and persistence Innovation is a journey…. It is exciting, but tough….

Slide 50:

Apply conventional thinking and you will only come up with Conventional Solutions But open your mind and you will find a world of opportunities opening up before you. Thank You

Slide 51:

Enterprising India 2011, - The largest & most exciting jugaad ( unconference ) by TiE in India scheduled on 4-5 March, 2011 at Mumbai. Visit us at http://summit.enterprising.in/