I have always felt that our homegrown industrial stalwarts are not being showered with the accolades or recognition they truly deserve. Upon reading the book “Harsh Realities” penned by Mr. Harsh Mariwala and his management consultant, Mr. Ram Charan, this thought has been more strongly underscored. The story of the meteoric rise of Marico from a closely-held company to a multi-billion-dollar global powerhouse encompasses perseverance, vision, adherence to ethics, continuous innovation, and unfettered ambition. It is no trivial feat to convert a small family-owned entity with sales of $16,000 to a professionally run, publicly traded company with a market capitalization of $8 billion.
The Book gives primarily 7 Key Takeaways for Family Owned Businesses to convert their entity to a successfully professionally managed one:
- IMPORTANCE OF BEING ROOTED
Before joining the family business, Mr. Mariwala’s father instructed him to take a short trip abroad, where he was exposed to shops and malls laden with consumer brands in impressive layouts. Even after returning to India and joining his family business, Mr. Mariwala, taking a cue from his international exposure, visited various factories in spite of being a scion. He tagged along with managers, spoke to staff in various departments, attended sales calls, dealt with buyers directly, cogitated over the company’s finances, and met with various distributors.
Mr. Mariwala embodies the example of being rooted in the core values and philosophy of their family-owned business while not being afraid to venture into uncharted territories after conducting sufficient due diligence. Every novice entrepreneur getting ready to brave the challenges thrown by the business ecosystem could take a leaf out of his book, where he employed a bottom-up approach when joining his entity.
2. CONTINUOUS INNOVATION
Mr. Mariwala has been a fervent adherent to continuous innovation throughout his business journey. Even before the trumpet of liberalization and privatization was being heard, he was one of the visionary entrepreneurs who tactfully employed advertising and brand positioning to the advantage of his businesses.
Marico was very successful in positioning their brand Saffola as a healthcare product. It was the first edible oil brand in India to be positioned in such a manner. This branding was enabled by the successful integration of conducting medical conferences, production of books containing healthy food recipes, issuance of literature on heart care, and enlisting of doctors into their marketing activities.
The innovative fervour of Marico, led by Mr. Mariwala, was revealed when they chose to introduce oils in smaller packages when they saw a market opportunity, as their suppliers started dispensing smaller volumes of loose oil at a premium to customers.
3. HIRING AND RETAINING TALENT
Mr. Mariwala was a trailblazer in his own right, breaking the myth that novice entrepreneurs can’t attract great talent from larger companies. His first recruitment of high-profile talent — Mr. Jeswant Nair — underscores this principle. Although Mr. Nair was a prominent HR leader working with Asian Paints, Mr. Mariwala successfully convinced him of his intention to build a huge consumer goods company that could withstand the test of time and was decentralized, where the entity could thrive even if the founder was removed from the equation.
Mr. Mariwala was keen on attracting people who were more educated and capable than himself, from whom he could learn and leverage their skill sets for the growth of the organization.
This strategy was the one that aided Marico in growing its annual turnover from Rs 80 crore in 1990 to Rs 648 crore in 2000.
4. SWIFT PIVOT
Though mistakes and failures are a “sine qua non” in the entrepreneurial journey, Mr. Mariwala demonstrates how a swift pivot can mitigate the damages and how, by applying the learnings from failure, one can turn things around to achieve resounding success.
This can be attributed to the instance where Marico ventured into the market of healthy snacks with the brand “Saffola Zest.” However, upon quickly realizing the mistake of prioritizing health over taste in the snacking segment, Marico swiftly pivoted and rolled out, under the Saffola brand, oats with a dash of regional taste preferences, such as tomato oats, pongal oats, masala oats, lemon, and pepper oats. Following success in the segment, Marico later rolled out SAFFOLA FITTIFY Gourmet, encompassing an array of healthy food and beverages. Later, this division generated a turnover close to Rs 200 crore, amounting to 20% of the overall Saffola franchise.
5. REDEFINING OF BUSINESS MODEL
Venturing into untested waters, especially when pioneering an industry, requires grit and perseverance. Marico was one of the pioneers in India to establish branded skin clinics. Their venture, “Kaya,” was floated as a wholly-owned subsidiary of Marico. Initially contemplated as a venture to market laser body hair removal equipment to clinics and beauty parlors, Mr. Mariwala displayed extraordinary business acumen by recognizing the market potential for skin care treatments as well. Mr. Mariwala astutely analyzed the geographical advantages of India, where it was comparatively inexpensive to hire dermatologists compared to foreign countries, and played it to his advantage.
Since its inception, Kaya has stayed true to the ethos of Marico by not diluting the quality of deliverables it provides to its customers. It quickly soared and expanded both in India and the Middle East, achieving a turnover of more than Rs 500 crore.
6. PROPER SUCCESSION PLAN
Though the clamor by many entrepreneurs to convert family-owned businesses into strategically managed professional entities has been in vogue for time immemorial, it requires a certain degree of tenacity to hand over the reins of your labor of love to an individual who is outside of your lineage.
Mr. Mariwala stepped down from the position of Managing Director in 2014 and entrusted the responsibility to Mr. Saugata Gupta, who was the CEO of the Indian Consumer Products Business of Marico until then. While zeroing in on a successor, it is an indispensable prerequisite that both individuals share the same core values. A wrong choice in succession can cause catastrophic damages, as seen in the Tata Sons-Cyrus Mistry fiasco and many similar cases.
Succession planning is usually an emotionally laden issue and can be aggravated at times, where the founder might have to navigate opposition demonstrated by family members if the successor is outside of the bloodline. As a beacon to many entrepreneurs wishing to transform their entity from owner-driven to professionally managed, Mr. Mariwala displayed sheer professionalism and firmness in his action, considering the long-term interests of all stakeholders.
7. STRONG PURPOSE
Finally, every business should have a strong, well-documented purpose encompassing the Mission, Vision, Core Values, and Philosophy. The purpose of Marico is “Be More. Make a Difference.” A purpose for an entity should act as the driving force, and it should take cognizance of all the stakeholders. The purpose should permeate all levels of activities and should answer the question “why” for every stakeholder, thereby adding value to the customer and resulting in long-term loyalty to the entity. Employees, driven by a strong purpose, go the extra mile, and satiated shareholders stay invested in the entity when they experience exemplary standards of Corporate Governance.