The book ‘Harsh Realities’ is a fascinating tale of Harsh Mariwala and the company he has built. It is also the story of India in the last four decades, as we emerge from being commodity producers to a country with perhaps the largest number of successful corporates in the emerging world.
CNBC-TV18 while in conversation with Harsh Mariwala and professor Ram Charan both co-authors of ‘Harsh Realities ‘tried to learn how a commodity trader became one of India's most shining FMCG majors to how a family run company became a public limited corporate of high governance standards and how a small company selling coconut oil, and Safola oil is today selling a range of haircare and food products ready to eat snacks. In the process of these conversations, Latha Venkatesh also tried to understand the do's and don'ts of a successful leader, of a successful CEO.
The first three chapters of the book is a very gripping tale of how a family-run commodity company became a public limited FMCG company, and Mariwala had to fight many battles. Briefly talking about how he entered the family business, Mariwala, said “I started at a very young age, by age of 20. And I joined a typically family-managed organisation, which was managed by my father and my uncles located in the heart of commodity markets. Most of the people sat on guddies, there were no professionals. It was family, acquaintances, relatives, helping the family and all the decisions were taken by the family members. And in that, I will just let loose because I just finished my commerce graduation and entered the business. I wanted to do MBA, I couldn't do it. My father didn't allow me to go abroad. So I joined the business at that time. And then there was not been anybody to guide me, so I have learned everything on my own.”
“I started exploring different parts of businesses, we had different businesses, we had an edible oil business, a spice extracts business and a chemicals business. And in that exploration, I realised that if I was able to work on the edible oil business in terms of converting it from unbranded to branded, it would create a very strong business and would be sustainable in terms of growth, as well as profits. The edible oil businesses would have very low gross margins and in case of FMCG businesses, the margins would improve. II was able to do that over a period of time. But I had to go through my own learning curve, because I didn't have anybody to guide me. Then I started working with professionals, meeting them evenings, go to the bar. Go by evening flight, come back in the next morning to meet a professor from IIM. So one has to actually try much harder in terms of finding out how do I learn from whom do I learn? And I think that learning was a great experience for me, the lack of so called MBA education didn't come in my way because I tried to make it up by meeting a lot of people reading lots of books attending short term programmes, and that's how I built up to this point,” he explained.
There are many fascinating pages in the book in which Mariwala described how he lured professionals from Hindustan Unilever or Asian Paints or Colgate to join you. Professor Chara, do you think that is the biggest wrench for a person running his own company to be able to get a professional? Is that a very big step or the most important step?
Charan said, One, Harsh is totally geared to learn the consumer experience. That's his MBA. And he's a born learner. Second, to build a team to build an organisation. The highest leverage a founder has to get the right people and since Harsh had this consumer experience, he would take a car to the places, personally observe, layout the vision that a potential candidate would see in the eyes of Harsh -- how driven is he, how visionary is he, how his feet is on the ground, and what he actually going to lead. That is something most of those people in large companies don't get the chance to do it. And this is the chance to report directly to the CEO, who is going to build something who knows the consumer experience better than probably their bosses? In the large companies? That attraction is huge. And recruiting the right people better people than him is the real secret to grow good businesses.”
When asked which would he say was one of his best decisions - was it the ability to understand consumer and product? Or was it his excellent HR practices? What's the magic mantra?
Mariwala said, “I wish there was one magic mantra. But I think at the top of all this comes the consumer because ultimately it is the consumer which pays for all your staff salaries, all your own profits. It is very important to drive your business based on consumer insights. And I think that is the starting point and that is the most important chain in any business outset.”
“To get an understanding, deeper understanding of the consumer, you need to get into the consumers’ mind. And many times the consumers themselves don't know what they want, it's a latent need, which the user to unearth in terms of asking the right questions, and going much deeper in terms of what their thinking is. I would sum up by saying that consumer is the most important starting point and the endpoint. If you are able to deliver whatever consumer wants in terms of a product or a service, at the right price, the way it's packaged, emotional content, rationally, I think your business will succeed,” he explained.
For the full conversation, watch the accompanying video