The Hindu Business Line : The snail and the lobster: Learning from threats

(This article is based on the author's book, The Case of the Bonsai Manager, which will be published by Penguin Portfolio this month. First of a three-part series.)

Business commentators use the metaphor of a fast-moving tiger or cheetah for companies. But believe it or not, the lowly snail lends itself to comparison too!

The snail is an animal with a soft body that is covered with a coiled shell. It likes moist weather. When the weather becomes dry, the animal responds by exuding a slimy substance. When this liquid dries up, it seals the snail inside its shell. It literally cuts itself off from the world. When it moves, it does so with a muscular action of its foot, but the muscles actually move in a backward, wave-like motion. So it moves forward by exercising its muscles backwards!

The snail has an enemy in the lobster, for it forms the latter's favourite diet. From the slow snail's point of view, the lobster is a fast mover and is quite horrendous. It has five pairs of legs; the top one near its head is like a powerful pair of pincers that can grab its prey and hold it viciously. It is a fighter, and in case it loses a limb or a claw in battle, it grows a new one in its place.

Science magazine had a report about how the growth patterns of a particular variety of snail were significantly altered by the presence of predatory crayfish, a type of lobster. When the snail grew in an environment free of the predator, it began to reproduce when the shell size was just 4 mm. Its lifespan was about four months. Then the experimenter introduced the crayfish predator.

The snail had to have some response to this threat because life could not carry on as normal any longer. It really had to avoid the crayfish, but prepare on how to respond if it did meet its enemy. The snails now postponed reproduction till they were twice their size (8 mm instead of 4 mm) and their longevity increased to twelve months from four months. The threat actually improved all growth parameters.

The scientists hypothesized that when faced with the threat, the snail reallocated its resources away from early reproduction towards growth and community survival.

No animal behaves as though its existence is assured even for a day. Each morning, every animal figures out how to survive the threats in its environment, and how to get its quota of food for the day.

It is only the human being who assumes that his survival is more or less assured, whether it is his job in a company or his life in the community. By understanding how animals respond to ever-present threats, there are memorable lessons for managers.

In fact, when you look at Nature as well as organisations, you find examples of both — great growth and vigour when there are threats, and a lethargy and absence of vigour when there is comfort!

The Brooke Bond leader who wanted a healthy Lipton

Unilever acquired Lipton in a global deal in the early 1970s. In India, Lipton India was a serious competitor to Brooke Bond India in the branded tea market with a share about half of Brooke Bond. For a number of reasons, Lipton India had become a problem company for Unilever by the early 1980s.

My old boss, Bipin Shah, was specially selected to go into this troubled company to fix its problems. Bipin was a consummate turnaround artist with a very fine commercial sense and a terrific intuition for business. The challenges he faced were considerable. Even while he was at work, in a global deal, Brooke Bond was acquired by Unilever in the mid-1980s. However, Brooke Bond continued to make life difficult for Lipton India because the companies were run on a stand-alone basis and at arm's length. So this is the story of two fierce rivals for over sixty years, who suddenly found themselves as sons of the same parent due to some global moves.

Lipton's market share was stagnant, its cost structure was bloated, it was a single-product (tea) company, its cash generation was stressed; and Brooke Bond was not making Lipton's life easy in the marketplace. Brooke Bond had twice the volume of Lipton, had healthy cash generation and commanded the market.

In the early '80s , a Unilever director, T. Thomas, decided to call on C.S. Samuel, the chairman of Brooke Bond. His private agenda was to assess the probability of survival of Lipton — selling out must have been a distinct option from Unilever's perspective. Such a conversation would not normally have been easy, but in this case, it became possible because Thomas and Samuel had worked together at Hindustan Lever in the 1960s. Thomas had been a technical manager and Samuel an accountant.

Thomas and Samuel have separately recounted this meeting to me several years later, and both had identical versions of what transpired. Samuel understood the predicament of Lipton, which was candidly outlined by Thomas. After all, his company was partly responsible for some of the woes of Lipton, though some other woes were, in his opinion, self-inflicted. He could not help in any meaningful way. Samuel asserted that whatever options Unilever considered, Unilever should rule out the option of selling out its stake in Lipton. "For its own long term interest, Brooke Bond needs Lipton to be a strong competitor, so Unilever should invest in seeing how to strengthen Lipton," he commented.

A rather strange attitude, one might have thought, because one can imagine CEO Samuel doing a delighted jig at the misery of his main competitor. But Samuel realised that the complete removal of `the Lipton crayfish' would stultify the `Brooke Bond snail' too. So, he took a long-term view, enlightened self-interest no doubt, but nonetheless farsighted.

Lipton survived and grew, so did Brooke Bond. Finally in 1994-95, when I was working in Saudi Arabia, Lipton was merged into Brooke Bond. One year later, I returned to India to lead the merged company. Tea volumes and margins were under great pressure, partly due to a downturn in the tea industry, but also due to the emotional mayhem that goes with such mergers. The most common comment I heard from managers was that in the absence of any competitive threat, the new company had nobody to fight with. I could not possibly encourage such a discussion as the merger was by then a fait accompli; life had to go on.

In a major drive of volume expansion, the new company notched up 30 per cent more volume within three years, giving up some margins in the short term in the hope of a long-term growth of volume and market share.

Meanwhile, another crayfish called Tata Tea was emerging; by the late '80s , Tata Tea had begun to pose some challenge to the two dominant branded tea players, Lipton and Brooke Bond! That is yet another story.

I will always wonder what might have been the outcome if Lipton and Brooke Bond had not merged in 1993!

How Harvard produces winners

I found it interesting to learn about how Harvard, for example, acquired such a huge reputation for producing `winners'.

There was a study called The Grant Study, which examined the lives of 268 Harvard undergraduates from 1939 to 1942. These alumni were chosen because they were thought to be the ones who would go far in life.

Subsequently, an analysis of the data was done by George Valliant, a psychiatrist. He averred that an ongoing process of challenge, adaptation, and learning prepared these individuals for more escalating challenges, and a virtuous spiral of experiences made for the best leadership development.

The people who aged most successfully, Valliant found, were those who had a great adaptive capacity, continued to learn new things. They looked forward with eagerness and optimism, rather than dwell on the past. This is the type of organisation that leaders try to create, a dream organisation.

A quotation which is relevant here reads as follows:

"Be thankful for the troubles of your job. They provide about half your income. Because if it were not for the things that go wrong, the difficult people that you have to deal with, and the problems and unpleasantness of your working day, someone could be found to handle your job for half of what you are paid...it is a fact that there are plenty of big jobs waiting for men and women who aren't afraid of the troubles connected with them."

(To be continued)