The Hindu Business Line : Don't give up your company as dead

HOLLAND, 1995. Unilever's meat, sauce and soup business is in deep trouble, and markets are shrinking. Workers and management follow a dedening culture and job in the factory is to "mind your own business". Little thought to product quality and less thought to shareholder value.

Thus begins the story that gets narrated in To the Desert and Back, by Philip Mirvis, Karen Ayas and George Roth, a book from Jossey-Bass (www.josseybass.com).

In five years, the $66 billion giant wakes up and marches on to grow by double digits and achieve "one of the most dramatic business transformations on record."

As if to prove that a leader can still make the difference, Tex Gunning is the man who steps in when the ship is sinking and stinking, and "once-sceptical workers embrace a challenging message of growth."

What the authors document is a saga of "personal soul-searching, teamwork, company-wide learning conferences, and memorable journeys to the mountains and desert."

Chapter 1 paints the abyss: "3,700 pallets of rejected goods towered in stacks from floor to ceiling. The warehouse reeked with the nauseating smell of rotten food.

As far as the eye could see — left, right, front, back — were piles of products unfit for sale: spoiled sausages in defective tins and vacuum packs, leaking cans of soups and sauces, poorly sealed packages of dry soup and sauce mixes. Products worth 9 million guilders, the equivalent of 4.3 million euros. Ready for destruction."

That is the venue and setting for the new chairman's address to 1,400 employees of Unilever Vlees Groupe Nederland (UVGN).

The idea that the company had such massive product quality problems came as a complete surprise to the employees. "Then managers and accountants, quality experts and production workers walked aisle after aisle counting cans, calculating the money lost, and contemplating the waste of their time and talent."

The company needed radical change, it was no longer reacting. There was sufficient critical mass of good people, but they needed to be wakened up, as if they were partly dead.

Management's attention fixated on profitability, and there was no forward-looking vision. People development was virtually ignored.

New product pipeline was dry. And the "surreal scene in the warehouse of waste was a theatrical way to sound a powerful wake-up call."

Gunning was in factories at all hours, dressed in blue jeans rather than the corporate suit. He was not like most chairmen who choose to sit in their corner office and "you see them only twice — when they come in and when they say good-bye."

His message was clear: "The traditional approach of raising prices rather than improving productivity was no longer viable. To grow in new areas, the company would have to shrink in others. There would be winners and losers."

And in four months into the turnaround, the company saved 4 million euros. "Improved performance of key production lines resulted in an 18 per cent increase in operating efficiencies. Headcount reduced by 500."

Cutting costs was not enough, the business had to grow. So, in 1996, they sculpted a strategic programme 2002 setting "an impossible final target — a doubling of shareholder value by 2002."

Soon, Gunning was to head a bigger entity, after UVGN merged with Van den Bergh Nederland (VdBN), the older, larger company and one of the two founding companies that had formed Unilever.

Essence of the change process is summarised in a quote from a finance manager: "If your top line is not growing, your bottom line will sooner or later collapse.

That's simple mathematics. Plus, if you don't grow, there is no goal for people to work for, no good opportunities for promotion, and you're managing something totally unexciting."

If you are in a turnaround job, this is a book worth looking around for.

ManageMentor@hotmail.com

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