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Cover Story: It took more than two minutes, but Nestlé India is back to fighting fit

Anant Rangaswami, August 8, 2017

Suresh Narayan was required to drop everything and head to India to manage the fallout of what was then a developing crisis. In conversation with Suresh Narayan, CEO of Nestlé India about his journey with Nestlé and how he tackled a developing crisis, one that threatened the very foundations of the brand.

Suresh Narayan was at a dinner at Manila when he received the call that would forever change his life. His boss told him—in no uncertain terms — that he was required to drop everything and head to India to manage the fallout of what was then a developing crisis —one that threatened the fortunes of Nestlé India. What were the instructions he received? Did he receive a truly free hand? What were his priorities? What role did his India team play? These and other questions are answered in a relaxed chat with Melt editor Anant Rangaswami —a chat which certainly lasted more than two minutes.

Anant Rangaswami: So, Suresh… you are sitting in Manila, and then you’re called saying you’re going to India. Just carry me through that.
Suresh Narayan: Well, Anant, as you rightly said, I was at a party at a friend’s place in Manila. And I moved to Manila around three months earlier, after having spent about five years in Egypt heading the company there. I got the call from my boss, who is the board member in charge of Asia, Oceania and Africa. She said, “Suresh, let me come straight to the point. You know what is unfolding in India. And the board and CEO have decided that we want you to help and get back to India.” So, it was a very straight forward conversation, there was no building up to it. And I think that’s her management style. And then I got a call from the CEO of the company saying, “Suresh, this is unfolding in India and I think we need the best hands on deck in order to resolve this issue or at least manage this issue. And we’ve decided that you’ll be the one.”

So initially, my reaction was of shock. And I asked, “Am I the only one?” And the CEO said, “Yes, you’re the only one.” I’ve been through a difficult spot. I went to Singapore where there was an economic downturn. Three years ago, we had the challenge to grow the company. I go to Egypt and within months there was the Arab Spring. And that has its own consequences. And I said, “Look, five years of probably the most exciting times of my career. But also, stressful times of my career.” So I got through that and the company was kind enough to post me to Philippines, which is one of the best countries that we have.

AR: Right, almost a holiday…
SN: It’s a lovely country, and I was loving the people, loving the environment and enjoying the challenges there. And then suddenly this happens. So for me, initially, it was a bit of a, “Why Me?”. And then I had a quick chat with my wife, and she’s been my partner for many years. And she said, “Look, you’re being called to do something for the company. I think it’s an honour for you.” And then I thought about it. It’s rare in one’s career that you’ll come across a situation where an organization’s the size of Nestlé’s tells you we need your help. And also, I think I love this team.

AR: Which team?
SN:
The one in India. And I somehow felt that I cannot let this organization down, that has done so much for me. And where my level of trust and credibility and respect has been very high.

AR: August 1st, 2015. You walk into this room for the first time. You are alone in a country where your company is going through a crisis. What are your thoughts? How do you marshal them, and what were your first steps?
SN: Yes, it is interesting because I came in on the July 24th, though my official announcement was from August 1st. I had my first interaction with my team. And I called a meeting of all employees. The two things I kept in my mind was that, it comes more out of probably a combination of age and experience. If I was a much younger guy, I may have been scared for myself. I would have said, “What’s going to happen to me?” The first thing I said to myself was that this is not about you, this is about the organization Nestlé, the company that you love, and about the stakeholders. That’s what it’s about; it’s not about you. Secondly, look at this job as a mission and don’t look at it as just another job. It’s going to be much tougher than you think it is. But if you manage yourself, because I think in managing yourself, you can help manage a crisis of any kind.

Many times, organisations falter not because they don’t have the genetic code of coming out of difficulty, but because the captain of the ship is showing signs of nervousness, signs of shakiness in decisions, or a certain lack of resolve that affects the organisation. So I think, for me it was, “It’s not about me. And I really don’t care about what happens to me or my career.” I have no big need of becoming the head of a global organization or this, that, or other. Now in my own country, this was an opportunity to head a fine company. This is the greatest honour that my company and my elders and God could have blessed me with. So I said, “Look at it from what you can do for the organization.” And I think that, kind of defined my spirit.

If I was a much younger guy, I may have been scared for myself. I would have said, “What’s going to happen to me?” The first thing I said to myself was that this is not about you, this is about the organization Nestlé, the company that you love, and about the stakeholders. That’s what it’s about; it’s not about you. Secondly, look at this job as a mission and don’t look at it as just another job. It’s going to be much tougher than you think it is. But if you manage yourself, because I think in managing yourself, you can help manage a crisis of any kind.

AR: Now, it’s unusual for a CEO to be focused on media communication and advertising rather than say, supply chain or new product lines or new SKUs. How was that change like?
SN: One of the lessons in today’s context, and I think it’s a lesson in leadership of an organisation. At this level, at the apex of the organisation, the task of the CEO is to protect the integrity, the values, and the purpose of the organisation. I think I have been tested for whatever skills I have in sales or marketing or general management across various roles. In my company today, there are men and women who are far better than me in many of these areas. I don’t even compete. They will win hands down in those competencies. What I provide is the glue, and the spirit and the articulation of the purpose of the organisation. So I think in this particular case, since the Maggi incident was so unfortunate, for a company whose genetic code has been defined by food quality and safety for 150 years, to be hauled over the course of something that’s really quite unfounded in the sense of the analytics, I had the moral kind of backbone, when I went into this job even though it was turbulent, to say, “Look, the company cannot and will not compromise with the good food quality and safety.” And I asked myself who were the three most important constituents of my organization. First, my own employees. And yes, I could talk to the employees. But the employees would also like to see something, not just me talking about it. So that was priority number one. To get the employee spirit back, and to get the confidence back.

Number two; the purpose was defined by getting Maggi back. Now Maggi is not just a fourth of our business, but it defines the consumer space as a brand. I don’t think many people knew before the incident that Maggi was from Nestlé. They knew Maggi, and they always thought that Maggi was kind of, something that was homegrown. And it was indeed homegrown. But you know, that was something that was important. And there I believe that I needed to engage and talk about what we were going through, and what we had done, and the challenges that we had.

One of the lessons in today’s context, and I think it’s a lesson in leadership of an organisation. At this level, at the apex of the organisation, the task of the CEO is to protect the integrity, the values, and the purpose of the organisation. I think I have been tested for whatever skills I have in sales or marketing or general management across various roles. In my company today, there are men and women who are far better than me in many of these areas. I don’t even compete. They will win hands down in those competencies. What I provide is the glue, and the spirit and the articulation of the purpose of the organisation.

AR: How frequent was this talk?
SN: Well, my style of management is that I can’t sit on my desk for more than an hour. I have to walk around and see, and go and chat with people. So these informal chats used to take place every other hour, and I would walk and talk with people. I was travelling across sites, going to the factories. Five of our eight factories had been shut. It’s difficult to manage workers who had been kept idle. But the resolve that I took, and I thank the top management of my company and the board of directors, for having lived up to the resolve that I set for myself saying I don’t want to get anybody out of a job. I thought that we’d keep them as long as we can. If the crisis had really lasted for much longer, I’d have been forced to take steps that were very unpalatable to me. But I would have to do it, as the head of the company. I think we managed to talk to people. And sometimes it’s so simple. We forget as leaders what people want from us. Number one is hope. As a leader, people say, “I need hope from you. Can you give me hope that something will come out?” I don’t have the answers. Because I am not God. I am a human being like you. I will find the answers with you. But I give you hope. I give you the hope that we will come out of this mess, and that we will rise once again to the glory that we are as a company.

If the crisis had really lasted for much longer, I’d have been forced to take steps that were very unpalatable to me. But I would have to do it, as the head of the company. I think we managed to talk to people. And sometimes it’s so simple. We forget as leaders what people want from us. Number one is hope. As a leader, people say, “I need hope from you. Can you give me hope that something will come out?” I don’t have the answers. Because I am not God. I am a human being like you. I will find the answers with you. But I give you hope. I give you the hope that we will come out of this mess, and that we will rise once again to the glory that we are as a company.

Number two, I said, “I’m in it with you.” So I was working as hard as them because this wasn’t just a leadership role.
The third thing, I said, I’m not on a witch-hunt. I could have been, if I was a different kind of human being, a bit vindictive. I could have said, “I was in the Philippines, doing well for myself, you idiots have gone and done a blunder, and I am not being called back in order to manage this. Who was the guy responsible for this? Let’s go and point fingers.” I think I left this whole thing out. A lot of management of crisis is sometimes not about addressing the cerebral issues as it is about addressing the emotional issues. These are cerebral issues and you need to have your facts and you need to have your cases. But the emotional issues, the little touches, the little gestures, they make a hell of a difference to people and leadership I believe, is contagious. If I set the spirit of the organization as being positive, that we’ll come out of it, then we will. If I would have said this is a mess, we may have to close down as a company, then that’s exactly what people will do.

AR: One of the things you did was spend an inordinate amount of time on communication in 2015–16. And we also saw an extraordinary thing in Nestlé India, which is a nimble, fast, agile Nestlé as far as communication is concerned. Tell me how you made that happen. Because, Nestlé, as in most parts of the world, was slow and a behemoth, and so on.
SN: The team and I discussed it. There are two approaches. Either we are hyper cautious, very very risk averse. We don’t say anything, we don’t do anything. We keep moving along quietly. The crisis we have on our hands is one not just of a brand. It can also be turned into an opportunity of a company. So I said, “In crisis, there is an opportunity.” Something that you can do to recalibrate yourself, to re-energise, and to re-direct the organisation with fresh energy and impetus coming out of a deep sense of purpose. And I think that is what we said as a company. I said, “In this crisis, we cannot afford to be quiet. We cannot afford to say that I’m sorry, I won’t talk to you.” If I don’t talk to you, and I’m incapable of talking as a leader, then I shouldn’t be in this job. I should find somebody else and let him or her do the talking for the company. So we took a bold stance.

It was not a risk-free stance because some of the communication that we did, like the “We Miss You Too” campaign, the brand wasn’t even on the shelves! And the classic marketer would say, “This is ridiculous. How can you have a brand that’s not on the shelf acknowledging its presence with the consumer?” We did it because that’s the digital age. And the idea, incidentally, and one of the other learnings from this whole thing is that leaders have to be humbling enough to understand that they do not know it all, and that the consumer today is very different from the time that you and I started as brand managers. One of the young brand managers came to me and said, “Sir, we have to do something digital, because that’s what my generation talks on. We are not interested in press ads, we are not interested in TV commercials, we are not interested in long interviews. We just want to see a little bit of fun, a little bit of brand engagement, which is what brand Maggi is all about, on digital.” My only deed that I did was say, “Go ahead. If it blows in our face, okay, I take the rap for it. But if it does well, and does well for the brand, then it’s history.”

AR: On the PR front also, you did some aggressive, brave stuff, not only advertising. What were the checks and balances that you put in place?
SN: There were three yardsticks that I used in doing what I did. Number one, does this add meaning to the company, to the brand, and to the process of communication that I’m engaging in? Number two; do I have the necessary competence to pull it off? Do I have the kind of people who can do it for me and on a sustainable, not one-off, basis? And number three was to ensure that in the moment to become faster, and the behaviours that I articulated for the team was that we have to be fast, we have to be focused, and we have to be flexible. These were the three mantras or habits of an organization. Let’s redefine ourselves. It doesn’t mean that we will be less compliant. It doesn’t mean that we will be jettisoning the processes. But we will take the responsibility of speed. And I said, “Look, in speed and in flexibility, there is an inherent seed of risk. I’m willing as the head of the company, to take that risk. So I don’t want you to feel thwarted that if something goes wrong, I’ll come after you.” Fine.

We launched 35 new products in a short span of six months. It’s never happened in the history of this company. We probably would have launched that in the next 10 years. We did that. Nothing was contravened. Only thing that was said was, this company needs to show, post the Maggi crisis, with the sense of purpose that we had, not only do we revive brand Maggi, but we revive the organization as an icon for innovation. You know Anant, we have more than 2000 brands globally. For a company that has more than 2000 brands globally, innovation should be the last of the problems. But that was what we were being held back with. These were some of the things that I put forward. So long as these criteria were met, I thought it made sense, I took the call as the leader of the organization, to empower people. I said, “I cannot micromanage.” The ability of training in an Indian environment has been that the leader has the ability to fly the helicopter, and also to look under the microscope. I can do both, and I can do it quite easily. So when I sensed that something needed micromanagement, I would do it. But I would tell my people that I wasn’t there to do their job. But I’m here to see that due diligence has been done. Once established, pull out, look at the big picture, and move ahead. Because if everyone is looking down, somebody has to direct you forward.

We launched 35 new products in a short span of six months. It’s never happened in the history of this company. We probably would have launched that in the next 10 years. We did that. Nothing was contravened. Only thing that was said was, this company needs to show, post the Maggi crisis, with the sense of purpose that we had, not only do we revive brand Maggi, but we revive the organization as an icon for innovation.

AR: At this point, what were the strengths of Maggi that you wanted to leverage?
SN: I think, Maggi as a brand, is amazing. I won’t say this as a person working in this company. But I think the history and the people and the way in which the organization has built Maggi, has been simply amazing. Two or three things that really came out in this whole saga. Number one, the closeness that the brand had to the consumer in their lives. I recall a conversation with a young marketer who came to my room wanting to write a book of short stories on Maggi. I looked at her and I said, “You want to write on noodles?” She looked at me and said, “You actually think Maggi is just noodles?”. I said, “Well, it’s just noodles. You boil it, you put in the masala, you mix it, and eat it.” She said, “Sir, you do not understand. Maggi was my snack when I came back from school. Maggi was the snack when I was in college. I thrived through college only on Maggi. My first boyfriend and I used to have Maggi when we went out, because that’s what we could afford then. He proposed to me over Maggi. We went on a honeymoon hoping to have fine dining, landed up in a lousy place, and what was available was Maggi.” And she said, “You actually call it a noodle?”

So I think the equity of the brand, and the moments it has defined were very clear. So we used, firstly, the legacy and memories of the brand. That was number one. Number two; because the brand is 30–40 years old, a lot of the people who started with Maggi are today real adults. So there is a huge cache in the young adults, and talking their language, talking their idioms was really something that we leveraged on the brand. Third, we said that Maggi shouldn’t just be a masala. So, we launched Maggi Hot Heads, which were spicy flavours of Maggi. Now we have Masalas Of India. And as I speak to you, in the next few months, you’ll find even more range of Maggi. So we want to make Maggi ubiquitous as a snacking platform. And that is all that we leveraged of the brand.

So I think the equity of the brand, and the moments it has defined were very clear. So we used, firstly, the legacy and memories of the brand. That was number one. Number two; because the brand is 30–40 years old, a lot of the people who started with Maggi are today real adults. So there is a huge cache in the young adults, and talking their language, talking their idioms was really something that we leveraged on the brand. Third, we said that Maggi shouldn’t just be a masala. So, we launched Maggi Hot Heads, which were spicy flavours of Maggi. Now we have Masalas Of India. And as I speak to you, in the next few months, you’ll find even more range of Maggi. So we want to make Maggi ubiquitous as a snacking platform. And that is all that we leveraged of the brand.

AR: Now you are well on the way of recapturing lost share. Now tell me your focus. Was it on recapturing share, or protecting margins? Because Maggi was a high share, high margin business for you before the crisis, I guess?
SN: Fundamentally, my own belief is that something multiplied by margin gives you profit. And that something is value multiplied by worth. If I don’t get that, this other thing is going to give you (zero). So the way I’ve conceptualized for the organization, and what we’re working on is, first, get the share. Companies that lose share, companies that do not make growth happen, are the dustbins of history because you’ll have a nice beautiful margin figure. I’ll tell you, “Anant, I have a nice 50% margin figure!” You’ll say, “Oh! Very good Suresh, great job done. How much do you sell?” “I sell about 200 kilos.” So for me, and for the organization, the passion is to get back the share, and of course, the rest of the business will fall in place. So it’s not that margins are jettisoned out the window, but we thought that it’s better to first get the share right. Let’s get the growth, let’s get the engines buzzing, let’s get the distributors happy. I’ve got a young sales organization. You came in the lift; you would have seen the number of young people. If these young people have to be energized for tomorrow, it’s got to be growth and opportunity, and not just being a fat cat. And that’s really what I’m trying to infuse in to the organization.

AR: We’re sitting here on June 30th. And on the stroke of midnight, GST is going to be rolled out nationally. How do you view GST, not just for Maggi or Nestlé, but also for FMCG companies?
SN: I’m really delighted that the country has finally moved in to a unified tax mechanism. Having witnessed and being part of an Indian business, we had about 10 or 12 different taxes. It was frustrating to get this across and then to negotiate the many travails of getting taxes resolved. I think the great thing is that it all boils down to a single tax, which is terrific in terms of compliance. Everybody, hopefully, will start coming over to it. So therefore, not only the tax revenue for the country, but also players like us… Nestlé does not have an issue in compliance. For me the value is to be ethical and honest in whichever station I’m in. But there are many other guys who are not playing by the book. So it’s about getting others to play by the book, which is a good thing to do. Initially, there are going to be teething troubles. I think the government also has acknowledged it. I see it happening too.

Change is never easy, and change of this magnitude is not going to be easy at all. So there will be bumps, but I think we’ll have to stay on the long course – with unification, with simplification, with more transparency, with everything being digitized, it’s going to be a much better organization of the tax mechanism. There are benefits in some categories that have been announced, which hopefully will bring down prices over a period of time. The last thing, for a consumer goods company, is the unleashing of efficiencies. Today I have distribution centers in every state. Simply because I’ve got the central and state’s tax that I need to pay.

Tomorrow, I will base it on the size of the hub, efficiency of the hub, factory location and distribution centers, optimizing the cost, optimizing the channels and distribution fields… those are the other criteria. So it will unleash a lot more of efficiencies. And hopefully with all the infrastructure development that will also take place in the country, because that is important… You can do all this because you’ve got the roads and the highways, where your trucks and drivers can move. If that happens, I think this can be beneficial for the country.

In the longer term, I believe that this is a good direction certainly for my industry. I believe that there is a need to have resilience and patience on this because we are very easy as a country to throw out things and say that look, this doesn’t work. There’s no point in hopelessness, in a time that’s going to be good for the country. So I think we have to be part of it, and as we go along, we’ll have to find solutions for some of the operational hiccups that may arise. But I certainly see this as a far better step. Something that’s being talked about for the last 60 years… And we had to bite the bullet. Some people said, “Oh, July! Should’ve been September!” Fact of the matter is that you have to bite the bullet some day. Not July, then in September you have to bite the bullet. You can’t keep saying that I’ll keep postponing it. And I think there’s a level of preparedness. There are some areas, or pockets, that still need to be worked upon, but as the new dawn comes, we’ll find the answers to it.

AR: In the last two years, what have you learned personally as a manager of this company, steering it through a difficult time? Something that you didn’t learn in Egypt or Philippines or so on?
SN: The first thing that I’ve learned is even more important than I thought it was. Managing yourself as a leader is more than half the job. So managing people comes out of how you manage yourself. And I think it is that inner strength that you draw through difficult situations or indeed, even through minor aberrations. Some of us react very sharply to this, and we don’t react the consequence to this. Lesson number one is that managing yourself is more than half the job of leadership.

The first thing that I’ve learned is even more important than I thought it was. Managing yourself as a leader is more than half the job. So managing people comes out of how you manage yourself. And I think it is that inner strength that you draw through difficult situations or indeed, even through minor aberrations. Some of us react very sharply to this, and we don’t react the consequence to this. Lesson number one is that managing yourself is more than half the job of leadership.

Number two, the importance and value of purpose. I saw that happening in the case of the Maggi episode. That when the organization was defined and seized by its sense of purpose that we need to come back as a brand, magic happened. Campaigns were produced in 20 days! Raw materials that took 40–45 days would come in 10 days! Our managers accompanied trucks with packaging material to the factories. Our factories, which had shut down for six months, activated within 48 hours. These were unheard of. Even our own company, my seniors in the organization, said, “Wow! How did this happen? It doesn’t happen naturally.” I said, “No, it doesn’t.” But when there’s a sense of purpose, then actually, it can happen.

The third thing I’ve learned in this job is that you live to see the strength of your values in a crisis. I think I’m very proud and kind of indebted to this organization for the culture and values it has. Sometimes I used to feel, “I think we are bit holier than the Pope. Why are we like this, right?” While going through this, I realized the strength of that. Some of our due diligence, some of the processes that we follow, some of the painstaking, sometimes even vexating attention to details and safety and quality and dimensions of our products, are all things, which have… which is why we have lasted 150 years. I can see that here.

Number two, the importance and value of purpose. I saw that happening in the case of the Maggi episode. That when the organization was defined and seized by its sense of purpose that we need to come back as a brand, magic happened.[…] The third thing I’ve learned in this job is that you live to see the strength of your values in a crisis.[…]The third thing I’ve learned in this job is that you live to see the strength of your values in a crisis.

Fourth thing I’ve learned is, it’s not about you. Any job is not about you. It’s about the people around you. As I get older, I realise that even more, adult life is coming to the sunset, But I realize that to build a lot more leaders around you, that’s more satisfying than just building offices or factories or getting turnover or rewards, and that’s the thing.

And the last one is… I think I, during this entire crisis, slept very well. I did not have any health issues or did not feel that I was stressed out. That was because of the kind of balance one had between what one had to do as a professional, and also managing your own family, and family relationships. I think for me, coming back to India was great because I have an old father in Chennai and I am able to spend time with him. I have old in-laws; my wife is able to spend time with them. So there is all this which is a huge bonus to me, because I might not have otherwise come back to India. So I think God somewhere, in the scheme of things, has done something to ensure that at least I spend valuable time in this country.