Secret Diary of D Shivakumar former chairman & CEO, PepsiCo India, | Biography Part-1 | Outlook Business
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Secret Diary Of A CEO 2017

"A CEO needs to balance between what’s good for the company and what’s good for the employee"
Secret Diary of D Shivakumar Part-1

Rajesh Padmashali

D Shivakumar, former chairman & CEO, PepsiCo India

personal information of D ShivakumarI woke up the second morning to find my swanky VIP suitcase missing. Every single certificate and citation I had won since my schooldays was in that suitcase — it felt as if my life had vanished with that suitcase. I got off the train at Howrah station, exhausted after the nearly 40-hour journey from Bombay, and headed straight to the police station. After filing my complaint, I reached IIM Calcutta with my airbag and tennis racquet, which had surprisingly not been stolen. I told the administration manager, Deepak Chatterjee, I had nothing left to identify myself but several of my friends were on campus and could vouch for me — apart from me, about 17 other people from my IIT Madras class had made it to IIM Calcutta that year. Mr Chatterjee called IIT Madras and the dean, Dr Srinivasan, told him to admit me; he would ensure that whatever documents were needed would be faxed to IIM-C. For the next 13 weeks, I made a trip every week to the Howrah police station but I never recovered my suitcase or my certificates. Even now, I don’t collect anything — whatever I receive, I send to my mother in Bangalore. She is the custodian of my scrapbooks.

how my life vanished with that suitcaseMy parents had wanted me to take the civil services exam but an uncle who was a police commissioner of Bangalore city had suggested getting an MBA instead. I took his advice, which was how I had reached IIM in 1982. IIM was a very different experience from what I had been used to, even though I had years of experience of living away from home — Sainik School in Bijapur and IIT Madras weren’t like this. There was no attendance and students could smoke openly in class — I didn’t because I don’t smoke; IIM-C truly treated you as an adult. I have always kept that at the back of my mind — treat people like adults; 80% of the time you get the results, 20% of the time you may not because some people may always misuse the freedom that you give them. But the good is far more important than the downside.

**
I was fascinated by marketing, so much so that I would attend the second-year marketing classes that were held after 6.30 pm. I would spend hours in the library, reading everything on management and marketing that I could lay my hands on. It was a running joke on campus that Shiv writes to all the professors — which was true; I wrote letters to gurus such as Peter Drucker, Benson Shapiro, Michael Porter, Theodore Levitt. But the amazing thing was that they would reply and they even sent me their articles. I’ve still got those. I was just a student but they responded and I corresponded with Drucker for a long time until his death.

Mr. DruckerGiven my interest in marketing, it was only natural for me to land up at Hindustan Lever. When you finish B-school you always want to be a brand manager and that is what you look forward to. After becoming a brand manager, you want to change things instantly, but one lesson that I have learnt over the years is to be patient. Brands are like human beings. They don’t change overnight, nor does their audience. Consumers in many parts of the world take to a brand slowly and give up on it gradually. Having handled close to 50 brands, I can tell you that when you tamper with the core of the brand, it will fail or will not do well.

HLL of the 1980s was an outstanding company — it still is — especially in how it invested in the next generation and was considered a gurukul for managers. All these years later, I still count my ex-chairmen as my mentors and reach out to them anytime that I feel I am in a tricky situation. HLL’s philosophy was to put what was good for India first, what was good for HLL next and then what was good for the individual employee. I think that is where I learnt the concept of being a company man. But it’s a different world today and you have to balance between what is right for the individual and what is right for the company. You can do only what’s right for the company by following the rule book; if you manage only what is right for the employees, there will be anarchy because every employee is unique and you can’t have an employee value proposition for every single individual. One of the most difficult aspects of being a CEO is managing this balance between what’s good for the company and what’s good for the employee.

**
The bulk of my time in HLL was spent in marketing and I had such diverse experiences over the years. There was an instance that reinforced the idea that if you worked your heart out; it really took care of you. In 1992, I was reporting to two managers and trying to please both of them. Despite my best intentions one of them didn’t consider my job good enough.

mario magic 2002 - action at HLLOne day I met the second manager at an airport lounge with the agency and their presentation. The agency made some mistake, which resulted in him calling them a bunch of goons and he also reprimanded me for not having filtered it out before taking it up to him. I agreed to that bit but he went further on to calling me a disaster and conveyed his plans of repeating the same to the director of the unit once he landed in Calcutta.

There were no cell phones those days. I returned to the office and went to the first manager and narrated the episode. I also expressed my unhappiness because I was giving it all I had. I knew what I was getting into when I began reporting to two managers but I wanted to make it work. That’s when he said, “Shiv, I think we’re doing something wrong with you.” He then recounted the incident to the vice chairman. Before the second manager landed in Calcutta, the management had issued a notice that I would no longer report to him. When you are a 30-year old and your company backs you, then you swear to do anything for your manager and the company. That simple closure made me invest even more than I was capable of into HLL.

Then another time, I remember going by train to Nellore when I was the area sales manager for Andhra Pradesh. When the train reached the station at 4 am amidst the pouring rain, our salesperson named Munir was waiting with an unfurled umbrella. It’s an act of kindness I will never forget. And sales managers can give you many more acts of kindness.
Those days, there were five big wholesalers in Vijayawada who would never buy from HLL. Still, I would visit them every week along with my stockist Mastanbhai, asking for business. They would always refuse, saying our rates in Hyderabad, Nagpur and Bombay were cheaper. After 18 months, I was transferred, so that last Tuesday, when I visited them, I mentioned that I wouldn’t be coming by any longer. One of them said, “You are the only one who has come every week, even though we have not given you any orders because of the difference in tax.” And he whipped out a notebook, gave it to me and said, “Whatever price you want, just write it here. We’ll take it.” They gave Mastanbhai an order for 5 lakh, I think, even though it didn’t make financial sense for them.

Mastanbhai’s story is equally interesting. During the period nobody wanted to be a distributor for HLL, we appointed him the stockist for Vijayawada. He and his partner invested 2 lakh each as capital. Today, he is a manufacturer of detergents and runs a school also. To see him grow like that is a humbling experience; it goes to prove that if you work hard in this country, you will succeed.

The HLL teamHLL used to give general managers breaks– early, so I ended up as a regional manager in south India. I have always been inclined towards HR and I had some outstanding HR people working with me: Georgie Antony, who moved to Nokia before me and is now on his own in Singapore; and Debashish Roy, who now heads HR for Europe and Africa at Colgate. These guys redefined the kind of HR work we did. We had spoken with the employees to find what they truly wanted from the company. And the feedback was, “I have come this far in life, but if you can do something for my children, it would be fantastic.” We selected children in the 13 to 16 year age group and invested in them, taught them computer skills; every Saturday, a certain LSN Gupta would groom them in life skills. Two of the children from that group went on to the US and two joined HLL.

Another incident I remember vividly is the renegotiation with the unions in 1994. After the earlier agreement ended, we sat with the unions and told them what we had to offer. After Georgie and I finished detailing the offer, the union leader Govindarajan asked for some time to discuss it and also asked me to get my stenographer along. When we reassembled,  Govindarajan said they were willing to accept the offer. Historically, agreements have never been signed on the first day of negotiations. My lesson from that was unions and union leaders are not your adversaries. They have as much stake in the success of the company as the management and as long as you are open and have a trustworthy relationship, it pays back handsomely.

**
In 1996, we launched a tea mixed with jaggery called A1, and the entire tea industry was against us. The UPASI, the CTC guys said how could you do this to tea; now, everybody is adding all kinds of things to tea but, back then, everybody lampooned us. Then there was a UPASI meet in Coonoor, which is typically addressed by the HLL chairman or vice chairman. That year, the communications department advised against his going; they decided to send me instead. They told me to make a presentation in under 20 minutes about changing trends and just leave, without taking any questions from the audience. So, we went to Coonoor by car and I presented to them what rural consumers want and the balance of being price-led and feature-led for rural audiences., I finished in 15 minutes and then bravely stood up and asked if there were any questions. Everybody was silent, and then applauded and nodded in agreement.

tea with jaggeryI had prepared so hard for those 15 minutes since I felt I had to salvage HLL’s reputation. That was a Saturday; on Monday when I reached office, Gopal (R Gopalakrishnan, vice chairman, HLL) called me to his office and said, “I got such positive responses for your presentation that from now on, you will work on all my presentations.”

In fact, years later, when Vindi Banga was the chairman, CK Prahalad wrote The Fortune at the Bottom of the Pyramid, he wanted a case study from HLL. My marketing manager, Rajnikant Sabnavis, and I provided all the charts on shampoo. It was quite a special moment when the book was published and Prahalad used all the slides we gave him.

I’ve had some of the finest and also some of the most humbling moments of my career at HLL. As marketing manager for foods, I had a couple reporting to me and that batch was coming up for promotion. The girl was getting promoted but not her husband. She got wind of it and spoke with me about it: “How can I go home and tell my in-laws I got promoted but your son didn’t?” I took the matter to my boss, Sanjay Khosla, who agreed to discuss the matter with the HR director. We couldn’t reach a decision and finally Gopal called us into his office to sort out the matter. When the facts were laid before him, he lost his cool and told me in no uncertain terms that I need not get emotionally involved with the subordinates; only the most deserving would be promoted and that was that. We gave the letter of promotion to the girl and the matter ended. We never discussed it again but it was a lesson well learnt: I was a professional manager, not a marriage counsellor.

This is the first of a three-part series. You can read part two here and part three here.

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