Tag: FMCG

 

By Dibeyendu Ganguly

 

Till he took charge as CEO of Air Asia India, Mittu Chandilya experience with the airline industry was somewhat tangential. As the China head of the air compressor division of Ingersoll Rand, he was responsible for ground equipment services to several airlines. Later, as the head of the services practice at headhunting firm Egon Zehnder, he handled several airline clients. And of course, he was a frequent flyer, with lots of ideas on how airlines could improve their services. But these were not the factors that led to the Air Asia board inviting him to take up the top job in its start-up venture in India. “They hired me for my entrepreneurial background,” says Mr Chandilya. “I had experience with start-ups, running a profit & loss centre, managing large teams. That counted for more than my knowledge of the aviation industry.”

 

Mr Chandilya admits to having a few misgivings when he accepted the assignment, but he found some comfort in the fact that he already had experience heading businesses much larger than what Air Asia India will be in two years time. Since then he’s been learning on the job and says, “A CEO has to be a good manager, a people leader. Working across industries actually helps develop these skills.”

 

Air Asia India is one of the more dramatic examples, but many company Boards today are putting their faith in CEOs recruited from wholly different sectors. Not surprisingly, many of these companies are new ventures, where startup experience counts for more than industry experience. They include global firms like Roland Berger Strategy Consultants, which recently recruited Wilfred Aulber, the managing director of Mercedes Benz India.

 

Mr Aulber joined the research and development (R&D) wing of Mercedes Benz soon after obtaining a PhD in solid state physics from Ohio State University in 1996 and thereafter worked in the global CEO’s office in Stuttgart. In 2005, he was deputed to India as country head (the fact that his wife’s name is Rekha may have had something to do with it), responsible for setting up a 100 million euro greenfield project at Chakan, near Pune.

 

Earlier, Aubler had also played a role in setting up the company’s R&D operation in Bengaluru. “I have always considered myself an entrepreneur. That means I worry about everything, about every expense incurred,” he says. It is this mind set, as much as Aubler’s experience in the automobile industry, that prompted the Munich-based Roland Berger to offer him the top job of managing partner in India two years ago. “They took a risk,” he says. “I had experience in sales, marketing, production, R&D. But what really counted was my experience in setting Indian operations for Mercedes Benz, where I had done a reasonably good job.”

 

But running a consulting firm is very different from running a manufacturing operation and Mr Aubler has had his hands full learning the tricks of his new trade. “As someone who has moved into a new industry, I have to catch up. The peole you deal with here are very different and you have to get used to the fact that you are just an advisor. The client may or may not accept all your advice. You have to live with that and go on regardless.” Changing industries is certainly no cakewalk, especially at CEO level, and Mr Aubler grumbles he hasn’t taken a weekend off in ages, no small sacrifice for a German CEO.

 

It’s the same with Ramesh Krishnan, though he’s probably more used to it. Mr Krishnan quit Samsung as head of the home appliances division three months ago to take charge of Geosansar, a company promoted by a British family of Indian origin.

 

Under licence from nationalised banks, Geosansar provides banking services at the bottom of the pyramid, to the urban poor who are normally excluded from the system. It’s very satisfying work, so it’s no wonder that Mr Krishnan, a 1989 batch IIM-Bangalore graduate, should have opted for it over Samsung. But what did he bring to the table? “I think they were looking for people with a business management background, with retail experience. The Reserve Bank of India (RBI) estimates that 145 million households remain excluded from banking services, so this is a sunrise industry. Geosansar is not an NGO, but a profit-making organisation,” says Mr Krishnan.

 

Banking is very different from selling refrigerators, washing machines and airconditioners and Mr Krishnan has been burning the midnight oil, pouring over voluminous documents on the RBI website to get a better grip on the rules and regulations that govern his new industry.

 

True to his marketing background, he’s out in the field every day, talking to various public sector bank executives, trying to learn as much as he can through their experiences. “For a CEO, there’s no induction programme,” he says. “Now that I’ve moved to a new industry, I have to both learn and unlearn things. In banking, you don’t get to decide what to do, like in the white goods business. You have to get permissions from the regulator at every stage.”

 

It is this trait – a willingness to learn and the ability to learn quickly – that corporates look for in CEOs hired from outside the industry. “A CEO hired from outside has to demonstrate a certain amount of humility,” says Vivek Gambhir, managing director of Godrej Consumer Products, who joined from the consulting firm Bain & Company. “They have to be able to put together a team that complements their strengths. Companies today hire a CEO on the basis of fit and potential, not domain expertise.”

 

Generalists were in vogue in the 70s and 80s, when companies (and business schools) believed that a good manager – like a good Indian Administrative Services officer – should be able to manage any industry. That changed in the 90s, when b-schools began producing functional specialists and the public sector gradually gave up the practice of installing IAS office officers as CEOs of public sector companies.

 

Mr Gambhir says today’s generalists are different – they are integrators, with a talent for bringing together disparate processes. “There a huge amount of industry convergence today,” he says. “FMCG is not about manufacturing products anymore. The boundaries have blurred. It has converged with on-line and off-line retail to become a service.

 

In such a scenario, generalists would do well.” Mr Gambhir himself had wide experience consulting with the FMCG industry before he joined Godrej as Chief Strategy Office in 2009. Would Adi Godrej have hired him directly as the CEO? “Not likely,” he says. “It’s always good to have a transition period And I was fortunate I had that.” For some, the challenge of changing industries – and the learning opportunities that go with such a move – provides a rush.

 

Amit Shukla, a 1989 batch IIM-Ahmedabad graduate, has changed industries whenever he’s changed jobs, which is often.

 

Starting with Zydus Cadila, where he was in charge of the cosmetics division, he moved to United Breweries and then to Bharti Airtel and then to the Deccan Chronicle group, where he was CEO. Today, Mr Shukla heads the consulting firm of Strat Team Advisors in Gurgaon and says, “Cross-industry experience gives you a width of perspective that can come in very useful. What may be an ‘impossible obstacle’ in one industry is a ho-hum solved problem in another.”

 

Will we be hearing of more and more corporates hiring CEOs from outside the industry in the near future? Air Asia’s Mr Chandilya doesn’t think so: “Most companies are still traditional. They wouldn’t take the risk. Still, there are some who will take a chance on people like me. I would say the ratio would be 80:20 in the future.”

 

Source:The Economic Times

Copyright © 2013, Bennett, Coleman & Co. Ltd. All Rights Reserved

Licensed to republish