The recent changes at the Godrej Group are not just cosmetic; they are a result of strict prioritization

and better listening

Business Standard 27th Feb, 2012

Presented by
Tejas Gohel
Vaibhav Jain Varsha Mohinani

Zeel Khadepaun
Ashwin Iyengar

 Master branded Entities fully branded as Godrej followed by description to signify the business. So, properties or appliances would signify the businesses Godrej Properties (B2C) Godrej Security Solutions (B2B) Godrej Appliances (B2C) Godrej Industries [Chemicals] (B2B) Godrej Locks (B2C)

Brand architecture

Platform branded
Brands which are prominently Godrej but can be developed

to include other values too. So, Interio adds design to expression of the master brand Godrej Interio (B2C) Godrej Eon (B2C) Godrej Expert (B2C)

 Sub-brands Brands with equal mix of master brand and unique values. Natures Basket stands as much for gourmet food as for progression (of master brand) Godrej Cinthol Range (B2C) Godrej No 1 (B2C) Godrej Natures Basket (B2C) Endorsed brands Brands with strong individual values but Godrejs endorsement helps consumers of these brands, like GoodKnight, to re-evaluate the master brand Godrej GoodKnight range (B2C) Godrej Nav-Tal (B2C) Real Good Chicken (B2C)

 House of brands Brands without association with master brand or part of the JV partners portfolio. Strategy will apply to these but not the master Hit (B2C) Brylcreem (B2C) Ambipur (B2C)brand use

Goals
The Godrej Group is scripting its future. the infusion

of young blood, both family and non-family, various acquisitions, rebranding and most recently, injection of private equity by Temasek. Their goal is of growing 10 times (to 1.5 lakh crore) over the next 10 years and get a firmer foothold in the three segments of homecare, personal care and hair colour in the three continents of Asia, Africa and Latin America

Listening better
Statistics say that only about 3 per cent of family-

owned businesses operate beyond the fourth generation. The 14,500- crore Godrej Group is one of them, it is because of diversification, strong financials and smooth change of guard. In 90s company went into many joint ventures with MNCs and modernize its management methods. The turn of the millennium saw Godrej restructure the group with separate CEOs leading the different businesses as separate companies. Many partnerships & ventures didnt succeed.

 That is why infusion of Young blood took place. In 2006 80% of

the business was managed by Adi Godrej(age 70) but now only 5-7% is managed by him. Adi Godrej changed his management style. He listen more to those younger to him by 20-30 years.. He says that he is quite older than the typical Indian consumer today & also there are youngsters who understands business & group better than he does. Also they try to listen outsiders too A monthly general management meeting has the top management not only discussing each business forecast for the next month but also listening to guest speakers from one of the Godrej Group businesses who apprise them of the segment. A programme called Bedharak Bolo topped off by an annual award initiated eggs employees to speak their minds at the meetings, including upcountry young managers who might hesitate in a corporate environment.

 Sunil Kataria, executive vice-president, sales and new

business development, GCPL The rural network we have created will help us drive more usage in rural markets which can't be tapped with urban insights. A festival like Nagpanchami, for example, celebrated only in certain parts near Lucknow, sees a spike in mehndi sales. So we could easily run a local activation 15 days prior to it to maximise sales by keeping our ears to the ground. Listening to different businesses has also helped the groups environmental efforts. They recount that suggestions on water harvesting, saving power and improving engineering efficiency have flowed freely between the Chemicals, Agrovet, GCPL and Godrej & Boyce units.

 Consumers told them that they needed to become

younger with innovations. If earlier, the Group was an operation-centric entrepreneurial powerhouse, it now needed to be brandcentric. Out came new brand values progression, expression, empathy and experience as part of their motto of Brighter Living. Everything from HR practices to business processes are being aligned to these traits as distilled in 2008.

What to leave out ?

As much as improving its listening skills have worked,

what has helped Godrej Industries and in a way the Group, is the ability to define the core of each of its businesses and processes. Good strategy is not just about what to do but also what not to do

Say no to Food
Thus in consumer goods, food is at the bottom of the list.

The Godrej Industries would not be looking at food for acquisitions nor would it be investing any further in the joint venture The innovation cycles and distribution are very different.

No soaps either
There intent is to stay away from soaps in its

international FMCG acquisitions, while it is a sizeable earner in India. Entry barriers in soaps are low, making for a low profitability business The recent changes are as much about staying relevant as they are about what to support and what to leave out

Removed Agrovets retail play

Agrovet's biggest business of animal feeds has separate

teams for feeds of different farm animals. Agrovet also did away with the federal mill structure and centralised quality control and supply chain, leading to immediate margin gains Retail was hemorrhage the company. It was a joke about how the profit from animal feeds business was paying for the retail losses Thats why Adhar was sold off the Future group

Brands & market

Emerging brands : Godrej natures basket Gourmet

Food Godrej Eon, Interio & Goodknight are very much successful in the market Godrej No 1 and Expert No 1 are as always very much strong in the market

Strategy
A big no to partnership. From P&G for soaps, GE for

refrigerators, Sara Lee for personal care to the more recent Hershey's for food and Tyson for poultry joint ventures, Godrej has taken on partners since the nineties but has had a somewhat patchy record One of our biggest learnings in the last five years has been that partnerships need to have a defined period in which each side will gain. We will not be just a distributing partner but add skills to our company through JVs, - Vivek Gambhir (Chief Strategy Officer )

Thank You