Unilever: Leadership Knows No Boundaries

Leadership is a complex subject that has been defined by numerous experts and theorists in nearly every industry around the world. There are as many definitions for leadership as there are companies that profess to be focused on leading their firms effectively. But merely talking about leadership and its application to the business world is no match for the application of leadership principles used to guide a firm’s decision-making and strategy.

According to Stephen Covey, in order to be effective one must be focused on being proactive, seeking understanding, working together, as well as focusing on the end goal. These characteristics could also hold true when evaluating leaders.

Michael Brunner summarizes his viewpoint on leadership in stating: “No matter which leadership philosophy you subscribe to, you must continue to innovate and grow, in good times or in bad. Seek new approaches to old problems. Be open to new perspectives, no matter their source. Your ability to evolve as an individual and as a leader is what distinguishes you from others, and it’s essential to the continued success of your business, your job satisfaction and your personal prosperity. Leading such a firm as Unilever is no small feat and to do this effectively takes strong leadership skills.

A Long and Storied Past

Unilever was formed in 1930, even though the companies that make up this corporation were in existence before the turn of the twentieth century. In the early years, the primary focus was on products consisting of oils and fats, such as soap and margarine. The corporation experienced such rapid expansion that it nearly outpaced its supply of raw materials. Throughout the early 1900s Unilever experienced tough economic conditions including the Great Depression and World War II. By the mid-1900s Unilever was well in command of their products, and had garnered a significant share of the marketplace while pursuing opportunities to expand into new markets. The 1970s brought about some tough economic times as inflation took its toll on the consumer goods market, and larger retailers demanded more and more for less money. The next couple of decades finds Unilever becoming more focused on its core business offering, fewer product categories, and abandoning nearly two-thirds, of its brands through pulling out or selling to other companies.

Today, Unilever employs 163,000 people in more than 100 countries around the world. Their products are sold in over 170 countries and their top 25 products account for 75% of their total sales: The reach of Unilever is significant and almost impossible to fathom as described by the company itself, “160 million times a day, someone somewhere chooses a Unilever product. From feeding your family to keeping your home clean and fresh, our brands are part of everyday life.” Leading such a massive firm requires considerable resources of both time and money. Unilever has established a clear direction (planning) for the organization in order to meet the diverse needs of its customers. Its direction is made clear by the four pillars that constitute Unilever’s vision:

• We work to create a better future every day.
• We help people feel good, look good, and get more out of life with brands and services that are good for them and good for others • We will inspire people to take small everyday actions that can add up to a big difference for the world. • We will develop new ways of doing business with the aim of doubling the size of our company while reducing our environmental impact. Defining Leadership

Operating a global firm such as Unilever is impossible without the appropriate level of focus on effective leadership. This epitomizes much of the work of Unilever as it seeks to dominate the marketplace with its products. Unilever has constructed a clear purpose(Leaders’ job is to assist followers to identify the direction and path in attaining task-related and personal goals, by removing any barriers.) for their operations that professes: “Our corporate purpose states that to succeed requires ‘the highest standards of corporate behavior towards everyone we work with, the communities we touch, and the environment on which we have an impact:’” Carrying out such a purpose is no small task for a company so enormous. In order to meet its stated purpose, leadership must begin at the top of the organization and flow through all levels to insure commitment is present across all of Unilever’s employees.

Leadership at Unilever begins with Paul Polman, CEO, who shares his thoughts on the leadership conviction at Unilever as: “…everybody is a leader, as far as I’m concerned (Servant leadership – empower). And my definition of leadership is very simple: if you positively influence (managerial power: Power should be used to influence and control others for the common good rather seeking to exercise control for personal satisfaction) someone, you are a leader:” With leadership beliefs such as this at the top of the organization, it is clear why Unilever has been able to achieve such a high level of success in its industry. However, the leadership vision and commitment needs to transcend further into the organization in order to truly make a significant impact on the organization. Furthering the belief in leadership across all levels was reiterated by Unilever’s Fergie Balfour, who said, “What does an effective business leader do? He or she makes it possible for others to do, and be, their best. Simple as that. And the way to do that is by unlocking people’s energy and belief that is so often missing at work.” (Motivation) Leading with Conviction

Discussing or defining leadership is a challenging task in itself; however, implementing these concepts in an organization the size of Unilever requires some serious forethought and conviction. This is the reason for the development of Unilever’s stand on corporate governance: “As stated in the Code of Business Principles, ‘Unilever will conduct its operations in accordance with internationally accepted principles of good corporate governance’. It is therefore Unilever’s practice to comply with the best practice represented by the aggregate of these best practice codes.” Unilever goes much further than merely professing its stance on corporate governance; it looks for ways to apply these principles in the daily business operations. This has been the norm for Unilever for a fair amount of time. It was even displayed by Patrick Cescau, Unilever’s former chief who initiated the “One Unilever” approach, crafted to provide some structure to Unilever’s expansive, decentralized configuration. Such a move makes it obvious that Unilever is interested in changes that will benefit the entire organization no matter what it takes to implement such changes.

Unilever’s current CEO, Paul Polman, has also had to address leadership issues within his organization, and make the changes he felt were necessary to sustain Unilever’s competitive edge in the marketplace. Upon his arrival at Unilever, there were substantial departures of some of the highest ranking executives at Unilever including their chief marketing officer, Simon Clift, as well as Vindi Banga, the global president of food, home and personal care. Such changes do not come easy especially within the ranks of a company the size of Unilever. However, in order to maintain its strategic leadership, focus changes such as these are a fact of life if Unilever hopes to achieve its long-term goals. As Unilever moves forward it is clear the corporation will rely on a culture focused on performance, as highlighted in their 2009 Annual Report: “We start from a strong base of values and principles, which have served us well over the years: integrity, trust, investing in people, doing the right thing for the long term. In very competitive markets, we need to further increase consumer and customer focus, speed of action, and responsibility and accountability. To achieve this we have made the organization flatter, simplified target setting and sharpened individual performance management.” Time will tell if the leadership principles and beliefs put in place at Unilever will continue to benefit the organization as well as all its stakeholders.

CASE QUESTIONS
1. DISCUSSION – How does Unilever display its commitment to leadership? 2. DISCUSSION – How has this commitment to leadership allowed it to capitalize on opportunities in the marketplace? 3. PROBLEM-SOLVING – If you were an upper executive within Unilever, how would you apply the concepts you have learned about leadership to your position? 4. FURTHER RESEARCH – Investigate Unilever’s international operations. Where do you feel it possesses the strongest presence? What is it doing to further its position in the international market?