Sunday, July 14, 2013

Unilever: Transformation & The Environment

I love reading about organizations that exhibit lean behaviors without actually labeling them “lean.”  Although using a term like lean helps provide a common way to describe an organization’s approach and practices, and connects them to a wider community for learning and development, there is something to be said for companies that tailor the system to make it their own.  Such is the case with Unilever.

A recent issue of Fortune Magazine included an interesting article about Unilever CEO Paul Polman and the success he’s having in transforming the organization toward a more environmentally sustainable business model.  The company issued a Sustainable Living Plan, which outlines its principles and approach for its model, including aggressive targets to be achieved by 2020.

Making the Transformation

Through the Sustainable Living Plan and Polman’s drive for change, Unilever appears to have done the right things to begin a transformation that, by all indications, appears to be on track to achieving some pretty aggressive objectives.  Although the transformation process never ends, getting to the point where it truly begins to take hold requires some fundamental elements that, without which, make a vision nothing more than a hope or prayer in the future.

Not in any particular order, these elements, that fall within the responsibilities of the organization’s leaders, include:

Clarifying the Vision  Creating a clever term or buzzwords to describe the vision are not enough.  People need clarity in order to connect their activities and efforts to a transformation.  Clarity also provides a lens with which to understand whether current systems and processes support or conflict with the future direction.

Deeply Believing in the Direction  The leader must fundamentally believe in the direction and need for change, and be obsessed with making it happen.  Without this level of belief and engagement, the message will lack the energy and confidence that people need to accept and buy into the effort.

Establishing a Worthwhile Cause  In spite of what many leaders believe, the vision must go beyond profits and share price.  Getting people to buy into a vision requires connecting it to something deeper than financial gain.  This can be done through a clear connection to the fundamental need the company serves through its mission, or through an ancillary aim like Unilever’s sustainability plan.

Stretching Targets  Lean thinking requires the desire and confidence that you can have it all.  Shifting thinking toward the idea that absolute perfection is the only objective helps drive creativity in ideas for improvement.  Polman’s belief that Unilever can double its sales while cutting its carbon footprint in half is an example of stretching the organization to unleash innovation.

Removing Barriers  Talking about achieving the impossible while continuing to operate in the same way will lead to frustration and a loss of trust in leadership.  Successful transformation requires breaking down barriers and questioning the company’s systems, processes, policies, and culture to discover what is interfering with the future.  The responsibility for doing this lies entirely with the organization’s leadership team.

Having Patience . . . but Not Too Much  Transformation takes time and, the further the organization currently is from where it wants to be, the longer the process will take.  Leaders must have the patience to let people internalize the new direction, and the impatience to know when the effort has stalled and requires direct action.

Two years into the plan, Unilever has begin to show remarkable results.  In 2012, revenues increased by 10.5% and the company’s stock price, up 75% since 2009, has reached an all-time high.  On the sustainability front, the company has significantly reduced packaging in some of its largest selling products, and 10 of it U.S. factories have completely eliminated the waste to landfills.

I used to live in Rotterdam and drove by the Unilever building every day on my way to work.  Other than thinking that it was interesting how the building hangs out over the river, I never thought about the important role the company was to play in global environmental and economical sustainability.  I sincerely hope that Polman is able to keep the transformation going and prevent the natural forces from pulling the company back to traditional thinking.

1 comment:

Kyle Blanchard said...

Establishing a Worthwhile Cause and Deeply Believing in the Direction are starting to become visible as a shortcoming in my neck of the woods.

I need to work on this with my new Ops Manager who believes in moving our asset above current performance using Lean.

Also--Stretch Targets...I'm hearing substantial pain from people worried about "getting beat up" over missing goals.

This is a difficult mentality to overcome.

I am trying to work up some coaching material to help out with this.

Keep the blog posts coming!

Thanks Gregg.