Client Spotlight: Godrej25.Jul.2012
Having conquered its home market, this Indian dynamo is fast becoming truly multinational. Here Smita Naidu & Neha Rohatgi explain how YSC has helped Godrej beat the ‘Globalisation Penalty’.
The context: unlocked transformation
Godrej is one of India’s most trusted business entities. With annual sales in excess of US$ 3.3 billion, a workforce of 20,000 and a diversified and constantly evolving portfolio of products and services, its transformation from a lock-making company established in 1897 to its present day status as a heavy-weight conglomerate has been phenomenal. Today, Godrej has a significant presence in a wide range of sectors including: fast-moving consumer goods (FMCG), consumer electronics, engineering, and information technology. Regarded as one of the oldest and most diversified firms in India, it continues to adapt successfully to a dynamically changing environment – and is focused on shedding its image as a closely-held family business to a ‘family-owned and professionally managed’ organisation.
The strategy: acquisition and expansion
Although one of India’s biggest conglomerates, Godrej is evolving from its roots as a wholly Indian company to one that is truly multinational. With a presence in more than 60 countries and approximately a quarter of its revenues generated overseas, the group is now preparing to operate as a ‘global’ business entity. Its strategy is to acquire strong local brands that have sizeable market share and potential to grow. For instance, one of its recent acquisitions is Argencos, SA – a leading brand in the Argentinean hair-care market. This acquisition unfolds a strategy which is focused on three geographies (Asia, Africa, Latin America) and in three categories (personal wash, hair-care and household insecticide) – what Godrej refers to as a ‘3x3’ strategy.
As Godrej acquires new organisations and grows, the leadership team is now focused on integrating and building an inclusive culture. As Adi Godrej, Chairman of Godrej Group observes: “The natural instinct of large Western multinational companies is to centralise and control. Our expansion strategy, on the other hand, is based on minimal interference from HQ. We have acquired entrepreneurial family businesses and believe in letting them operate as they deem fit.”
The challenge: beating the globalisation penalty
The benefits of globalisation are undeniable, but they come with risks and challenges of scalability, complexity and increased performance expectations from the leadership team. A recent McKinsey study highlights the concept of ‘Globalisation Penalty’: a phenomenon experienced by high-performing, high-growth organisations moving into a global arena. Godrej is experiencing similar challenges as part of its business integration. It has had to work hard on creating a shared vision, maintaining professional standards and raising the bar for expedient growth. The leadership team has been busy crafting integration strategies that aim to enable Godrej’s core values to cascade down, without acquisition companies losing their own personal DNA.
YSC’s role: partnering godrej on the journey
YSC and Godrej began partnering in November 2010. We were initially asked to build an individual and collective view of the Godrej leadership talent pool within the context of the company’s new identity and overseas market expansion plans. Since then we have worked with more than 70 business leaders across various divisions including: FMCG, Property and Corporate Finance, in India, South Africa, the UK and South America. We have supported Godrej with:
- Stepping into bigger shoes. To help further international expansion, Godrej is keen to develop the leaders of the future. They had identified a set of emerging leaders who were already considerably stretched but were being expected to assume leadership positions in spite of limited experience. YSC’s in-depth individual assessments helped these individuals to step back and reframe their challenges, pinpoint the key capabilities they need to focus on, while also bringing to light their potential for future success.
- Balancing both worlds (local and global). Although confident of its capabilities in India, Godrej needed support to raise the bar in terms of influencing international business environments and driving greater alignment to manage corporate performance. YSC brought breadth and rigour to profiling conversations by addressing the local and international perspectives for the group.
- Meeting global benchmarks. Godrej was keen to measure its leadership capability and benchmark it against external leadership talent. Based on our considerable experience of working with the “best of the best” leaders globally, YSC helped the Godrej top management team articulate what its leaders needed to do to get ahead of the curve and drive business growth. We also helped identify the areas of opportunity and risk in managing the talent pipeline.
YSC’s approach: balancing local and global
From the start, we adapted our approach to address what 'good' looks like in the Godrej local and international context. Before we started profiling participants, we established a clear picture of a successful leader in the organisation and identified what leaders would need to do differently, retain, or even shake off, to enable them to be truly successful.
Through our assessment conversations we were able to raise individuals’ self-awareness, enhance performance orientation as well as reinforce desired leadership behaviours (aligned to the group’s business objectives). These included helping leaders adapt to a competitive marketplace while staying true to Godrej’s core and evolving values.
We then collated our team findings and insights and shared this with the Group leadership team. This was used to support and inform succession management and career development plans for the individuals involved.
The outcomes: change at every level
- At an individual level. Participants fed back that they received significant value from this process and found it to be very insightful and refreshing. They felt that Godrej was seriously investing in their capability and career development. There has been a highly positive response from participants and, by popular demand, the programme has been extended from the top 40 to an ongoing annual engagement.
- At the top team level. Our intervention was able to help top management build their understanding of why people behave the way they do – especially from a local, cultural and business context.
- At the organisation level. Godrej was able to size up every individual’s ‘headroom’ to enable them to think at the next level – as well as gaining insight into their overall potential, and their strength and development areas. Godrej has also been able to articulate and define the next steps in supporting these leaders to be successful both locally and internationally. Godrej has raised its overall awareness of and capability for leadership development and is now driving consistency in assessing, developing and promoting leaders.
“We partnered with YSC to assess our leadership capabilities and craft the way forward. We are pleased with how this has progressed and look forward to a renewed commitment to strengthening our development programmes.”