Unilever is up against it. In 2003, it needed 234,000 employees to net $3.5 billion. P&G needed half that number of people to net nearly twice as much ($6.5 billion).
One strategy is to rationalize the famously sprawling structure of the company. This is a good thing. Far flung companies are not just expensive to run. They can be ponderous and unresponsive.
Another strategy is to insist on global approaches. Country managers for Dove are no longer able to modify packaging, formulation or advertising. Knorrs soup and bouillon cubes, a $2.7 billion annual business, is no longer produced and designed as locally as it once was.
Economies of scale are a good thing too. But you cant read todays Wall Street Journal without thinking that Unilever is playing out a traditional view of management.
Simon Clift is head of marketing for Unilevers home and personal care division. In the WSJ piece, he says, that there used to be so many local players in the new product development process, it was “like herding cats. There were no strategic priorities at all. Clift has imposed a new regime: “Recently a major region wanted to launch a new packaging for Ponds face cream. We said, No. Gone are the days when you can decide packaging locally.
The trouble is that some consumer taste and preference comes increasingly from its local context. (We may define “local variously: national, regional, urban, ethnic, linguistic, cultural, subcultural, neighborhood, class, age, lifestyle, etc.) In this various marketplace, giving the local player some control over the formula, the package and the advertising is probably a good thing. Ironically, Unilever appears to move away from this approach just as the rest of the world is thinking hard about whether “herding cats might actually be a new model for management.
There is a “paradigm problem at the root of this. The old management model was an Enlightenment project. The manager sought rationality for a corporation that, left to its own devices, devolved into superstition, localism, the unsystematic, and the increasingly variable. Efficiency escaped this organization like heat from a New England barn. There were many enemies of great strategy. Local knowledge and practice was one of the most pernicious.
The new model says that the corporation must forsake its Enlightenment pursuit of single rationalities and find a way to respond to the variability of the marketplace. How does the corporation read and capture local variation and build this back into the products and services that go to market? This will be messy and difficult. It will take a thorough rethinking of some Enlightenment impulses and a reinvention of the management handbook. But it will happen. Local variation is growing, and it is now one of the great competitive opportunities in industries, sectors and product categories where just about everything else has been tapped.
The “herding cats model of managements discourages some aspects of ‘the vision thing, and the idea that corporations must be run with a great thundering idea that come from on high, obliging every subordinate to demonstrate fidelity to Rome, and make themselves the vessels through which the idea passesin one direction only. (Actually, the Catholic church was pretty good in some cases in absorbing local practice and there may be something we can learn here.)
We are now looking for something a good deal more dialogic, where the locality streams intelligence back from the periphery and accommodation out into the world. No, this wont be that awful California “sharing and caring regime that says that everyone must be heard and every idea is precious. The dialogic is sometimes mistaken for the idiotic, but lets not make that mistake here.
The solution has to be some center periphery model that says, first, that the center is constantly fed intelligence and inspiration from the periphery, and, second, that the centre responds with something like “strategic vistas that establish parameters within which the locals may make choices. There has to be a fail safe provision here as there is in the Delphi system. Locals must be given the option of insisting on their own course of action but these exceptions must be very carefully justified and they must pay out if the exception is ever to happen again.
The corporation is the most nimble, adaptive, transformative thing in our worlds. But it is only beginning to master the full range of its responsiveness.
Ball, Deborah. 2005. Despite Revamp, Unwieldy Unilever Falls Behind Rivals. WSJ. January 3, 2005, pp. A1, A5.