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Case Study: The Lonely CEO
“The closer you get to excellence in life, be prepared to lose some people on your journey” — Tony A. Gaskins Jr
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Anand Mitra watched the receding figure of Naman Firoze, coach and advisor to the management committee of India, battling whether to stop him or maybe call him later.
Mitra had a great need to discuss something that was bothering him the last five days. Naman was by far the best person he could speak to. But Mitra was unsure he should do it now. Just as Naman swung the handle down to pull the door, Mitra called out, “Hey Naman, can I talk to you a bit? There’s something that I want to…”
Naman looked back surprised and said, “Yes, of course. Ha ha, I thought we were done.”
Anand: I think we are just about beginning. Please sit, I will order us some lunch since it is 1 p.m. and you will be looking for a sandwich anyway…?
when the food had been served and the various people who waited to get this or that signed or approved, left, Anand poked his head out and told his office assistant L. Gopalakrishnan, “LG, no visitors, no pushing door and begging audience, unless there is a fire and the fire extinguisher fails. I am with Naman and need to have an undisturbed 20 minutes.”
Gopalakrishnan: Yes, of course, Anand.
As Anand sat down at the marble coffee table across Naman and placed the food plates accessibly for Naman to help himself, he thought sharply about what he wished to bring into focus. Then he said, “You have mostly dealt with my team; hence you know nothing about me. Or my work. (Pause) Or my challenges. Sometimes it is not easy to work because there are conflicts that are huge. And I need to air them… (pause) Heck man, heading an organisation is by far the loneliest.”
Anand was 58 and the CEO of Gemmet India, a Rs 8,000-crore organisation. He was also on the marketing board for Asia, a new position created by Gemmet worldwide to renew marketing thought regionally.
After an even longer pause, Anand nodded as if to himself and said, “There is a situation, which to me, is overwhelming and wrong. I need to toss the thoughts around, but am unable, because there is no one I can talk to. And what I seek is an understanding of what I feel and what is going on. There is no one who I can trust in any way. Besides the matter is so complex …. It is not easy. It's nature is such -- confidential and can lead to its corruption easily!
Naman: We can talk, I am willing to listen.
Anand: Thank you, Naman.
You know Abhiram Murthy... (and at this point Anand stared into space). A most nasty situation has come to be. HR has asked that I sack him.
Naman was startled. Abhiram was the head of sales, who he had been mentoring and in all these seven months, Abhiram had not indicated any crisis.
Naman waited for Anand to talk.
Anand: The company has been on a slippery road last five years and every year, one has sought to do many things to improve top line and bottom line. I understand the nature of FMCG, I have been in sales and marketing several years so I know this is a slippery slope. This year our performance is poor – we have grown sales less than we did last year.
Now as things go, there is a face we need to wear for FIIs; a face for our banks; a face for our shareholders; and a face of bubbling grandness for our consumers. But some of these will ask, as they did last year, ‘Why Is performance bad?’
HR, in consultation with one Board member, wants Abhiram to carry the can for the bad show. Abhi as you know heads sales. HR wants to hang the blame on someone. That one is Abhi. And when I face the stakeholders, I need a script when I talk to the Board, to business channels....to parent company... and a part of that script is placing the blame on a poor sales function.
Naman: And what do you think about this?
Anand: Foul, very foul. Top line has grown but very marginally, say 1.5 per cent over the previous year and our target was 9 per cent. Interestingly, we had committed this to the stock exchange,
Naman: Was that forecast made under duress? Because it looked good to make that forecast then?
Anand: The Board wanted the forecast to look very good then, it did seem like we will do very well. After one of our competitors got washed out by an investigation into one of their food brands, we thought our food products will now do better, although it was not in the same category, since we are in Ready-to-Eat while their’s was a Ready-to-Cook. The Board contended that there would be a substitution and our sales will grow.
Naman: Did you buy into that reasoning?
Anand: I felt this was very hackneyed. There might be a small substitution and even then for a short time, and not because a given pasta is off the shelves. These are deep economic and consumer behaviour issues and cannot be reasoned through back-of-the-envelope strategy. I argued that 9 per cent was a hell of a lot because it’s not just contributed by our foods business alone; even if say, we were able to substitute the pasta on your plate, we were doing badly in our other serious categories – like in our Home Hygiene. That has been in trouble after we lost a technology tie-up with Ebertz, which brought our entire Home Hygiene products down. There was some activism over the excessive formulation of our floor cleaner…. So, we had to withdraw three brands from the market. Now imagine the kind of bad press you get for .05 per cent excess over norm and a media that is waiting to go ballistic at the drop of a hat.
Hence 9 per cent was very bullish and I had in fact asked for 5 per cent, which was very doable. But we were unable to even deliver the 5 per cent, which was my most likely estimate. I think, to a large extent, it was the activism troupe but leave that be. I know we could not have done that 1.5 per cent either. Importantly as you can see, the issues at play could not be pinned on to Sales.
Naman: Look, you know your business and that’s not an area I want to get into. I am, however, intrigued by your role in all this – it seems to me there is some politics going on here…
Anand: Well, corporate performance is a war these days..
Naman needed Anand to delve deeper and examine what was really there beneath HR’s move. Gently he urged Anand to open up, open out the thought he was now placing there so gingerly. “You have been on that seat for 8 out of the 11 years you have been at Gemmet. Certainly similar stuff has happened several times before and you have sailed through it all…? What makes you especially uncomfortable now?”
Some silences fell between them as Anand thought hard.
Naman: You are the CEO …
Anand: Businesses go through ups and downs. I know every year we try to do better. My real question is, is it very important to do enormously better every year? What is better? Is an increase in top-line necessarily better? Why is growth only that which is measurable and hence ‘better’? I think a significant part of what we do is service existing consumers and that is a big deal. You need to think about this. Yet I also take the existing million consumers for granted and go find new top line! I do that too, I do. But somewhere we need to look at how foolish we become in the face of competition. One guy down? Then, go run grab his market share and get it home for mommy… this is stupid.
Abhiram has been heading our sales for four years. That means, for three years, sales did not decrease... the market has been flippity-flop…he kept our consumers tied to us, he kept the wholesale and the stockists and the retail energised, trusting and committed to our brands. You see? This year was critical because of some loans, which we are to apply for, a likely capital investment and so on. Sorry I will be cagey – you are not supposed to know.
Whatever the reasons, these are not out of the ordinary for any business. Businesses always have many pots boiling and performance cannot be stepped up or stepped down to enhance looks. In my opinion, a manager should be sacked if there is blatant dereliction of duty, misdemeanour, any manner of….
Naman: Agree. So, what exactly is the problem?
Anand (staring at Naman while thinking...): Competitiveness! Headline syndrome. Inability to understand that a drop in sales is not ‘failure’.
Naman: Hmm… and how does all this make you feel?
Naman was hearing him intently. He was exploring around Anand’s assertiveness behaviour. If he is so clear, what the Board is recommending is wrong, why does he not resist / resign?
Naturally, Naman was not going to ask that. But he had touched a nerve.
Anand: How do I feel? I do not feel very good about it. I feel decimated at one level but also feel outraged because I do not think HR can come and order me to sack somebody. They can ask me about a person’s performance, they can come and tell me about someone whose performance they are not happy with, but I think, as a person who runs this organisation, my views count. HR is not above me;
Naman: You think there is a story?
Anand: So, there is a story, which is why I am talking to you now. It is a plan that has been hatched somewhere… which is that the company does not want to look foolish in the eyes of the stock market, in the eyes of FIs, in the eyes of shareholders, in the eyes of the public too. And therefore it has decided that they must have a fall guy. If there is a fall guy, then I get to look like the betrayed one; the one who had done his best but whose sales head was a lemon… then all attention from me as the leader of a failure is diverted. I now get to look good; and when I continue to look good, I can make a forceful presentation to all these stakeholders, to the larger canvas of global audiences, as this today, is by far the worst – talking to a world audience, to media anchors. Suddenly there is a great need to sound fantastic! Earlier it was just print medium and many did not read all of it, plus the reporter edited text. Now it is live and you don’t have an auto correct! (Oh God, I am angry.)
The whole plan is for me to come through as overpowering but place the blame squarely upon the sales head. This is most underhand. Any organisation that seeks to place the entire blame for its poor performance on one individual, has a serious need to introspect.
Naman: (Finally) Look, in the circumstances, I want to invite you to look at action from a different perspective. Let us examine: as opposed to the best thing to do, what would be the right thing to do...
Anand: I won’t be able to, which is precisely the reason why I needed to talk to somebody. And where I am, there is no one. This is a lonely spot. Yesterday for the first time, I realised what a bummer my position is – I have no one to talk to, no one to bounce such thoughts with… this is a very, very lonely position to be in. The competition and politicking has become so frothy and rich. I wonder at times if the ethical quotient of the organisation is slipping so subtly and gradually that we are unable to sense our own degeneration.... If I elaborate, I will be passing judgement and I do not wish to do that. I do not like what is going on. I can’t deal with this.
Naman: The values you seek … Who decides that?
Anand: When it comes to who decides values here, the path we take, who decides how we look, it is the board.
Naman: You have thought of a way forward?
Anand: There are two ways of looking at this. At one level, I say to hell with all this. I get up and quit. And when I quit, I take responsibility for the poor performance. They may decide to still sack Abhiram, who knows! That’s how I feel. But I also think that might be seen as a cowardly act as well. Because I should be able to explain to the organisation that their thinking (in wanting to pin blame on Sales) is incorrect.
The other is that I stay on and ensure this chap is not allowed to be sacked; that we all take joint ownership for the performance. Beginning with me. I think as an organisation we need to understand that leadership is most important. That leadership should have independence; that leadership be allowed to do what leadership thinks is right, appropriate for the business. And that kind of independence is lacking to a large extent, because I have the Board designing our looks all the time; telling me what to do, how to do, how not to do… which is ok; I can deal with that and I have been. But this time, they have gone over my head and dealt with HR, which I think is very, very poor.
But to bypass me and go and place the blame on a young man, who is all of 38 and tell him to carry the can for the organisation’s poor performance… is in bad taste… is not where I come from.
Naman: And you have thought of what you will do after you resign? I also mean personally.
Anand: Right now – and this is two days old – I am overwhelmed by the hugeness of how wrong this is. Just a suggestion from the Director, HR that this man should be asked to go, has completely rattled me. So, is it that I will be rattled and then soon, I will be un-rattled, and soon I will be all right...? But it has been 48 hours and I have not been able to think coherently after that. Worse, I see they are moving on the plan.
Yesterday the confidential appraisal files were opened….. I am just very shaken by what we have become as an organisation.
Naman: So, what do you think is going on?
Anand: This need to look fabulous. This need to wow the onlooker all the time. Hence the inability to deal with bad looks when the looks are bad. What the hell has happened to us as a people? It is a false good that we want. I do think it is OK if the media talks poorly about my organisation. Hey wait… they don’t talk poorly about my organisation; they only say things as they are.
So, if Latha Vishwanath questions my corporate performance in the light of trends, trends in industry and then my stock prices, she won’t be wrong. If we have performed badly, it is for us to take stock of where we went wrong.
We have known we are doing badly for seven months. It is not as if on 31 December or March we simply plummeted. No. And neither is it that we were indifferent to market readings. I know how hard that lad has tried in the face of the Ebertz break up, the activist chaos... There were some things that did not go well, but there is a huge process that has many, many aspects to it, which are all to be examined and probed. Sacking will not help correct that which did not go well…
It is OK if the media said, “Hey, look, they said 9 per cent and they have done 1.5 per cent.” It’s fine. I think it is the nature of the market place to dissect and probe a below-target performance. But my message internally to my people will be that:
a) We need to forecast honestly without coming under the pressure of image demands b) We need to honestly examine the gaps between our targets and actuals month to month, do reality checks of where we stand vis-à-vis our vision for the organisation. Instead, we are looking at where competition stands….!
We need to look at the beginnings of failure geographically, product-wise, SKU-wise, maybe even area sales person wise. And I am sure, if I sat with my MC and second line I will be able to bring this about.
Naman: What are you thinking?
Anand: Suppose I become unable to fight this, and they go ahead with the plan, then I will not be able to live with them or myself. Neither will I thereafter get the cooperation of anyone in the organisation, because everyone will be able to see through what has happened.
Naman: People might well think that you protected your job…
Anand: Oh God, that sounds so bad…. I know… And I cannot forget that this is the chap I have brought up, groomed… when I joined 11 years ago, he was a young man of 27, very promising. And he delivered on innumerable promises too! Why do we forget that?
Naman: So, what do you think you need to be doing?
Anand: Hmmm…. the whole purpose in talking to you is not because I lack choices but because I need to be able to put them on the table with clarity and see what pieces are there and how to put them together and examine the emerging picture.
Naman: In your opinion, what is the right thing to do? And if it is right, will it be the best thing to do?
Anand: I think I understand, but do elaborate what you mean by ‘best thing to do’.
Naman: Resigning will mean house goes, cars go, perks go… you will be on square one.
Anand: I know what you mean. My reasons for staying on in a job should not be the creature comforts it affords me. I don’t want to be reluctant or inhibited to tell them they are wrong, because of a fear of losing the comforts of life. I think I have lived well… have had a good innings of good living.
I will not make that my reason for staying back. And this is what I talk to my boys all the time. In fact, that is another of the thoughts that I keep before me: which is that any action of mine should not confuse my children, should not cause dissonance. I care about that immensely. My sons should not one day read about me and say, ‘Hey… Dad blew it! He kept his job but made another guy close to half his age carry the can...’
Anand: Yes, now I have a fair amount of clarity. It is clear. I have all the pieces now. And the picture is forming…. I feel every organisation has the right to define its ethics and values on which it will run. I think typically leadership should define, demonstrate, deliver and divinise culture in an organisation.
Naman: Ideals for an organisation versus your ideals for yourself… any conflict there?
Anand stood up and shook hands with Naman. “Nope…. I just made my choice… Thanks, Naman. You are indeed a good bouncing board!”
To be continued...
Read Also: Case Analysis by A.V.K. Mohan | Sidharth Singh