In 1981-82, ITC made a profit of Rs4.5 crore on a revenue of Rs105 crore; last fiscal, on its centenary, it celebrated crossing Rs4,000 crore in profits.
The 100-year-old company’s first factory had come up in Monghyr in 1910, and a leaf-processing unit in Chirala had been built around the same time. In 1942, the distribution network had reached far out to Ledo, the railhead in Assam from where Gen. “Vinegar” Joe Stilwell of the US Army had built the road to Kunming in China.
Ajit Narain Haksar, a Harvard Business School alumnus, joined ITC as a “pupil” (the company’s nomenclature for management trainees) in 1948; two decades later, he became its first Indian chairman. With frugal resources at his disposal, Haksar embarked on transforming the company, and from the difficult tobacco trade he diversified it into hotel business and paperboard manufacturing. All this, and more, in a licence permit raj, with a shallow capital market and consumers who had limited purchasing power.
By his own admission, Haksar faced a triad of challenges: a company with a legacy of style over performance, a country where doing business was difficult, and an obstructionist overseas shareholder with a colonial mindset.
So what made him tick? Haksar possessed that ethereal leadership quality that appreciated the importance of human resources. A bunch of capable and humane senior leaders, who epitomized rectitude, were entrusted to craft a strategy to invest in human capital.
Under the new programme, recruiting and then training managers had a rigor to it. Mentoring and coaching were taken seriously. Haksar rotated “listers”, fast tracked them across businesses and functions relatively young, and groomed them for selection to leadership roles.
He encouraged professional managers to be entrepreneurs—“proenuerial”, as he called them. He needed capable risk takers to fuel his diversification and growth programme. His leadership pool went four levels deep, and he retained talent. Haksar’s company prided in offering a womb-to-tomb career, and the tag line “careers with ITC” was a serious proposal.
In fact, investing in long-term relationships and building an “espirit de corps” was part of the organization’s DNA—whether it was with employees, consultants, advertising agencies, customers or vendors. An environment of interdependency and shared values prevailed.
Haksar invested in creating a unique organizational culture. Once at an offsite workshop, he spent a couple of days with the team and said a few things that merit recording.
He referred to Ted Levitt’s book Marketing Imagination, (Levitt was the editor of Harvard Business Review), in which he writes: “The purpose of business is to create and retain consumers at a profit.” Haksar presented us with a copy, suggesting we read it and not keep it as a souvenir from the chairman.
For Haksar, investment in strategy delivered significant, successful results, which were sustainable. In his book you created to last. Innovation was lazy if it wasn’t sustainable.
He understood brands and their role. The test was that consumers would miss them if they were to make themselves absent. He believed brands must deliver palpable benefits, and a consummate marketeer mastered the fine art of romancing the brand with the consumer.
Teams under Haksar’s stewardship crafted strategy for elite hotel properties and restaurants. His brand concept notes on the WILLS cigarette packets, written with Subhash Ghosal of JWT, are gems and must be mandatory reading for all consumer-marketing professionals.
Haksar’s teams also led the creation of luxury and premium categories in cigarettes. This is a fine example of building a laddered price, image, psychographic grid and brands that straddle and dominate these segments. It helped drive ITC’s market share from 35% to over 70%.
Haksar abhorred selling cheap, on credit and building volumes aimlessly. The financial algorithm needed to be robust, with the interlocking objectives of sustainable growth, profitability, scale and share of the business. This built the capability to drive a series of greenfield ventures fired with local innovation.
He also helped set up the Indian Market Research Bureau (IMRB), with ITC as its first client. In the company’s corridors, it was said that the head of IMRB was like the Pope, whose views, based on consumer insights, carried veto power over the mandarins of the marketing department.
Haksar’s great achievement was building a learning organization. He was a voracious reader and recommended inculcating the habit. With a healthy horror for humbug and a low threshold to suffer fools, Haksar suggested that one should develop the art of disagreeing without being disagreeable even with one’s seniors. Perhaps one could even be a bit bolshie.
At that workshop, he signed off with a few thoughts:
The best teachers are competitors, their products and businesses. They are equally talented people.
Put the interest of the nation ahead of the business; it pays. Put the interest of the people who are in your charge ahead of your own; it builds institutions.
It is wiser to build sustainable businesses and happy teams. Careers follow.
Subroto Chattopadhyay incubates new businesses as chairman of The Peninsula Foundation, and also advises companies and development agencies
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