Sanjay Khosla | Khosla and the chocolate factory6 min read . Updated: 19 Nov 2011, 08:12 PM IST
Sanjay Khosla | Khosla and the chocolate factory
Sanjay Khosla | Khosla and the chocolate factory
Sanjay Khosla’s job may be that of a key thinker and strategist for Kraft Foods’ developing markets business, but ask this once-upon-a-time fast moving consumer goods sales guy what he loves best about his job and pat comes the reply: “Walking around markets across the world and seeing how they have changed and still remained the same."
We meet at the Polo Lounge, Hyatt Regency Delhi, a few days before Diwali. He’s on a two-day halt in the Capital, on his way to Singapore. It is a busy time for the Cadbury Kraft Foods India team (Kraft Foods bought over Cadbury in February 2010), with Diwali shopping and “kuch meetha ho jaaye" fervour all around. After ordering nimbu-pani, Khosla, 59, settles down to tell me that he has spent the better part of the morning visiting local markets in Hauz Khas and Green Park in south Delhi. He is full of tales of how even the local vendors were impressed with Cadbury Kraft’s focus on a core product—in this case, Cadbury Dairy Milk chocolate.
It is easy to mistake Khosla for a professor of marketing science—he does after all conduct talks based on a paper (Growth through Focus: A Blueprint for Driving Profitable Expansion) he published with Mohanbir Sawhney, a professor at the Kellogg School of Management, in the Strategy + Business magazine—at US universities such as Northwestern and Georgetown, etc.
He wears no necktie, his top shirt button is undone, he does not look at his iPhone even once during the interview, slips in and out of Hindi with a Punjabi twang as we chat, and is keen to ask questions while deftly deflecting any personal queries thrown at him. When he really gets down to talking, it is to hold forth on the virtual cycle of growth, the 5-10-10 formula and the winning-through-focus strategy.
The real reason for this success lies in just three simple rules, he says. “When I joined Kraft five years ago we were all over the place, planting flags all over the world, and had more than 100 brands. For the emerging markets section, we decided to focus on the 5-10-10 formula (five product categories—chocolate, biscuits, powdered beverages and coffee; 10 power brands within Kraft, such as Tang, Oreo and Cadbury; and 10 markets, including India, China)."
For example, since chocolate was a key category and India a key market, it made sense for Kraft to buy Cadbury so that the company, which did not have much of a presence in countries like India, could gain a foothold here. “I have been experimenting with this concept for a while, and I have realized that the difference is only in implementation from country to country, not in the concept as a whole," says Khosla, responding to a question on how he adapts this 5-10-10 formula to each country.
He disapproves of a large number of innovations in one brand. “People do a large number of small things and they get very busy. Activities get confused with output, and that’s why I prefer a model where things are kept simple and focus is clear."
According to him, in the first half of this year, Cadbury has posted 40% growth in India. “Cadbury has been around for 50 years, so why is there a sudden spurt of growth?" asks Khosla, and then quickly gives the answer himself: “We focused on the core brand—Dairy Milk chocolate. Within that, we have small innovations like the Dairy Milk chocolate shots and that’s why you can see the numbers jump."
The second part of Khosla’s strategy is to get the balance right between the global and the local, or “Go Glocal", as he calls it. “Earlier, everything at Kraft was centralized in Chicago, now it is all localized for this unit. Chicago is not the repository of superior knowledge all the time." He uses the example of Oreo cookies and their dismal performance in China four years ago to illustrate how important it is to listen to what the locals are saying.
“We were going to pull the brand out of China when I decided to do some market visits. Kraft had gone completely wrong there with ‘what’s good for America is good for all’. Shopkeepers were telling us that this American Oreo was ‘too big, too expensive and too sweet’. So we made it smaller, introduced small packages and made it less sweet and even introduced green tea Oreo," he says. Today, China is the second largest consumer of Oreo after the US.
“I believe in giving teams and their leaders a blank cheque and the freedom to use it within a framework. The idea is to encourage their entrepreneurial spirit and let them function as a small company within a big company, but as independently as possible." The whole philosophy of transformation is that they don’t need to go back to Khosla or anyone in Chicago for decisions and can make their own choices.
Khosla does sound like a dream boss. Yet he is quick to point out that this is exactly what his boss did for him. “I love this about her (Irene Rosenfeld). She gives me space to operate. I had complete freedom to pursue a strategy which was so different from what Kraft International was doing, so why would I not give this to my leaders?"
He has specific ideas on what he looks for in the leaders he chooses to translate his vision: “I ask only two questions to myself: Can he or she transform and adapt to our focus areas and is he or she likely to be a team player? I don’t care much for superstars who are individual brats. I prefer people who can collaborate."
Khosla also makes it clear that while every leader has the freedom to try something new “within the framework", he prefers it if the team abandons a particular strategy when it realizes that it is not working—and moves on. “The point is to take risks, but when you see it is not going well, have the courage to stop quickly as well. You cannot be emotionally involved because then you will keep saying let’s have one more try, and no, that does not work."
After graduating from IIT Delhi, Khosla joined Hindustan Lever (now Hindustan Unilever) and stayed with the group for 27 years, selling soaps, detergents and AXE deodorant. He worked in the group’s Indian and European markets, including London. He was part of the team that launched Wheel detergent in India, and even today he feels that this brand had a special learning for him. One of the most important lessons learnt at his Wheel tenure: “When you realize that you really have to go after a specific target, there’s no way you can win unless you focus resources which help you achieve just that and nothing else." Looking back, perhaps this was the foundation of the winning-through-focus strategy.
Maybe, Khosla says, when he retires he will take up teaching full-time. For now, this big daddy of brands and strategy spends more than 15 days a month on the road and is focused on making sure that you and I consume more Tang Orange, Cadbury Dairy Milk chocolates, Bournvita and Oreo.