Home / News / Business Of Life /  Sanjay Khosla | Understanding the wisdom of less


Sanjay Khosla, former president of Kraft Foods Developing Markets and now a senior fellow at Northwestern University’s Kellogg School of Management in the US, can’t stress the importance of concentrating resources enough. The co-author of Fewer, Bigger, Bolder: From Mindless Expansion To Focused Growth says that when companies place fewer bets in terms of the number of products, geographies and categories, they can allocate a large amount of resources—money as well as people—to areas where they are most likely to succeed.

In an interview during a visit to the Capital, Khosla explained his Focus7 framework, and how companies can translate insights from consumer data into actionable plans. Edited excerpts:

What is Focus7?

Fewer, Bigger, Bolder—From Mindless Expansion To Focused Growth: By Sanjay Khosla & Mohanbir Sawhney, Portfolio/Penguin, 260 pages,  <span class='webrupee'>₹</span>699
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Fewer, Bigger, Bolder—From Mindless Expansion To Focused Growth: By Sanjay Khosla & Mohanbir Sawhney, Portfolio/Penguin, 260 pages, 699

We developed a seven-step framework, which actually goes to how you make choices, where to focus. After making the choice, you distort resources to where you can win and unleash the potential of people behind that. It’s quite a rigorous process. A lot of it has to do with stopping things (mindless expansion and projects that don’t yield results).

Could you give an example?

In 2007, when I joined Kraft Foods as president of developing markets, we had a food business in India which was not successful. For many years, people had been trying all kinds of things but it was not working. The question before us was, “KKH, Karna kya hai (What is to be done)?"

We made a very hard choice to de-prioritize India. Now you can say, “What? India’s got a billion-plus people, what do you mean de-prioritize India?" But we did not have a successful business model. All the attempts for many years had not worked, and I felt that at that stage it was better to use those resources in other places. So we closed the Indian operations, and we appointed a separate team to look at possible other ways of organic or inorganic entry in India.

It’s easy to be seduced by a billion Indians or over a billion Chinese because it’s there. The basic principle is to focus on where you can win, as opposed to focus on what is there. You can imagine going to the leadership team with that decision. But they too felt that just working harder was not going to help. We either have a different business model or why would things be different?

What did you do with that freed-up resource?

We use a very simple model in the book: the 3M model—material, momentum, margins. One of the priority countries for Kraft at the time—and it may seem counterintuitive—was Ukraine. It had material, it was a large business. It had momentum, it was doing well and we could use the talent and infrastructure of Ukraine in neighbouring countries. And it had margins—it wasn’t growth for growth’s sake, it was profitable margins.

You talk in the book about garnering insights from what works well, and implementing them in other areas.

The three simple principles here are: Data insights are fine, but make sure you convert that into something that gives you competitive advantage. The second is test and learn while doing. The third is, think big, test, develop and then scale fast.

Let me give an example of converting data into insight into competitive advantage, and then sales and profit. When I was coordinating Lipton worldwide, in all the data and insights, there were two countries which always seemed to be doing well—Saudi Arabia and Portugal. Now, the largest tea market for Lipton is the US. Portugal, Saudi Arabia, what were they doing in the list?

What we found was that the people in Portugal and Saudi Arabia were looking at Lipton in the larger beverages market, they were looking at it as a full experience of Lipton tea. But it was not just a strategic statement, their road map in action matched that strategy. In Saudi Arabia, that got implemented in things like hot tea shops—these are social places where people get together, much like a pub in the UK. The local management started putting Lipton as the glue to bring people together, and everything was painted yellow. This is so different from a typical grocery market approach. Some of those lessons were applied to the rest of the world in the Paint The World Yellow campaign.

One of the totally counterintuitive countries Lipton went to then was France. The French first said, “Oh, no, no, we drink coffee, not tea." So we used the same paint-Portugal-and-Saudi Arabia-yellow model in France. It became one of our most successful Lipton countries. We had used the insight from another market, presenting it as a healthy alternative to some of the other beverages available.

You argue for empowering the individual.

It starts with the simple philosophy that senior people do not have all the answers and senior people do not have superior knowledge. In today’s connected world, data and information is a different view to what it used to be. I am doing some work now in what I call glodig—a combination of globalization and digitalization—and the implications of the glodig world. Three principles of leadership are, first, get the right people whom you can trust, with the right skills. The second is to give them the right resources. And the third thing is get the hell out of the way.

What is the “blank cheque" experiment?

I have tried this in different industries in different geographies. When you tell a person that they have unlimited resources, a blank cheque, to do what they want within the strategic framework, the first reaction is always scepticism—“what are you talking about?" Then, once scepticism goes out and they realize this is serious, scepticism turns into panic—“what do I do? Because if I continue doing what I have been doing before, why would the results be different?" Very often the first thing they start doing is working harder. Then they realize that’s not working. And then they look for the few things to focus on where they can really win.

It’s very tense actually. When the results come, a few things happen. The first is, the numbers are great. The second is, it sends a message across the company that they are acting as entrepreneurs. They starting acting like an owner, and become more accountable. They act more cost-effectively; in many cases we’ve had people return some of the numbers (money).

However, not all of them succeed. So what happens if they fail? There are basically three steps: First, you stage (stagger) the investment and resources, so you can take corrective action (along the way). The second step is in case things are not going well—and often they don’t—then the team is encouraged to take stock and not get so much into working harder, but working differently. The third thing, after all that course correction, if it’s still not going well, stop it. Learn the lessons and move on.

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