Article

LS International 03 February 2020

Intellectual Provocation – The Power of Disconnect by Adam Kellermann

As managers or leaders, we do have frequently the opportunity to discuss the plan. The annual business plan, brand acceleration plan, plan to close the gap or to launch a brand. I am sure we could bring here a number of different examples. For me personally the most exhaustive experience was always a discussion upon every small detail in the plan. Can we get 3% here or there. How do we bridge the gap between our plan and key decision makers expectations (which are always bigger that you assume)? I always had the impression that from such a meeting no one is getting out fully satisfied. Of course, we do improve the plan to squeeze another 3-5 maybe 10% more. But how you can be sure that this is maximum what you can get from your market opportunity? And how to keep engagement of the Team that spent weeks developing the plan that is being challenged? Few times I went through slightly different experience that inspired me to start using intellectual provocation as a tool to take my team’s ambition to completely different level.

It was a cold, autumn afternoon when together with my colleague we were dragged into a meeting with the VP Europe of a Global FMCG company – strong leader of its industry. The VP Europe was a strong, and yet humble leader of an American origin. He was sitting with our GM and Commercial Director. As soon as we entered the room, we knew this is about something serious.

Let’s take a step back to understand the business context at that time. The world was still suffering from a series of tsunamis after the financial crisis of 2008. Our company profit collapsed after 3 strong negative effects accumulated in one year. First, overall consumptions were dropping as consumers where in the “let’s save some money for the darkest hour to come” stage. Second, oil prices where sky rocketing. If you are using a lot of plastic as a packaging (unfortunately) and have a significant number of sales reps driving cars and burning fuel, you’ll feel it in your P&L. Lastly, consumers changed their shopping habits and turned towards organized trade and discounters which generated lower profitability vs. traditional distribution channels. Those three strong effects put enormous pressure on the company’s bottom line.

Let’s go back to the room where three senior managers where sitting with very serious faces. At that time, I was leading a team responsible for channel and category development. A colleague of mine was the commercial lead. The VP Europe started – You know where we are and what kind of challenge we are facing. We need to reinvent the way we are doing business. We believe that changing completely our pack price and channel strategy is a must. You both are the right ones to lead the project that will put the company back on track. Now the key question is, how much time do you think is needed before it is ready to hit the market?

We looked at each other and started to count: current portfolio performance analysis by channel and customer, building scenarios, validation via consumer research, feasibility study by operations, production line adjustments, customer sell, distribution – even If we work really hard and some elements will be completed in parallel, it will still take between 8-10 months. It was far from perfect timing, as the product was quite seasonal, and that meant it will hit the shelf at the end of the next summer.

There was a moment of silence. The VP Europe was looking at us and then he said with his voice of a CNN presenter – What If we did it in just three months? Think about it – someday you will write a book to tell that story… He looked at us and begore we could say anything he quickly added – Good! So, we all agree that it is a top priority. Sit together and we want you to come back tomorrow and tell us how do you see the project management and what do you need to complete this in three months.

We went out the room and felt overwhelmed, excited and somehow pleased. Overwhelmed by the responsibility and stretch timing. Excited by the importance and complexity of the task that for sure would be a great learning experience. Pleased by the amount of trust that was put on us, as we knew that this project is a make it, or break it, the for the Company. At that time, I was first time manager of managers which was a completely new experience to me. In my team I had some experienced people however, most of them just joined the Company and where fresh to the category and Organization. I was really curious how we will handle that.

We set down and quickly and designed the plan of how to face the “three months challenge”. Within maximum one week we agreed to finish, delegate or drop everything we do right now. We counted back and divided the project into the tasks that should and could be completed within one working weeks’ time. We agreed that every week we will start from the review of what was completed last week and what must be accomplished in the current and following weeks. Then we defined precisely required resources, and of course got it all. We did not apply any framework although some elements might sound familiar for fans of scrum. We designed it this way intuitively working against the “three-month challenge”.

Did the outcome of our work hit the market after 3 months? Of course not. But it was not 10 months either. Our complete and detailed reco was ready before Christmas. It took less than 3 months to put it together. The product was on the shelves well before summer which was the actual expectation. Market shares went up to the record level of 1:8 vs closest competitor. Profitability was stabilized. We achieved the impossible.

That short phrase expressed with absolute calm and confidence “what if we do it in three months” disconnected us from our reality. Our reality that was about managing 10-15 projects at the time. Reality of known lead times from operations, research agencies and time needed to launch new products within existing commercial planning process. We were like Neo in the final scenes of the famous Wahowski brothers’ movie seeing for the first-time digital reality of the Matrix. We were disconnected from our reality and encourage to think differently as an outsider, not knowing obvious limitations. As we were confronted with the almost impossible challenge vs. just a simple target of launching a new product before summer, we had to act like this. Over tight deadline you can negotiate with some rational arguments. With the impossible challenge you do not discuss. You take it or not.

Some years later I was with another FMCG giant. Nothing dramatic was happening, however the company for many years was in decline. Category was declining and so were we. Seemed obvious. Everything was set up to manage the decline. On-going restructuring, strong focus on margin as a %, relentless focus around efficiency, simplification and cost cutting. The company was partly disconnected from the consumer as a primary focus was around sales optimization. All efforts were directed to optimize decisions at the shelf towards profitable mix. And clearly, shopper marketing was a strong area of expertise and a competitive advantage. When the category started to bounce back behind incoming innovations and favourable macro trends, the company was not ready to jump on the arising opportunity. Innovation costs and caries risk, and we were in the mindset of “profit first”. A new leader for our division arrived. The message that he was spreading in his first weeks was “growth is out there”. It sounded like “The truth is out there” from the X-files series. Maybe it is out there, but so far nobody actually spotted it.  Second message was “shopper is dead”. There is no shopper. There is only the consumer at the moment of purchase. We need to re-focus on the consumer. Third message – category as it was defined so far, does not exist. Lines are blurred as many products can serve the very same need. And there is plenty of needs that becomes more and more important for the consumer today. You can discover them by de-averaging the category. Yes, on average category (that does not exist anymore) is declining. But there are plenty of products which are growing volume as they are more and more relevant for the consumer. Like functionals, which fit perfectly into health and well-being trends. So, how do you disconnect the organization from the reality of managing decline in the declining category by optimizing decisions at the shelf? Tell them that the way they measure category is wrong, their hero – shopper, is dead and the growth is out there if you search it in the right way.

With the very same company, I went through another adventure. I was assigned to lead a pilot project of integration of a newly acquired business. The new brand and products were opening completely a new market for an FMCG giant that was going through some difficulties. On trend, profitable and playing within the segment that was expanding more than 20% year on year. When I got that assignment, I was feeling like I was getting keys to the top-class race car. If you know how to drive it, you cannot lose. I got best people, access to all resources and decision makers. Sounded perfect. We worked hard for a few months integrating processes, building strategy, engaging the organization, meeting customers. We had a great fun.

Sometime later I attended a meeting with the VP Europe to present our midterm growth plan. I was so confident with the plan to grow +35% in just one year on the market growing +20%, delivering margin well above the company’s average. I expected nothing but applause. In the room there was a global marketing team, CEO of the new business and VP Europe for our division. He was an older, calm gentleman with a very sharp mind.

He was listening carefully till I arrived to the slide with the growth ambition +35%. He raised his voice – Stop! This is your plan? If yes, there is a zero-ambition behind! The minimum what we should aim is to double the business. Not in 2 years but now! Growth is here and now. It will not wait for us forever! We are the category. It does matter if it is growing +20% or +50%. If we will double the business, the category will also be doubled. Go re-work your plan. And you all” – he turned to the all participants in the room – you are here to help him! Double the sales in one year! Nothing less can be accepted. – he concluded his speech.

On my way home, on the plane I was reflecting over what happened. My confidence behind the plan was gone. I was confused about how to progress further. The next day I had a debrief with the General Manager of our business unit. How did it go? – he asked. Well… I summarized the meeting and shared my feelings. How do you move from brilliant, well thought through plan, to crazy idea of doubling the business in one year? You need to disconnect from the current reality. Our reality was re-launching a high potential business, positioned very premium vs. the market to fuel the company’s profitability. We decided to focus on highly profitable products and channels, and crossed out from the plan innovations that did not fit that picture, despite their high market potential. A new perspective forced us to revise the pricing strategy to be more affordable and thus, reach more consumers. We decided to go with innovations that maybe were only on the company’s average profitability, but were also addressing new consumer needs, so bring purely incremental volume. And finally, we looked at the distribution strategy less selectively.

Our perception of the reality is actually our reality. It determines our decisions and actions. Whenever our perception can be changed, so we can look at the reality from the different angle, our decisions and actions will change as well.

If you want your team to go for more, do not challenge the details, instead of that, disconnect them from their current reality. Change their perception. Confront people with the impossible. Kill the heroes from the past. When perception changes, the reality changes and miracles can happen.