Interview with Paul Polman CEO, Unilever
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www.pwc.com/ceosurvey Growth reimagined Prospects in emerging markets drive CEO confidence 14th Annual Global CEO Survey Paul Polman CEO, Unilever Interview Transcript Interview with Paul Polman CEO, Unilever PwC: What indicators are you short-term and let long-term issues fall watching to understand how the by the wayside. That is very dangerous global economy will develop and for business – just consider the currency what trends do you see? wars now being waged. Likewise, the crisis has caused some countries to turn PP: For consumer goods, we look at towards trade protectionism. Right now, consumer confidence data and there are 350 cases before the WTO, employment levels. In managing our the bulk of which concern various forms business model, we look at broader of protectionism by OECD countries. societal trends. With regard to social So we have to make sure that we don’t attitudes and behaviour, I would observe turn our backs on globalisation, which that the economic contraction has not is still the world’s greatest wealth only resulted in a financial crisis, but creator. An additional development that also an ethical crisis for the private you see coming out of this crisis is a new sector, which now must examine the seriousness regarding sustainability. way it does business. But every crisis People now realise that the ways we brings with it the opportunity to do currently consume resources is things differently, and in that regard, unsustainable. The world’s population is the economic contraction may change expected to grow by two billion over the attitudes and behaviours in a positive next 40 years and that growth will be way. The crisis has certainly underlined concentrated in the emerging economies the importance of international whose people have rising expectations institutions like the IMF, the World with regard to their standard of living. Bank, and the G20. People are taking To meet those expectations we’ll have these institutions seriously now. At the to look at things differently and find same time, the crisis has prompted the solutions that can lift people out of economies of the East to assume a level poverty. Businesses that understand of economic and political maturity much how to do that that will be successful. faster than they might otherwise have So you put all these trends together and – and that’s going to have a major impact what you’re dealing with is increased on business. The economic crisis has pressure and incentive for business to also brought attention to the level of take greater responsibility for society over-consumption by the wealthy. as a whole – and an expectation by That realisation will have repercussions consumers that business will accept regarding how we build a more equitable that responsibility. Unfortunately, the society in the future. In many cases political environment, by its sheer – you can take Greece or Ireland, but design, makes it difficult to implement many others countries, too – society has far-reaching solutions. And, right now, been living beyond its means. Corrective confidence in business is low. measures will be painful: Economists calculate for every one percent of PwC: Can you comment further government deficit that’s cut across about the public’s lack of trust European countries, one percent of GDP right now in business? will also be lost. So we clearly need a business model that will help us return PP: Some studies have shown that to growth – but growth that is equitable confidence in business has fallen as low and sustainable for all of society. This as 14 percent. Right now, people look will take political will. But, in reaction to inward – to friends, family, relatives – for guidance and advice. So consumer 14th Annual Global a crisis, most politicians focus on the CEO Survey Interview Transcripts scepticism has increased because people 70 percent of our business will come Paul Polman don’t trust business. And they don’t see from the Far East. That shift eastward CEO, Unilever politicians solving the issues that need has tremendous implications for our to be solved. They’re terribly frustrated company’s structure and culture. with the way the world has been run. The values at the heart of our company If you view the world through the eyes certainly won’t change, but our culture of the consumer, which I do every day, and business model will need to it looks as if the world has been run so evolve to reflect a changing customer that the benefits of risk have accrued to demographic. The conventional a few individuals, while the cost of risk Western way of running a business – has been shared by society at large. which historically has not been very No one would ever run a business like advantageous for women, for example that, but somehow, we let the world – is not necessarily going to work in operate in that way. But the consumer the Far East. Unilever already has far is discovering that they have ways to more women in management in our make their displeasure known. I like to Far Eastern operations than in the West. say that Facebook – with 550 million As we shift eastward, we have to make members – is the world’s third largest sure that our corporate culture and country. You have China, you have operating model reflect the markets India, and you have Facebook. Likewise, there. Trying to get that right is where with Twitter. We recently launched I spend most of my time. Unilever’s, ‘Sustainable Living Plan’ and within hours of the launch, two million PwC: How does one go about people had commented on the Plan preparing a well-established using Twitter. So consumers are using organisation like Unilever for the Internet to make their expectations growth in new markets? known. And if you can fulfil those PP: We do that by maintaining our consumer expectations – which is what growth potential ahead of our actual we’re trying to do with our Sustainable business numbers. We aspire to become Living Plan – there’s tremendous a US$ 80 billion company versus a US$ opportunity for business. Businesses 40 billion company today. And in order that fail to tap into the expectations of to become a US$ 80 billion company at their customer base will very quickly some future date, I need to start go the way of the dinosaur. building a US$ 80 billion organisation PwC: Where do Unilever’s right now. If my capabilities are not most significant strategic ahead of my actual turnover, I will never achieve my objectives. So I concentrate opportunities lie? on expanding Unilever’s capabilities PP: Well, it’s very important to ahead of its numbers. Analysts focus on understand where consumer trends are turnover, but I focus building internal headed and to position your company as capabilities. For example, it took us a a leader of those trends. I always say it’s year to put our Unilever Sustainability better to make dust than eat it. If you Plan in place because I felt it was understand what consumers want and absolutely necessary that everyone in have products that meet their needs, our organisation understood and you can grow – regardless of macro- embraced it fully before the Plan was economic conditions. At the same time, announced externally. It was clear to we are also aware that within ten years, me that if I didn’t, for example, have 14th Annual Global CEO Survey Interview Transcripts Unilever’s R&D function geared towards everybody in the supply chain. Tesco is Paul Polman driving sustainable innovations – going to be around for another hundred CEO, Unilever which is a central principle of the Plan years or more – and so is Unilever. – I would not be able to deliver results It only makes sense to work in concert to the marketplace. And that would to meet consumers’ needs. By working create a credibility gap with our together towards a common goal there customers. So you always have to is much more value to be gained than galvanise the organisation around there is in haggling over costs. the way forward before you start communicating your plan to external PwC: Describe Unilever’s approach audiences. Internally, we talk a lot about to managing its brands. the values of running a business for the PP: Every one of our brands must have a long term. Externally, we speak more “product mission” grounded in consumer about the concrete things we’re doing to needs. But along with a product mission, advance our long-term goals. So my each brand must also have a social communication to the outside world is mission. That social mission engages the more about what we’re doing, while consumer in a relationship with the inside the company we talk more about brand. Take any of our brands – Ben & the capabilities we need to create now Jerry’s Ice Cream, for example. Ben & in order to reach our ambitions. Jerry’s social mission is to make the world a better place. To achieve that, for PwC: What is Unilever’s approach example, it uses fair trade practices in with regard to product innovation? procuring the ingredients that go into its PP: People tend to see innovation ice cream and operates a carbon-neutral strictly in terms of revolutionary, model. But it’s important to remember breakthrough products – technologies that the consumer creates the social to sequester carbon emissions or mission that the brand attaches itself to. microchips that can process data many People who buy Ben & Jerry’s Ice Cream times faster. That’s fine.