Unilever 3.0: CEO not afraid to copy from P&G

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Look out world, here comes the new-and-improved Unilever.

OK, please stop that impolite snickering. Sure, Unilever has been a perennial underperformer. The official line is that Unilever took its eye off market share during its recently concluded five-year restructuring to concentrate on margins. Market share did fall. And margins, though improved, still lag Procter & Gamble Co. by more than a third, as well as other key players even in the lower-margin food business by less. In an industry where margin ultimately determines how much you can spend on marketing and whether you win, this is a fatal flaw.

What makes this all hard to fathom is how good Unilever has become at marketing, particularly the "soft" skills. Marketing for brands such as Axe and Dove is entertaining, provocative and commercially successful. Unilever, a package-goods marketer of all things, ranked No. 2 at Cannes last year.

P&G, which knows well how and whom to benchmark, certainly has taken note. It followed Unilever by sending big delegations to Cannes. It followed Unilever's global communications channel planning with a similar system of its own four years later. By mutual admission, P&G rooted through Unilever's trash in Chicago five years ago. Today, even with P&G so successful and Unilever so obviously struggling, P&G still hasn't stopped paying attention. Pantene is pre-empting Sunsilk "Anti-Sponge" products from Mexico before they hit the U.S. with a derivative launch of its own.

It's tempting to poke fun at this. The reality is that swallowing enough pride to knock off or improve upon a competitor's good work is an essential business skill. Ever hear of Microsoft? The bad news for P&G and others is that Unilever has learned it.


Despite consumer marketing success, Unilever has badly lagged P&G and others in effectiveness and efficiency of its supply chain, manufacturing, retail marketing, finance and effective use of scale.

Unilever's new CEO, Patrick Cescau, appears unafraid to borrow ideas from competitors to fix these things. He's implementing a matrix management model similar to P&G's, but with twists aimed at maintaining Unilever's marketing strengths. From Gillette Co., he's learned to bury the earnings guidance bar, buying flexibility to spend more aggressively on marketing. He has begun soliciting bids to outsource information technology, human resources and other back-office operations like P&G did years ago. In the U.S., Unilever has begun consolidating logistics and sales efforts like P&G and Kraft Foods did long ago.

Right now, of course, Unilever people are still choking on the dust of a chaotic management overhaul, much like P&G people five years ago. And it has a very long and painful way to go. Newly combined with Gillette, P&G is roughly a $70 billion company with 140,000 employees. Unilever is roughly a $50 billion company with 234,000 employees. Scary, huh?

What could be scary for Unilever's competitors, though, is that this restructuring, unlike past ones, is finally going after its real problems.

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