Unilever's New Leader: You Can Expect Change

Polman Seeks Broader Adoption of 'Alternative Communication Vehicles'

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BATAVIA, Ohio (AdAge.com) -- The world's two biggest ad spenders, Procter & Gamble Co. and Unilever, have also long been part of one of marketing's most classic rivalries. Now the latter has hired as its CEO Paul Polman, a 26-year veteran of its biggest competitor who just happens to come from a formidable foe of both firms: Nestlé, where he was passed over to become CEO last year.
Paul Polman
Paul Polman Credit: Fabrice Coffrini

For the first time in its 123-year history, Unilever will be putting an outsider in charge when Mr. Polman becomes CEO sometime this fall. He will succeed Patrick Cescau, who brought substantial change to the $55 billion company as he unified the corporate structure and shed brands.

For a marketer that's received high marks in creative contests in recent years and dramatically improved top-line results globally, Mr. Polman's arrival would seem to signal that's not good enough and that there's no end in sight to a company restructuring that's already lasted nearly a decade.

"Rather like the Chinese [in the 1960s], the cultural revolution at Unilever has thrown out the old but hasn't replaced it," said one company veteran, adding that a new CEO portends even more change and uncertainty.

But in an interview with Advertising Age, Mr. Polman, 52, discussed why his appointment doesn't signal that anything is fundamentally wrong with Unilever. He also covered why he doesn't plan to remake Unilever as a Euro-Procter, his outlook on how to improve marketing and innovation, and why he holds no grudges against his former companies.

Ad Age: You spent 26 years in the P&G culture and now are moving to a very different one at Unilever. How are you going to bridge that gap?

Mr. Polman: There's no doubt that these cultures are different. But that doesn't mean I have to have exactly the P&G or the Unilever culture. I've never really been 100% Proctoid in that sense either. I always think it's important that people stay themselves and develop to their full potential.

Ad Age: What does it mean that Unilever brought in an outside CEO, and how hard will it be to retain senior managers who weren't chosen?

Mr. Polman: When an outside CEO comes in, it's usually because of two things. Either it's because the company is in dire straits and there's nobody in the company who knows what to do, so they bring in someone from the outside -- I think we all agree by miles that is not the case with Unilever -- or the company feels [so] comfortable about its strategy and the strength of its management team that it can support a new CEO coming in. And obviously that is the case at Unilever. The management team has done a good job there and created momentum. I certainly hope we can benefit from their contributions for many years to come.

Ad Age: One of the bigger differences in the companies, at least as they're perceived sometimes, is in their approach to creativity and process. Is there much of a difference, and will your coming to Unilever result in change?

Mr. Polman: The advertising is only as good as it builds the business. Like Unilever, like P&G and Nestlé, we've all had some great campaigns that built the business, and we've all had some campaigns that missed the mark.

I do not [believe] that Unilever is lacking in effectiveness. They have had some very good campaigns, Dove being one of them, where there is a good consumer insight that has been building the business quite smartly. And I think there are other examples like Knorr and Axe where they are doing some great work that is building the brand and at the same time award-winning. If you can find those combinations, fine, but the first priority is to build the brand.

Ad Age: You've had fairly recent experience at probably the two principal competitors of Unilever. Does that create any personal rivalry?

Mr. Polman: Obviously between Unilever and Nestlé there is some overlap, but that overlap is reasonable. Companies that size will always have an overlap. When I went from P&G to Nestlé there was a little bit of overlap with Iams and Folgers, and the boards felt comfortable with that. ... It was also very pleasing to me to see that was Nestlé's reaction when I informed them about my decision to become CEO of Unilever.

Ad Age: Do you expect to bring some of your former colleagues to Unilever?

Mr. Polman: Unilever is deep in talent themselves. I found the same in Nestlé. Needless to say, P&G has very good people as well. But our strategy is not to just look at P&G people or any others to fill the ranks. I've not taken that approach [at] Nestlé, and I don't see any reason why I should change that tack.

Ad Age: Unilever even more than P&G has been continuously restructuring for nearly a decade. What do you say to the folks at Unilever who might be wondering, when does it ever end?

Mr. Polman: Well, it's the famous question you're posing, when does change ever end? And I think the answer is known to that one. There will be continuous change as we adapt to the changing environment and consumer. ... I would suggest during my time at P&G that we had continuous change, and again at P&G now you have ... a significant reduction in the ranks of management that they seem to be announcing and causing some anxiety. Unilever has had changes and will continue to, hopefully anticipating the changing markets and consumer. So I think that will never end. What we need to do is not make change a special occurrence but an ongoing part of what we do.

Ad Age: What are the biggest things that need to change about Unilever?

Mr. Polman: Unilever has had the benefit of having Patrick Cescau for four years as CEO. He's made some tremendously tough choices. There's now one CEO. They used to have two CEOs. There is more focus on the strategic categories. ... He's cut out management layers. He's driven through very effectively the One Unilever program. Some of that needs to sink in. Some of that needs to consolidate. And I certainly will be doing that.

I will spend the first few months after I join them to more deeply understand what the opportunities are there.

Ad Age: In marketing what do you see as the biggest challenges?

Mr. Polman: The challenge for all of us in the industry is to continue to find better and creative ways to connect with the consumer ... as P&G used to say, when and where consumers are receptive. Companies that do well anticipate that. And Unilever has some wonderful examples of where they are starting to do this. The same examples you will find in other companies. Some companies talk a lot about having moved out of conventional TV into alternative media, but then when you look at the numbers, you don't see it. I think if you look at Unilever, you already see a faster move toward alternative-communications vehicles. The challenge for companies like Unilever is how to get these best practices more broadly implemented across the organization.

Ad Age: How do you think your old colleagues at Nestlé and P&G will react to you becoming CEO of Unilever?

Mr. Polman: I'm touched by the reaction both from Nestlé and P&G people [including a phone call from Chairman-CEO A.G. Lafley], but especially from P&G people, where I have a lot of friends and admiration for them. At the end of the day, it's not about competition, but about satisfying consumer needs. ... We don't make our lives successful by having as goals making others' lives miserable. The markets are big enough that if we all get better, I think the consumer can benefit from that.

Ad Age: You're coming in at a difficult time economically. How hard will that be to overcome?

Mr. Polman: This is not an easy period. We have tremendous input cost increases. We have economies slowing down. We have certainly an environment that's more difficult to compete in than we have had in my 30 years [in the industry]. It's also a tremendous opportunity in these times of increased uncertainty to bond with consumers using your brands. Consumers will look for more security, and brands that we sell will have a key role to play in that.

Ad Age: You operate in categories that have been around forever, and innovation has always been a challenge. How do you expect to accelerate innovation at Unilever?

Mr. Polman: The challenges at Unilever will not be different than other companies have. It's very difficult to come out with blockbuster products. Nestlé has been very successful with Nespresso. P&G has been with Swiffer or Febreze, but in periods after that very little has been invented in terms of blockbusters, so it shows you how difficult it is. And I think that challenge is the same for every company. There's a lot of talk about "I'm most innovative," but in reality there's a lot of renovation in this industry, which is important, but not necessarily the highest level of breakthrough innovation.

The tools and methods these companies put out there are probably the same -- increasingly tapping into open innovation, increasingly broadening the definition of the business models, increasingly creating separate structures within and outside the organizations to attract the creativity and the startup mentalities and risk environment needed to get ideas to blossom.
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