Why Airtel founder Sunil Mittal picked Gopal Vittal as new CEO [Strategy] [Times of India]
(Times of India Via Acquire Media NewsEdge) In his first stint at Bharti Airtel, between 2006 and 2008, Gopal Vittal made himself popular -- and unpopular -- by redefining the relationship between operations and marketing in India's largest telecom company. "Prior to that, each business head designed his offerings and then went to the marketing team, which worked with ad agencies," says a top Bharti executive who worked closely with Vittal, not wanting to be identified.
As head of marketing, Vittal turned that communication flow into a two-way street: he started suggesting changes in the consumer offerings and the business plan. "For the first time, the business heads were challenged by the marketing team," adds the executive. "Some even alleged he was trying to take over their businesses." Well, Vittal will from March 1 - as CEO of Bharti's Indian operations.
Vittal declined to speak to ET for this story. But those who have seen him work at Hindustan Unilever Limited (HUL) and Bharti say he can challenge established patterns without seeming cavalier, be instinctive and yet result-oriented, be entrepreneurial even in congested corporate environments, and connect well across the hierarchy. He is capable, they say, of changing a well-worn picture.
Kishore Biyani, who worked with Vittal as a trade partner, calls him a "highly intelligent thinker and strategist." "He has strong entrepreneurial instincts, is willing to take risks and is very passionate about his work," chimes in A Mahendran, managing director of Godrej Consumer Products, adding that Vittal is one of the few professionals in India with a high success record.
Vittal's has been a rapid but understated, tangible but under-documented rise: in charge of 74 per cent of HUL's 2008 revenues of Rs 20,601 crore at the age of 39, and now endowed with the onerous responsibility of reversing the alarming decline in profitability at the Rs 1,21,900 crore Bharti, by possibly retooling it. His 23-year career can be seen in four acts, as a series of arrivals and departures across two of India's most respected companies.
ACT I: HUL, Stint I
Straight after an MBA from IIM-Calcutta in 1990, Vittal joined HUL, the coveted choice of B-school grads. Marketing was his specialisation, and he took up positions as a brand manager and a marketing manager. In his early years, he did two stints as an area sales manager, worked in Brooke Bond (a group company) and handled skincare brands.
One of his HUL milestones was Project Bharat, a rural-reach strategy that incentivised people in rural areas to try HUL products. Vans went to villages carrying packages containing a selection of HUL products to be sold at two-thirds their combined price.
According to Dalip Sehgal, ex-director, HUL, Vittal caught the management's eye--especially that of MS 'Vindi' Banga, chairman from 2000 to 2004 -- with his ability to join the dots to make a story for the consumer.
"He sifted out unwanted data and simplified it into coherent plans," says Sehgal, who has worked with Vittal in HUL.
"He is perceptive and can see through the maze to arrive at workable points." R Balki, chairman and chief creative officer of ad agency Lowe Lintas & Partners, describes Vittal as "one of the most complete marketers" he has met. "He's got instincts, rigour and logic," he says. Balki recounts how Vittal approved Surf Excel's first 'Daag Ache Hain' film.
"He was having dinner somewhere. We literally barged in and told him the idea, and he approved it. It's always felt like working with someone who understands the power of communication." Vittal rose through the ranks to head the home and personal care (HPC) business of HUL, its biggest.
"He showed exceptional execution skills while heading it," Banga, now senior partner at UK-based PE fund Clayton Dubilier & Rice, told ET over phone from Dublin.
ACT II: Bharti, Stint I
In 2006, Bharti promoter Sunil Mittal lured Vittal to take charge as the company's marketing head.
"Mittal believed people from FMCG could fit in laterally as the nature of businesses was similar," says a current Bharti senior official who worked closely with Vittal in this period. ET spoke to six current and former Bharti executives on Vittal, none of whom were willing to come on record. The dominant narrative that emerges is that Vittal changed Bharti's marketing strategy to cater to the mass market.
This was the time when telecom companies were looking beyond the metros. Bharti, on its part, started looking beyond the top 10 cities, at the next 30 cities and towns, which housed about 350 million customers.
"A change in mindset was required as competition in smaller towns was largely from regional players and BSNL, and larger operators were seen as being more expensive," says the Bharti official quoted above. Powered by offerings tailored for these new markets, Bharti's subscriber base increased to 122 million in January 2009, against 33.6 million in January 2006.
The company came up with new offerings such as small top-ups of Rs 15-20.
"Some of these changes were led by inputs from the marketing team, which began working closely with people on the ground as well as agencies that collected customer feedback," this official says. But such engagements shook traditional equations in Bharti. "The operation teams never had marketing ask for changes in voucher denominations, or demand packages tailormade to suit their campaigns," says the official.
The Bharti officials ET spoke to outline two other significant Vittal contributions that broke new ground for the company and have endured: segmenting customers to make them targeted offerings, and bundling handsets with Airtel plans. Yet, they add, much as Vittal sought a deeper engagement between marketing and operations, his hands were tied beyond a point. Vittal left Bharti in mid-2008, but he had left his imprint.
ACT III: HUL, Stint II
Five HUL executives ET spoke to say Vittal returned to the company largely at CEO Nitin Paranjpe's persuasion. He was reappointed head of the HPC businesses and also given a board seat, superceding several company executives.
"Of the entire HUL talent, I would rate Gopal as the most intelligent after Vindi Banga," says Amin Babwani, an independent consultant who has worked with HUL for three decades and has known Vittal for years. "Those who make it to the board generally do not have any history of failures," adds a senior HUL official, on the condition of anonymity.
But the HPC business was flailing: in the preceding three years, it had grown at a compounded annual rate of 5-6 per cent. Vittal went to work, along with Hemant Bakshi, then ED, sales and customer development.
With the objective of reviving growth, HUL cut prices, drew up new campaigns for key brands to give them a clear positioning, made 40 launches and relaunched 90 per cent of the HPC portfolio. Between 2008 and 2012, HPC revenues grew at a compounded annual rate of 14.7 per cent and operating profit at 10.5 per cent. Vittal could delegate without losing control, says a senior HUL official who was part of the HPC leadership team.
"He lets good ideas flourish and involved multiple partners to discuss ideas, find solutions and thrash out issues. He did not believe in silo meetings." Adds Babwani: "He was able to connect easily with every person in the hierarchy." Vittal, who was seen in the company as second only to Paranjpe, left HUL again in early-2012, a few months before the latter received a five-year extension as CEO. "He (Vittal) was leagues ahead of everybody," says Babwani.
"If it is anybody's loss, it is HUL's."
ACT IV: Bharti, Stint II
Vittal rejoined Bharti as director (special projects), removed from the tumult of operations. He has spent most of the past year at SingTel's Singapore and Australia operations to familiarise himself with the data and internet business; he's also been at Japan's Softbank and Silicon Valley to orient himself in new business streams linked to mobility.
At a company offsite in Dubai in 2010, Sunil Mittal spoke about transforming Bharti from a "dumb pipe" (which carried data traffic, while others made money) to a "smart pipe" (which carried data traffic and also made money off it). Even as Vittal embarked on his global apprenticeship, many were tipping him for the top job to realise this very vision.
When he did officially anoint Vittal, Mittal said, in a press statement: "He has an outstanding record at Unilever and brings with him a wealth of experience in assimilating the consumer mindset, managing operations efficiently, winning with the customer, building brand and innovating to secure market leadership." With outgoing CEO Sanjay Kapoor leaving, and another top-deck rejig, the stage is set for Vittal to do what he was trying to do in his first stint, and more.
A former Bharti executive, who was on its management board, says Indian telecom has made a "generational shift" over the last four years. "We no longer sell a product, but an experience," he says. "So, it is not a connection, but a combination of services, data, better network quality, apps, music, specialised tariff packages for regions and social media. The end product is the outcome of multiple tie-ups with content providers, technology platforms, financial service providers and banks, social media firms, internet giants and app developers." Banga is backing Vittal for success in telecom too.
"The training in FMCG is essentially about reaching the consumer and delighting them." he says. "And these learnings are applicable to not just FMCG or telecom but every other sector. And these learnings will certainly stand Gopal in good stead." Sehgal adds that, unlike FMCG, telecom is a daily call and it's also capital intensive.
"The condition of the sector is severe. Some of the best guys in the sector have seen the industry in its best of times and so the ability to approach the market differently is tough," he says.
"And that is where Gopal's strength lies -- in the ability to create new rules."
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