YPO chats with Harsh Mariwala, YPO member and Country winner of the EY Entrepreneur Of The Year Award 2021, India.
“Innovation can occur anywhere,” says Harsh Mariwala, Chairman of Marico, one of India’s leading consumer goods companies operating in the health, beauty and wellness space. “It could be in any process, in manufacturing, in marketing, in sales.”
It all starts with the right mindset, an openness to ideas, a willingness to take risks and trust in your stakeholders. Soon after graduating in 1971, at the age of 20, Harsh became the first member of the third generation to join the family business, Bombay Oil Industries (BOI). It would be a transformative journey of a self-taught entrepreneur determined to succeed.
Disrupting the status quo
Without an assigned role in the business, Harsh was left to his own devices to explore all aspects of the three manufacturing businesses — edible oils, chemicals and spice extracts. “I didn’t have any clue what I was going to do in terms of what kind of business I was going to build, but you experiment, and you take some risks,” says Mariwala. One of the first things he did was tour the markets in the Western region of India to observe and understand how traders handled BOI’s products and how consumers used them.
After surveying the factories, engaging with customers and assessing the competition, he identified an untapped opportunity for growth in the edible oils business.
“We were selling edible oil mainly in barrels and tankers unbranded,” says Mariwala. “Because of that, our margins were wafer thin. Competitors had begun offering coconut oil in smaller consumer packs just as multi-national marketers like Unilever and Colgate did with their products.”
He set out to convert Bombay Oil’s bulk and large-pack products into consumer-packaged goods. Initially, he introduced small tin packs for Parachute coconut oil that could be purchased by individual consumers and built a customer base and distribution network at small markets throughout India. A recognizable image of a white parachute on a blue pack became a way for the company to stand out in the market.
Mariwala also extended the reach of another brand in the refined edible oils market. Capitalizing on the cholesterol-lowering properties of safflower oil, Saffola positioned itself as good for the heart through various health platforms. Not only was BOI able to charge a premium because of the health benefits, but it quickly became the leader in that niche.
“Whenever we innovated, we were able to make a big impact in the marketplace,” says Mariwala, “and it increased market share for our business.”
Reimagining the look
Observing the consumer was a key to innovative ideas. Tin packs were inconvenient to use and did not look elegant. His solution: replacing traditional tin cans with plastic bottles. They were far more convenient to open and pour from. That plastic was cheaper than tin, helped to earn better margins, which Mariwala could reinvest in the business.
Consumer surveys indicated acceptance of the new plastic packs. However, it was quite different with distributors and retailers. “There was a huge resistance,” says Mariwala. “But as an entrepreneur, you don’t give up easily.”
The problem was another company had packaged coconut oil in plastic containers to disastrous effects: oil that leaked onto the square-shaped containers attracted rats. To prevent leakage in the marketplace, Mariwala’s team designed a round, rat-proof blue bottle. They tested its durability by keeping rats in a cage with the bottles for a day and used photographic evidence. With savings from the manufacturing process, Harsh employed an aggressive investment strategy that included a guarantee of the product, an increased advertising and promotion budget, and sales incentives. Plastic packs began to replace traditional tin packs, pioneering an industrywide shift.
It was a smart move: “Our market share jumped up from 10-15% to almost 50% in five years,” says Mariwala.
Becoming a market leader
“Finding out where the gaps are, where the opportunities are and pioneering certain segments has led to most of our products and us becoming market leaders,” says Mariwala. “If you’re a market leader, you get economies of scale and your margins grow. And growth is like oxygen in business.”
Rather than offer another “me too” product, Mariwala identified new products based on customer needs, behaviors and preferences. Examples include a line of masala oats that garnered 70-80% of the market share; the repositioning of Mediker, an anti-lice treatment, as an oil, a more commonly used product than shampoo in India; and the creation of Revive, a cold-water starch that was convenient to use.
— Harsh Mariwala, Chairman of Marico Limited share
Mariwala has learned what works and what does not through trial and error. After identifying baked snacks as a new market, Marico introduced a line under the health-conscious Saffola brand. The problem was the company failed to take into account what mattered most to consumers in a snack: taste. “Health was first and taste second, and the product was rejected by the consumer,” says Mariwala. What that launch taught him was the importance of interacting with consumers earlier in the process and taste profiling.
Establishing the brand
Branding became very important to Mariwala, especially in his efforts to attract the quality talent he needed to innovate within the consumer goods sector. The BOI headquarters were near the docks of Masjid Bundar, then the largest wholesale market and truck transport hub in India, and Mariwala often found that applicants left due to the “overall atmosphere outside our office in terms of crowd and dirt.” To overcome this hurdle, he invited them instead to sit down at an area sports club, where he could pique their interest and prepare them for the conditions.
“We didn’t have a good name yet, and the best professionals are always reluctant to join an organization with so many family members managing the company,” says Mariwala.
It was a struggle for Mariwala to establish a unique brand and value proposition within the larger family business. The divisions lacked synergy, nearly 10 family members worked within the business and there was diffused accountability and no clear allocation of resources. Realizing how difficult it would be to grow the consumer goods business within BOI, Mariwala had to convince the family to be given greater independence and established Marico Limited as a separate entity in 1990. The soon-to-be-released book, Harsh Realities, co-authored with Ram Charan and published by Penguin Random House India, details how he built the company into a consumer goods giant from the ground up. Today, one in three Indians uses Marico products through its portfolio of market leading brands including Hair & Care, Livon, Mediker, Nihar Naturals, Parachute, Revive and Saffola. Its markets extend beyond Indian shores to other emerging markets of Asia and Africa. Marico’s annual revenues exceed USD1 billion and its market capitalization is over USD8 billion. Marico’s board is recognized for being among the best run in the country.
Creating a culture of innovation
As a separate entity, Mariwala was free not only to build the company but also “a culture of innovation, which will throw up innovation on a perpetual basis.”
His goal was to have every employee within the organization thinking of growth and innovation. To do that, he recruited young, diverse and qualified talent, created a flat hierarchical structure to empower employees, encouraged everyone to experiment, recognized innovators within the organization, and defined the organization’s core values as trust, transparency and innovation.
“Most of the time people are not willing to experiment because they think that if I fail, I will be punished,” he says. “Removal of that fear of failure is very important.” Innovations came from every level and in all different sizes. A factory floor employee, for example, recommended installing a fan on the packing line to blow away any empty bottles and prevent them from being mistakenly boxed.
Cultural innovation did not happen overnight. It developed over a period of three to five years and required constant reinforcement from the top down.
“We have to go on attracting very good talent, put them in a culture where people are open in dialogue with each other, they are willing to take risks, they’re willing to prototype, they’re looking at trends and it’s okay to fail,” says Mariwala. “These are the kinds of things which drive innovation within an organization.”
For Mariwala, the culture is not just about the bottom line. “There is a certain burning desire to make an impact not only to my consumers or my shareholders but to all the stakeholders,” says Mariwala. “I strongly believe that all stakeholders are very closely interlinked and if I do something good for the employee, they’ll do their best and that will get reflected in better organizational performance. Whether it’s our associates, ad agencies or backing lenders, we try to make a difference so that the relationship is stronger. They feel closer working with us, and they give their best.”
Mentoring future entrepreneurs
To help other entrepreneurs flourish, Mariwala founded the Marico Innovation Foundation (MIF) to nurture startups in 2003 and ASCENT Foundation, a peer learning platform for entrepreneurs to exchange insights, experiences and ideas in a confidential environment, in 2012.
“It arises from my desire to give something back to society. I’m not the kind of person who just wants to donate some money, I want to be actively involved in giving,” says Mariwala, who assembled a group of 20 to 30 CEOs to serve as mentors through the foundations.
MIF works closely with startups that are innovative and impactful and helps them to solve critical business challenges aiding rapid scale up. ASCENT enables entrepreneurs to navigate through specific enterprise challenges through shared learning in a safe, confidential and trusted environment.
“It’s a system that is working well in terms of helping entrepreneurs in different areas, whether it is a functional area or scaling up or a talent issue or whatever issue they’re facing,” says Mariwala. “We have done a lot of work in the area of innovation. When the organization has a purpose and when an individual has a purpose, that drives you.”
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