What is the secret to a successful business? A common answer to this question usually is: start a business that deals with products that would never go out of requirements. Best examples of such products would be foods, beverages, personal care products, consumer goods, etc.

But is this theory right? No. Even though there will always be a demand for these products, the challenge is to have an upper hand in a market that has a number of companies involved in these products. But Hindustan Unilever (HUL) is quite an expert in this craft.

HUL, that deals with a number of products ranging from foods to consumer goods, has enjoyed a larger market share in most segments. HUL brands which include Lifebuoy, Dove, Clinic Plus, Ponds, Lakmé, Closeup, Surf Excel, Vim, Brooke Bond, Bru, Kwality Wall’s, Kissan and, as of 2020, Horlicks, are used by 2 billion people every day, as mentioned by the company on its website.

So what is the secret behind HUL's success story? Sudhir Sitapati, ED-Food & Refreshment, HUL and the author of The CEO Factory, answered this million-dollar question.

According to Sitapati, the reason behind HUL's success is that it holds on to what has always made it succeed than looking into new products.

Sitapati, in an interview with CNBC-TV18, talked about the things that have led to HUL's success over the years which include middle-class soul, meritocratic culture and integrity.

"One of it is it has got a very strong middle-class frugal soul, so it is a great cost competitor. One of the things about HUL is its return on capital employed (ROCE) is 92 percent, it is top of the line, and its indirect cost is 4 percent, which is absolutely best in class. So it has got this middle-class soul," said Sitapati.

According to Sitapati, HUL has broadly got a very meritocratic culture. "It gets bright people in from the best institutes in India and then puts them into rural markets and into deep into sales and it gives them a little tough time. So everyone in HUL has seen the country. Lot of people think that HUL is a process-driven company, but actually, it has also got a very high degree of tolerance," he says.

Further, Sitapati said that the company follows a set of values, such as integrity, which has helped it remain at the top of the game. "If you study the history of HUL, there have been, over the last 60 years, 7-8 inflection points where the company has really taken off. Each of those inflection points has people associated with it and acts of great entrepreneurship," he added.

First Published:Jan 2, 2020 4:45 PM IST