‘Paul Polman’ by Andrew Saunders, Management Today, March 2011

Paul Polman is the relatively recently appointed CEO of our biggest client Unilever and it would be risky and presumptuous of me to claim to review his progress and performance after two years in the job. Thus I am reviewing this article purely in terms of its quality of communication, rather than its content; regular readers will recall my past criticism of Management Today articles as often being too superficial.

One good thing about the article is that, unlike many in Management Today, it is of sufficient length to do the subject justice, three full pages of text and a full page picture; too often the pictures seem to be an excuse for reducing the words. It is titled as the ‘Management Today interview’ though one does not see too many signs of questions being asked.

There are however lots of answers in the forms of quotes from Mr Polman and these are the strongest elements of the article. Where the author makes his own comments about Unilever and its history, there is less conviction. His description of Polman as a ‘grey suited specimen whose idea of fun is poring over minutiae’ is not a good start, though he does later qualify this by saying that the CEO is not really like this stereotype.

The quotes are well chosen and accurately bring out the challenging approach which is bringing so much change to Unilever internally and externally, in particular the refusal to kowtow to the hedge fund managers and City analysts. The author does, in my view, rather understate the enormous importance of the decision to abandon earnings guidance and quarterly forecasts, which were previously seen as the basis on which performance was judged. And the courage needed to accept the 10% reduction in share price which followed. The author also seems to misunderstand the thinking when he suggests that Unilever is no longer committed to shareholder value; it is more that, under Polman, it is long term shareholder value that is important and meeting consumer needs is the best way for this to be achieved.

I would also question the author’s suggestion that following the needs of society and taking the long view makes Polman sound ‘a little out of step’; We would argue that this is very much in step with trends towards corporate social responsibility and with Michael Porter’s new theme of ‘shared value’ as described in my previous blog

It is relevant to judge articles of this kind by what is new, because there have been similar feature articles before and Polman’s unconventional views have already made headlines. What I had not heard before was another unconventional view that challenges the thinking of strategic gurus and other CEOs, who believe that strategy is about trade-offs. Polman thinks that ‘too many people think in terms of trade-offs’ and that this is old thinking, the most common example being the belief that you cannot grow without damaging the environment. Polman is convinced that these goals are not mutually exclusive.

There is a good analysis of the problems of Unilever before Polman arrived, how the company was outgunned by more agile and slicker rivals like P&G and L’Oreal. There is also a stark reminder of how many managers were released as part of the dramatic culture change that has taken place over the last two years. As a former Unilever employee (twice over) from many years ago, I felt relieved to have escaped. I was also unsure whether I would have passed the Polman tests, particularly when the article revealed that he likes to test managers’ mettle by ‘inviting’ them to join him on training runs!

Perhaps the most telling point that marks Polman out as a different kind of CEO is a comment at the end, that ‘we spend a lot of our time disengaging from shareholders who do not benefit our strategy’. That’s a quote that I never would have expected to hear from the CEO of Unilever or any other FTSE company and the author should perhaps have made more of it. It shows a determination and confidence that are remarkable by any standards; it means that Unilever only wants shareholders who share their long term view and the rest can invest in companies with more conventional CEOs.

Click here to read the article in full;
http://www.managementtoday.co.uk/features/1055793/the-mt-interview-paul-polman-unilever/