Patrick Cescau: Unilever's X-factor that kills 99% of all known failings

After the profits warning of September last year - the first in the 75-year history of the Anglo-Dutch multinational - and the failure of its five-year programme "Path to Growth", the 55-year-old Frenchman has been pushed forward as the company's new, and only, leader. Unilever's old management structure of two joint chairmen - one in London, the other in Rotterdam - has been ditched in favour of a conventional chairman, Antony Burgmans, and chief executive, Cescau. He has to recover the faith of markets, customers and employees.

Cescau has been working at Unilever all his life, becoming famous for integrating major acquisitions such as Bestfoods and Lipton. This, according to insiders, renders him uniquely suitable for reorganising the three Unilever sections (food, domestic and personal-care products) into one company.

Amid this, he does not ignore the morale of the troops. "Our people were fed up last year with the criticism in the newspapers, refused to see any more analytical reports. They wanted recognition for their hard work," he says in a rare interview, talking between presentations and soap-box gatherings during a visit to Unilever's Italian base in Milan.

"The profits warning has had a liberating effect on them. We had to recognise that we were not as good as we thought. That makes you humble and, at the same time, is a motivation for change."

He is optimistic about the will to reform within the company. "No human being wants to be a loser. Employees ask me if the changes could not be made more quickly. At the same time, they are apprehensive that too much has to be done all at once. They ask for direct engagement by management. It is now my most important task to ensure that the message is the same, everywhere in the organisation." No easy job, when there are 230,000 employees spread over 120 countries.

Again, the changes aim to contribute to Unilever's growth. The company has struggled with this ambition for decades, even after spending billions on buying Bestfoods (with its famous brands including Knorr and Hellmann's) and Slimfast. What baggage is it carrying that prevents the group from growing faster?

Cescau explains: "At the start of Path to Growth, we were very impressed by the results produced by Axe [known in the UK as Lynx] and by Dove's approach. In hindsight, we copied that too readily to other categories. That did not work so well everywhere.

"An example, with our domestic cleaning product we built a story around a brand such as Cif. We painted a romantic picture and forgot that clients only want to know whether the product kills bacteria. In addition, we missed essential innovations such as the 'little pump'. Cillit Bang [the highly successful cleaning range made by Reckitt Benckiser, which features this trigger design] should have been our innovation. In order to dominate such a small section, one must lead in all varieties."

The nucleus of the problem, argues Cescau, lies in Unilever's culture. "We are a marketing company. We dream of building brands. However, the challenge lies in the stores. With the advance of own-brands and discounters [such as Lidl and Aldi], we have to do much better there."

Cescau has not spent much time as a chief executive on marketing but has been talking with his customers. Retailers such as Carrefour, Tesco or Ahold tell him that they miss "aggression" in his company. "They tell me that when we lose a share of the market somewhere, we don't fight back but restructure."

In outlining his strategy, Cescau emphasises market share rather than margin - in contrast to the thinking behind the Path to Growth plan. "We have forgotten how to fight to the death for market share," he says. "That is why our organisation now consists of two groups: brand builders and the group that does business with commerce. A competitor used to call it a division between 'poets' and 'farmers'. Our country managers should no longer make all types of objection against packaging or advertising campaigns. Other people in the company will think about brands. They only have to take the brand, bring it to the market and sell it."

Does the company have enough "farmers" who will fight? Unilever veterans have the reputation of being likeable and intellectual, and Cescau is loyal to his workforce. "I will never say, for example, that about 30 per cent of our people are not good enough. That would be terribly demotivating. Besides, we have been working with the new organisational model very successfully for several years in Latin America. Now I put people from that continent in vital places. That is how I give the implementation a face."

In the four months since becoming chief executive, Cescau has sold Unilever's perfume division and is also putting the Dutch food producer, Mora, up for sale. He has even started an investigation into whether there is a future for frozen products within the company. "There are no longer any taboos," he warns. "I don't want hitchhikers, only fee-paying passengers on the train. Thanks to factory closures, frozen products still create value for shareholders. But will that be the case in 10 years' time? Such a business does not grow."

According to Cescau, Uni-lever's portfolio is also in want of worldwide strength. "Although we are big, we are not big worldwide. Competitors such as Procter & Gamble and Nestlé have a 40 per cent or more share in important markets outside Europe and the United States. Then you can dominate."

That the Frenchman wants to challenge the culture is obvious from the appointment of a number of external personnel managers at Unilever. "For the first time we have a professional HR manager at the top of the company, an American from Motorola. He has faith in the feasibility of his task. P&G also had a profits warning five years ago; they said then they were not good enough at implementation. And look at them now."

A version of this article first appeared in 'Het Financieele Dagblad', the Dutch financial newspaper

Biography

BORN: Paris, 1948

QUALIFICATIONS: MBA, Insead

CAREER

1973-77 Unilever France, organisation officer

1977-84 Astra-Calve France, senior consultant

1984-86 Astra-Calve Germany, chief accountant

1986-89 Unilever Philippines, finance director

1989-91 Unilever Portugal

1991-95 Unilever Indonesia, chairman

1995-97 Van den Bergh Foods (US), president

1997-98 Lipton (US), president

1999-2001 Group finance director

2001-2004 Foods director

2004 Chairman, Unilever

2005 Group chief executive

OTHER POSTS: non-executive director, Pearson

Married, two children

INTERESTS: "A voracious reader, a passable golfer and a good photographer"

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