On any given day, 2 billion people use Unilever’s products. The Anglo-Dutch consumer goods giant has more than 400 brands, of which 14 generate annual sales in excess of €1 billion (about $1.3 billion) each.
The firm’s impressive portfolio includes foods, soaps, shampoos and other products, and it features world-leading brands, including Lipton, Knorr, Dove and Hellmann’s.
Since the 1890s, when Unilever was established, brands with a social mission have been the focus of the company’s business, and corporate responsibility underpins its current strategy. Its mission statement highlights this by stating that success requires “the highest standards of corporate behaviour towards everyone we work with, the communities we touch, and the environment on which we have an impact.”
In 2010, the company launched the Unilever Sustainable Living Plan – a set of targets designed to allow Unilever to grow its business whilst minimising its impact on the environment. The Unilever Foundation, meanwhile, is now partnering with five leading global organisations – Oxfam, PSI, Save the Children, UNICEF, and the World Food Programme. The Foundation is dedicated to improving quality of life through the provision of hygiene, sanitation, access to clean drinking water, and basic nutrition. It has an ambitious goal of helping more than 1 billion people improve their health and well-being, in turn creating a sustainable future.
Jean-Marc Huët joined Unilever in February 2010 as CFO. Prior to joining the company, Huët was executive vice president and CFO at global biopharmaceutical firm Bristol-Myers Squibb Co. Before that, he worked at Royal Numico N.V., a baby food and clinical nutrition company, as CFO and member of the executive board between 2003 and 2008. He was instrumental in helping to spearhead Numico’s financial restructuring, growth and acquisition strategy, and was voted Dutch CFO of the year in 2007.
Huët holds an MBA from INSEAD, Fontainebleau, France, and a bachelor’s degree from Dartmouth College in the US.
Here is Huët’s insight into driving long-term business success:
- Put the customer at the centre of your business. As a FMCG (Fast Moving Consumer Goods) business, we have always been most focused on our consumers and our brands, and then on our retailer customers. What is happening now in our industry is that our customers are no longer just the traditional multiple retailers with bricks and mortar stores. For us, some of the emphasis is now shifting towards e-commerce and the increasing importance of drug and healthcare retailers.
Historically we had good insights on what was happening geographically, what was happening in our categories, then in our brands and consumers. The next step is to get a better idea of how the P&L looks for individual customers or retailers. Beyond that, and with the plethora of data available, within five years I think we will be talking about the gross margins of an individual person. So, for example, we can identify a typical individual and know their gross margin. This will be the result of a better use of big data, and knowing where your shoppers are. That’s the voyage that we are on.
- Corporate reporting must become fit for purpose. We are keen to integrate our achievements on sustainability into our annual report and accounts in a more explicit way. Our ability to report our results is now fairly quick – three weeks is quite fast in such a complex business across various categories and markets.
Whilst we are pretty quick to report, we haven’t accelerated our governance process yet. But in time that will reduce too. I see the draft financial statements within ten days. If we are not at the forefront of integrated reporting, a crucial development, then we are going to be left with a plethora of non-financial KPIs which are not consistent, which you cannot compare, and which are very difficult to audit.
- Find the right balance of risk and opportunity. A major challenge is the way in which risk and opportunity is shifting for us as a business. There are some aspects that are very obvious – almost generic. For example, everybody recognises that we are living in a highly volatile world with more disruption from commodity costs and exchange rates and so on. But there are other aspects to our risk profile that are changing. There are two that stand out for me. One is sustainability. It is an integral part of our business model so that we can de-couple growth in the future from our environmental impact, which in itself raises the risk profile of the business – it raises reputational risk, legislative risk, and regulatory risk. The other big risk is around connectivity. We are now more connected with consumers, with customers and suppliers, than we ever have been. What that means is opening yourself up to the outside world in a way that we have never done in the past. Our IT systems are available to third parties. We are collecting more information about our consumers, information that is subject to privacy laws and so on. All of this raises the risk profile of our business.
- Ensure that your business model moves with the times. It is vital to create the framework and people skills to measure what matters in the business models of the future, rather than the business models of the past. In exactly the same way as management accounting was founded by Lord Leverhulme and others to satisfy a lack of appropriate management information in a changed world, business models going forward are now changing in terms of sustainability. Our team has done an awful lot of work looking at how we measure sustainability, putting the metrics that we use through a lens and asking ourselves questions around maturity, cost of delivery, reproducibility, strategic importance, and so on. These are not financial metrics but we are using financial discipline to make choices and decisions on the measures we use, and how we want the business to behave. These measures are not going to be driven by standard setters, it will be large businesses and professional bodies that set the scene for these frameworks and also develop the people skills needed to deliver them.
The global financial crisis highlighted that many boards had fallen short in their responsibility to oversee strategy and risk effectively. The current environment may leave little room for manoeuvre or error, but equally companies cannot resort to a bunker mentality and play it safe. They must get the balance right between risk and innovation in order to succeed.
It is encouraging to see the emphasis that Huët places on evolving business models. Our upcoming CGMA theme on resilient business models is rooted in the work we are doing for the International Integrated Reporting Council to help develop the business model component of the integrated reporting framework. CIMA and the AICPA are extremely committed to the development of integrated reporting, which is built on integrated thinking and decision-making throughout the organisation. We believe that organisations that fully understand their business model, in terms of how it can create and destroy value, are in a stronger position to achieve long-term sustainable success.
One of Huët’s priorities is also turning a plethora of data into insights and action, which involves a thorough understanding of the impact of developments such as mega data and cloud computing, which we will be exploring later in the year in our CGMA work.
We look forward to continuing to work with our members to explore these key issues affecting business today.
—Charles Tilley is chief executive of the Chartered Institute of Management Accountants.