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Our Appetite for Risk is Higher

When, much to her surprise, Renu Misra was asked to take over as managing director of Grohe India (a part of Lixil Water Technology, Lixil Group) in February 2012, little did she realise that this was the start of her grooming for a much larger role that was to appear a few years later. Then director of finance at Grohe India, Misra found this promotion surprising, considering she had no sales and marketing expertise and her forte had been finance and operations. But when the next call came in the middle of April 2017, to move to Dubai as president of Grohe in the Middle East (ME) region, she was ready. What she was not ready for, however, was the three-week time she was given to pack up from India and settle into the new role.

Sourcing Hardware reached out to Misra to understand what makes an Indian manager tick in overseas settings. She’s been handling 39 countries of the Middle East, Africa and East Mediterranean regions for a year now, for a sanitary fittings and ceramic sanitaryware market that BRG Enterprise Solutions has estimated at €3.76 billion (nearly 8% of the total global market value). While in India she oversaw the successful integration of two global brands – Grohe and American Standard – following their acquisition by Lixil, in the Grohe Middle East region (GROME) she is in charge of a ‘challenging market’ that has immense growth potential. Therefore we believed she fits the bill for answering this question.

In a series of telephonic interactions that took place in the midst of her hectic travel schedule (at one time she agreed to take our call right after she returned to Dubai from Dusseldorf at 6.00 am), she explained what it takes to manage a vast operation in a setting that’s culturally more diverse than India. And in the bargain we got a glimpse of her mettle as a leader.

By Gyanendra Kumar Kashyap

Indians are increasingly emerging as successful leaders at global organisations. What do you believe is the underlying reason for us Indians being so competitive and successful?
It’s a fact that today many Indians are leading global corporations. I believe we have to give credit to our education system for this, though many people would say it’s not great and that it is a lot of rote learning. It hasn’t come easy for us. I personally feel that we Indians have struggled through our lives being competitive – be it in academics, sports, profession, etc. We have learnt to be competitive. Our competitiveness is high because we know that many of us are in the queue to get into the best colleges, schools, workplaces, etc. It is perhaps this resource crunch that brings the best out of us. Imagine there are about 1.7 million applicants for some 10,000 seats in the IITs. It’s no surprise that the DNA of an average student is super competitive.

We are born with that competitive spirit and when we carry that to work we energise the whole system. I think all of us have a lot of energy to take the whole team along because that’s how we have lived. We have lived in large families, we have lived in resource crisis, we have lived in competitiveness, and we have been very inclusive about it. We have not shed our culture, we are respectful as citizens. We are very compassionate because we are very responsible towards our elderly generations, particularly our parents. We have been brought up with a good set of values and that’s what takes Indians to the top.

What leadership aspects make an Indian, or one who has served the Indian market, better positioned to lead a global brand?
I would say it is the exposure to challenges that makes us the way we are. When I was being offered the role for the Middle East, it was very clear that the market was going through a big transition. Oil prices were not stable, there was a lot of value loss, the Middle East market was introducing VAT for the first time (they had never heard of taxes in the region before life). There was a squeeze in Saudi Arabia and UAE because of this, they did not have their traditional source of revenue and were going through difficult times. In such scenarios, you need people who have worked in markets which are difficult, challenging and volatile, and that’s when you get offers likes these.

I would reiterate – our exposure to challenges, ability to work through chaos, cultural inclusiveness and multi-tasking skills are the biggest strengths that we have. This role probably came my way because Grohe thought that there was a need for somebody who could steer the business through challenging times in Middle East markets and set up the organisation for the next level of change. The Middle East is a big business market for Grohe. It was going through a very big cusp of change from being a joint venture to a fully owned subsidiary, and at such times it is important to have someone in the lead who can handle change. When I was asked to take over Grohe’s India business, my role’s ask was to strengthen the organisation with the skills I had acquired over the years in finance, supply chain, HR, and organisational management. I am sure most leaders get into these roles on the basis of their strengths to transform the business in one way or the other.

How quickly did you get into the groove to take on the global leadership profile?
I was pretty much sent to the Middle East from India in three weeks, that’s it! One week to make a decision and another two to pack my suitcase. I could not relocate my family at such a short notice and I think it was fair, because I had to travel across different countries. I handle 39 countries. After I joined, I had to visit key markets to get a first-hand understanding of the set up; the business model in these markets are very different from that in India. India has a highly retail-oriented market where we have many partners and we deal with them directly. But the Middle East is a more distributor oriented market – there is big volume, big distributors and big developers as well – you have to learn the ropes of how the business works. I was pretty much living out of a suit case. Every four days I would be in a different city. But I must admit that was probably the best time; you get to learn so much as an individual as you travel.

The cultures are different here from what we have in India, yet you were able to settle into your role effortlessly. Was there an appreciation within you that perhaps helped you manage this change?
I am grateful for the life in India because when you visit countries that are volatile or gone through wars, you realise how difficult the life of an average person is. The problem that people here have to grapple with is the long term future of their children and how to settle them in other countries so that their future is secured. The conversations are very different and it’s a very humbling experience to actually work in this part of the world. People here are high risk takers; there are a lot of businessmen who have lost money and have started all over again several times, over generations. We have had longstanding relationships with our distributors. It’s very humbling to know how they work and you really start appreciating the many basic privileges that are a given in our country. So our spirit of challenge and chaos and their spirit of challenge and chaos pretty much match. I was able to appreciate this as I settled into my role and that probably helped me a lot.

Which particular skill sets have proved crucial for this role? Why do you believe that you as an Indian were better equipped to manage business in multiple markets?

When I took charge of the Indian operations in 2012, the business was pretty much at a nascent stage. We had to get it to the next level in terms of operations. Typically, growth comes in any geography that is so big when you find more distributors, enter more countries, or as in India, more states. Geography gets you business. However, after a while there has to be a deeper way of doing business – establishing the right channels, making sure there is enough market penetration in those states/countries, and making sure that the business has a sustainable model. I think that’s what I did in India for more than five years, and once we got to a sustainable level – when I moved out of India – the business was running on auto mode till Grohe looked to hire a successor.

You have to have the ability to get the business to a sustainable phase, and probably those were the skills they were looking for in the leadership role for Middle East region. And most people who come with these skill sets would probably be from geographies where they have faced volatility, risk and uncertainty besides high growth challenges. And a lot of people who have worked in Asian countries today fit that criteria, as compared to more stable and developed countries where the challenges are different.

How different has the global assignment been for you, as compared to managing Indian operations?
The biggest challenge is in terms of the ability to move swiftly. I think that decision making in a single country like India is much easier. India is a centralised market. You make a decision for the entire country even though culturally and linguistically there are variations, and that’s because business ethics are pretty much similar across the country. But when you move to regions like the Middle East, North Africa, etc, not only language but the way you do business also changes. I have to manage a large geography – Africa, East Mediterranean, as well as Middle East – so you cannot have a single decision for across the region. You ought to have strategies that are localised. The biggest challenge is that you have to treat them as a set of countries and not as one big region. That’s why I feel the speed of decision making gets a bit low comparatively.

What has been your understanding of consumer expectations as you move across geographies?
I find that consumer expectations are mostly similar. Now we have globally exposed consumers – they are digital, they are exposed to everything about a company and what it offers across the world. So their expectations from a brand like Grohe will be superb quality, great design and technology, and fantastic service. I feel that consumer expectation across the world is similar and that doesn’t change. This helps, because our product portfolio is very global. So when they move from one country to another they have the same experience and thus the same expectations. This is good for a global brand like ours.

What learnings from the Indian ops are helping you manage multi-market businesses?
The biggest lesson is to be inclusive and sensitive to people in general, I think that’s very important. You are dealing with a number of partners, suppliers, employees and people on a day-to-day basis; they are all important spokespersons for a business. The digital world has opened up many platforms where brands and experiences are being discussed. It’s therefore important that we engage with our stakeholders meaningfully.

At Grohe we have a combination of world class products and committed people, and I believe that success is in the blending of the two. In the Middle East the average Grohe employee age is 5+ years; there are employees who have been associated with the company for more than a decade or even 25-30 years! So, brand allegiance in this region is superbly high. We are market leaders here and people want to work with us. I believe that the ability to connect and establish communication with people is one trait I carry very strongly from my Indian experience.

How should a budding chief prepare for a global role? What’s unique about the Grohe way of managing the business?
I think people have to be patient about results. You can’t be expecting that the speed at which you executed and the results you got delivered in your country will hold true in other countries as well. People work differently, their interpretation of delivery is different; you have to be connected and communicate with them so that they understand the strategy and objectives. It takes a lot of time because there are language and cultural differences. However, if you have clarity in communication and clear expectations, you can lead any global organisation.
The over-arching thing is strategy. Grohe is a very lean company globally; and we are focussed on our long term strategy and short term focus areas to achieve the mission of the organisation. There are well-defined ‘sharp focus areas’ every year, and the whole organisation is cascading them down to the teams. It becomes easier because you have defined priorities and clear focus, in contrast to larger organisations where ‘sharpness in communication’ is missing due to complex structures. They have a very nice vision, mission and objective statement – but I think by the end of the year their objectives are somewhere lost.

So there are two things to it. First, you should always have a long term mission and vision (eg, we say that in a decade from now more than half of Grohe’s portfolio will be digital) and work towards it. Second, when it comes to top focus areas, the whole organisation is behind it. It must be communicated and translated into key action areas for respective markets (because it may mean different things for different markets), and make sure that the results are achieved. I think Grohe is very good at it. I have worked for eight years with Grohe and no year has been disappointing. I have worked in two regions and I think there is a very good systematic thinking process, with German precision.

What strategies have you put in place in order to keep brand Grohe a notch above others in the MENA market?
In the Middle East we are the leading brand. The perception of the brand and the market share in the region is amongst the highest in the world. Saudi Arabia and UAE are our biggest markets. Now that brings a lot of responsibility as well, because you have to increase the share, penetrate more in the country and widen your portfolio. The advantage is that Grohe is now getting into many more portfolios. We have ventured into ceramics as a portfolio, we have entered into kitchen – we are just launching kitchen sinks and then we are going to get into many more verticals over a particular period of time. So this allows us to add more space to the bathroom and kitchen of the consumer and increase our share.

In most countries/regions, like the Middle East, where our market share is higher, this portfolio will really support us and that’s what we need to do. This is what I am doing differently from India, because in India we still had the market penetration issue. We had not penetrated into many states – so every year we had the opportunity to get into two-three new markets and gain share, which was the beauty of a country like India. Add to this the large number of consumers – we were launching products at the entry level, widening our base and catering to a large retail consumer base as well as developers. We naturally gained market share and grew a lot.

In a region like Middle East where people have been buying luxury as well as entry level products, and we have been in this market for 60 years with leadership position, it’s much tougher. So we need to venture into new portfolios; Grohe is doing this. We are getting into digital portfolios every year with new products. We will gain market share through diversification and new channels. E-commerce is one channel we are looking at very strongly; the Middle East has one of the youngest populations in the world and they are very digital savvy. So we are focusing a lot on digital marketing, and in another two-three years our complete consumer profile will look very different in the region.

Can you describe how are you incorporating design & innovation into your business?
There are four pillars of Grohe that we always talk about – technology, design, quality and sustainability. We have been working on these for a number of years. Grohe is the most innovative company in the industry; most of our competitors don’t even have products that are close to us. We are investing highly in digital products, we are also investing in lead-free products known as Grohe Zero (which are close to 98% lead free); all our kitchen products today are made from Grohe Zero in our factories in Germany. More and more of our bathroom ranges are moving towards it; we are committed to sustainability and it will remain an important pillar for us.

We are focusing on digital innovation and making sure that we are giving one-touch products. All our thermostats are one-touch, child-friendly with child lock facility, etc. As a German company we spend a lot on R&D in design and technology. We are focussed on innovations and sustainable solutions and that keeps us in the leading position.

How competitive is the ME market, and how do you ensure that Grohe maintains its legacy aura?
It’s a big market and we have all the competing brands present with our distributors, but I think most of them are not as consumer focussed as we are. We are investing significantly towards end-consumers in making them knowledgeable about our brand, product offerings and choices across prices and design. Second, the quality of our products is world class and we are industry leaders with 62 design awards last year, more than ever before in our history. In 2018 so far we have won 12 awards and are already on way to another record.

No wonder Grohe is an aspirational brand, even for developers. Take the example of developers in India who are selling their projects in NCR for Rs 3,000-3,500 per sft. They want to invest in Grohe because they are convinced that this is the quality that they should provide to their customers. In fact this is helping them in getting catagorised as a premium project. So that’s the level of faith they have in the brand. That’s true for the Middle East region also. Even today a lot of developers – who cannot afford us – want to install our products so that they can position their projects better. We are pretty much an aspirational brand and competition has not kept pace with us.

Is there any specific product segmentation that you’ve worked out for MENA region?
The segmentation is done globally. We have an entry level segment, called G2 and that’s G2 across the world. G3 is affordable, G4 and G5 are more luxury, and G7 is ultra luxury. The categories and the products within are defined as our ladder of products. So when we launch a product in any category, the segmentation and pricing is done accordingly. In fact segmentation, designing and pricing are similar across markets, and that’s why consumers have a lot of confidence in our brand. They know that if a product is in an entry or affordable range in a given country/region, it is the same across the globe.

While Middle East has been a strong G3 and G4 market, with the introduction of G2 we have been able to gain more market share because it’s more affordable and you can get into more projects. While our end/retail consumers buy a lot of G3 and G4 products; G5 and G7 being luxury are being bought by hospitality chains and individual villa owners; that’s a trend across the world.

What are your mid-term to long-term goals and how do you plan to achieve them?
We will grow our portfolio – that’s for our mid-term and that’s also our strategy to gain more share in the market. I think long-term goal has to be that your absolute reach in the region is higher than what it is today. For instance in the African market, which is pretty much growing, we have to penetrate all of those countries in North and West Africa. In the Middle East we need to win more business and get more depth. We need to be the topmost recalled brand. In a decade’s times I expect that most customers will specify Grohe as a full bathroom and kitchen solutions brand.

To be the top of the mind brand (in the next three years), there is a lot of focus on digital investment. We are ensuring consumers are more aware about our product offerings. There is a lot of push to pull strategy, to have consumers walking into stores and asking for Grohe. That’s the long-term objective with mid to long term investments.

 

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