Getting high

Mahesh Madhavan tastes success at revamping Bacardi India

Executive Summary: In 2007, Bacardi India was floundering. Enter Mahesh Madhavan. After successfully transforming the fortunes of Bacardi Thailand, he took on the challenge of repeating the feat in India. Madhavan quickly revamped the company, hiring new talent, firing underperformers and steering it to a new set of longterm goals. In less than five years, he transformed Bacardi India - its turnover has tripled and it is growing 40 per cent annually. 

When Mahesh Madhavan was appointed Managing Director of Bacardi India in August 2007, the company was on a downward spiral. Bacardi Superior, a white rum that constituted about 95 per cent of its spirits portfolio, was losing market share at the rate of eight per cent annually. And while the industry was growing 18 per cent a year, Bacardi India was lagging behind at 11 per cent. (Retail consultancy Technopak estimated the size of the liquor market in India to be $1.64 billion in 2006.)

"The loss in market share was because of many things," recalls Madhavan. The global parent had cut investments in India between 2004 and 2007, and the brands started to decline. "Investments were diverted to markets providing a better return on capital." Sensing a decline, about 66 employees quit in those three years. For a company whose headcount was 71 when Madhavan joined, that was massive.

While conventional wisdom would call for loyalty rewards, some of those who remained would face the axe. "The team was a mix of different types. Some were very passionate and talented, and some were floaters, who were sticking around simply because they couldn't get a better job elsewhere," says Madhavan. "We had to get rid of the deadwood and inject some fresh energy, ideas and passion."

Madhavan, who was the Managing Director of Bacardi Thailand prior to his India stint, was not new to people problems. Bacardi Thailand had a turnover of baht 300 million (around Rs 32.2 crore then) when Madhavan joined it in 2000. The problems there also had to do with people. "I got a lot of people off the bus, and a lot of people on the bus," he says. By the time Madhavan left, the company had a turnover of baht 1.2 billion (around Rs 129 crore). Perhaps, it was because of this turnaround that he was picked to steer the Indian operations.

There were problems aplenty in India, most of which were on the human resources (HR) front. The company did not have an HR team. There were no clear processes, and no distinction between high and low performers. "If I'm not performing, and you're doing a fantastic job, you'll wonder why you're breaking your back. So we had to initiate a culture based on performance," he says.

Madhavan also needed to hire people. But he faced budgetary restrictions and had to find other ways to bring in talent. The marketing director position, for instance, was vacant. But instead of a replacement, he hired Arvind Krishnan as a marketing controller in February 2008, to work alongside Gautam Gangoli, who had joined a year earlier.

Krishnan joined the company from Luxor, a writing instrument maker, where he was the Senior Vice President for Business Operations. "Bacardi was in the process of charting a new career path, and the challenge of turning things around attracted me to the company," he says. Krishnan is now Vice President and Brand Managing Director for Bacardi's Dewar's whiskey in the United States.

In 2009, a vision map was drawn up, detailing what Bacardi India wished to achieve by 2015. Clear targets were set for senior managers.

People who performed well and had good potential were identifi ed as top talent. They were groomed for bigger roles in the company.

Today, Bacardi India is growing 40 per cent annually, outstripping the industry average of 17 per cent. Attrition rates have come down to 12 per cent.

"A marketing director may not have joined the company then, as Bacardi was not doing too well and did not have resources. But for mid-level professionals like Krishnan and me, it was an exciting opportunity to turn things around and grow," says Gangoli. "Splitting the portfolio between two strong midlevel marketing controllers who directly reported to Madhavan helped," he adds.

Madhavan also initiated discussions with consulting firm Right Management in November 2008 to give the company a clear focus. "Mahesh was clear about where he wanted to take the organisation but was not sure whether the team would be able to do it. He was extremely transparent," says Chaitali Mukherjee, Country Manager, Right Management.

Bacardi India's global parent wanted long-term business targets, from 2008 to 2014, and the initial meeting with Right Management was about business goals. "But, as we continued our discussions, we realised that the probability of success depended on the people who would chase them," says Mukherjee.

In February 2009, a vision was drawn up for the company, detailing what it wished to achieve by 2015. Clearly defined goals and targets were set for Madhavan, those reporting to him and function heads across verticals, such as sales, HR, and marketing.

The leadership competency - the parameter of the 'right leader' for Bacardi India - was defined in line with the global organisation's requirements as well as local market requirements. "Using that framework as the base, we assessed close to 30 key leaders to understand their individual strengths and challenges," says Mukherjee. People who did not match up were asked to leave.

Among those facing the axe was a senior executive who headed a function and reported to Madhavan. "It was a tough decision, as Madhavan was facing a leadership crunch, but he decided to do away with him," says Mukherjee. The company's existing talent was also nurtured with a 12-month executive coaching programme. Eight key leaders, including Madhavan, Gangoli and Sanjeet Randhawa, who was Director, Finance, were coached individually for larger roles by senior business coaches from Right Management.

The consultancy's team looked at past performance data and drew up a Performance/Potential matrix for each executive. People who scored high on both parameters were identified as top talent. Those who scored high on one of the axes, or who were in key leadership roles but came low on potential were identified as people who needed to be worked with.

Through these assessment systems, Bacardi India was able to restructure the organisation in terms of interim and longterm restructuring. Existing talent, including Gangoli, was groomed for bigger roles and new talent was hired when the need arose.

The sessions were held once a month, and each leader had a different coach. "I was someone who was impulsive and hot headed. The coaching taught me how to think and act like a CEO, adapt to different cultures, and look at things from a 360 degree angle," says Gangoli. "I learnt about the paanwaala syndrome from my coach Sudhir Chand. A paanwaala manages everything single-handedly. I learnt to be able to handle things single handedly and I still use this approach when I am stuck," he says. Gangoli was made Managing Director of Bacardi Thailand in August 2011, and has now moved to China as a Commercial Director.

With investments picking up from 2010, Bacardi India started introducing more brands and hiring people from strong and diverse professional backgrounds. For instance, the new HR Director, Saurabh Upadhyay, was hired from Nokia in 2010. The new Sales Director came in from Pernod Ricard.

The company also instituted more town hall meetings and ensured better communication with the leadership team through offsite sessions. In addition, it rationalised performance bonuses and salaries, rewarding top performers and letting go of the bottom five per cent.

Today, Bacardi India's revenues are growing 40 per cent annually, outstripping the industry average of 17 per cent. The company has grown more than three times over the last five years. And attrition rates have come down to 12 per cent. In 2007, it had just two senior leaders: Madhavan and Randhawa. Today, Bacardi India has a fullfledged leadership team in place, including function heads for sales, marketing, human resources, operations, and finance.

Many leaders from Bacardi India have gone on to take up larger, global roles. While Gangoli headed East, Krishnan shifted to Miami, and Amit Dutta, a brand manager, moved to London this year as Global Brand Manager in Bacardi's travel retail division.

Madhavan feels vindicated. "It takes around four to five years to turn a company around. These postings show the global team recognises Indian talent," he says with a sense of satisfaction.