SHE can coexist with enterprise

Unilever has successfully demonstrated how virtue can be sustained over generations in enterprise. Can the same be said about venerable Indian companies?

Virtue — sustainability, honesty, and enlightenment, or SHE — can coexist with enterprise, despite appearing as polar opposites. Virtue and enterprise can and should be reconciled. Here is an example of virtue being sustained over generations.

While Unilever has retained the basic philosophy of William Lever, albeit modified and modernised, that is not the case with other storied names that are often written about in business history. “Even when virtuous practices have been implemented, they have had relatively short half-lives in most corporations…most executives believe that their shareholders opposed such practices,” concluded James O’Toole in his book The Enlightened Capitalists, though his observations primarily focused on Anglo-American companies.

I have been interested in Unilever as an example, partly because I have long experience of working in that firm, and partly because it demonstrates that the founder’s values and principles can survive many generations, though updated in its expression.

During my Unilever years, I visited Port Sunlight, Britain’s equivalent of our Jamshedpur. Through my hurried business visits, I did not quite appreciate that Port Sunlight counts among the earliest as a model town in Victorian England. William Lever advocated and practised radical ideas for his time, such as employee welfare, societal advancement, and gender equality, at a time when women in Britain were busy with the suffragette movement to secure voting rights for themselves! Lever’s philosophy, as recorded by John Griffiths of Manchester Metropolitan University in his doctoral thesis was “the interests of employers and employees were identical.”

“The truest and highest form of enlightened self-interest requires that we pay the fullest regard to the interest and welfare of those around us, whose well-being we must bind up with our own and with whom we must share our prosperity,” wrote Lever in 1888. By the early 1900s, Lever had substantive operations all over Europe and America.

Progressively, William Lever’s success enabled him to act with increasing boldness, even zaniness. He devised and implemented ideas by undertaking riskier and riskier investments. In the early 1900s, young King Albert of Belgium invited Lever to invest in the Belgian colony of Congo. Entering a 50:50 partnership with the government, Lever embarked on the Congo operations. The company provided decent wages, clean housing, schools, and healthcare to a population that was accustomed to being exploited as slaves. Lever was quite successful in his efforts.

Convinced by Port Sunlight and Congo experiences that his business could be a force for social good, he purchased two impoverished islands in the Outer Hebrides in 1918, off the west coast of Scotland. These islands were quite remote, almost in the Arctic zone. He was passionate about setting up a model township around a fish business there. Unfortunately, the venture stumbled.

One reason was a steep fall in world commodity prices and deflation, which must have been difficult to anticipate. The finances of the company became greatly stretched. Lever wrote with frankness and despondency, “We are not entirely masters at the present moment and I am not the captain of my own ship.” Lever’s finances were so stretched that he had to concede control of “his” company to a more profit-oriented accountant, D’Arcy Cooper, a member of the Cooper branch of Coopers and Lybrand, auditors of Unilever accounts. That is how Unilever became professionally managed. A few years later, Lever was merged with the Dutch Margarine Unie to form Unilever.

According to James O’Toole, “Over the years, the company somewhat drifted away from Lever’s founding values, though not entirely”. In my experience, William Lever’s successors over the next one hundred years, adapted to the changed circumstances, not by departing from the founder’s philosophy, but by adapting the narratives and rituals that follow any philosophy.

From the 1980s, as emerging global storms became a hurricane — financialisation of company balance sheets, the advent of inexpensive money, demand for formalised corporate governance, short-term profit orientation, and debates on profit versus social purpose along with do-good ideas like planet and purpose —new ideas based on Unilever’s core philosophy grew, almost as a nod to the ghost of William Hesketh Lever.

Under the leadership of recent leaders, the company imposed on itself the arduous and painful goal of reducing its use of water and energy, adopting fair trade sourcing of its raw materials and agricultural raw materials, and having half of its management as women. While the resultant collision between new trends and the financial market demand for quarterly profits has created some undercurrents, the company’s core approach remains undeterred. 

“Anglo-Dutch Unilever has maintained a strong corporate culture that stresses the nurturing of community spirit among its employees. Equally, it has earned a reputation for ethical behaviour,” writes James O’Toole. Historian and Harvard Business School Professor Geoffrey Jones states, “The concept of integrity is wider than honesty. Making money was never seen as an exclusive goal within Unilever either for individuals or for the company.”

Would the script differ when it comes to venerable Indian companies like Mahindra, Lalbhai, Tata, Godrej, Bajaj, Birla? Do these companies have a reputation for implementing virtuous philosophies that they have managed to institutionalise over generations? There may be something to this enquiry.

The writer is an author and a business commentator.  www.themindworks.me; rgopal@themindworks.me