Mr. Mahesh Madhavan – President and CEO (South Asia), and Area Director (South East Asia) Bacardi

Samatvam: Mr. Madhavan, congratulations for achieving your present eminent position as the President and CEO (South Asia) and Area Director (South East Asia) at Bacardi

Samatvam: Looking back to the early stages of your career, what was the impetus that helped you choose business leadership?

Mr. Mahesh Madhavan (MM): Well, I lost my dad when I was twenty-one years old. I had just finished a bachelor’s degree in engineering, and was barely a few months into my first job at that time. He suffered a heart attack, and passed away in my arms. The mishap happened at a time when both my mother and my younger brother weren’t at home in Mumbai – the one in Bangalore and the other attending college. From the time of breaking the news, to getting them back home and eventually managing the last rites, I had to take care of the situation all by myself. Overnight, I found myself assuming the “head of the family” role. Moreover, we did not have much income flowing into the house. Therefore, I had to structure whatever family assets we had in order to support both my mother as well as my education. This experience accelerated my maturity by about ten years. It was also my first lesson in leadership.

After an year and a half of engineering work experience, I completed my MBA and commenced my management career as a sales person at Wipro’s Consumer Products Division in Mumbai. It was like jumping from the frying pan into the fire. I had to do 60 sales calls every day, 6 days a week, in difficult terrains. For example, one of my first territories was the Khurar village – a very large slum area – in Malad, Mumbai. The evenings were spent with the distributors, making sure that your orders obtained during the day were expeditiously delivered.

And then, we did doing something called “van sales”. Basically, you leave the distributor premises early in the morning with a van full of FMCG goods like Wipro Shikakai, Santoor, Sunflower, and Vanaspati etc. and visit the villages deep into the interior of Maharashtra. One was not allowed to come back to town till all the goods had been sold. For six months, I also spent time selling upcountry – travelling in state transport buses, eating “vada pao”, and sometimes having to survive only on Misal & bananas. These experiences helped me to become very grounded.

I then graduated to the job of a sales manager for the next six months, whereby I actually managed a team of about 50 people – including six sales supervisors. I must have been about 27 years of age at that time, and some of my colleagues were mostly 50 plus years of age. For a new kid on the block to command their respect was a tough mandate. However, we turned the whole operation around in such a way that this particular area started to contribute with accelerated volume and innovative ideas. Eventually, it became a flag bearer for the entire state.

I believe that the only way to gain genuine respect from your team members is by rolling up your sleeves, and work alongside them in the trenches. This belief helped me in the initial days of my career, and demonstrated to my more experienced colleagues as to how a rookie could also add real value to the business. There is really no short cut to success.

Post Wipro, I worked in an advertising agency in order to experience brand management from the other side of the table. Here, I realized the difficulties that an agency goes through. From this experience, one realizes how helpful certain clients can be. On the other hand, clients can

be enormously difficult too. Some of them don’t even think about the brief they give to an agency. I have always believed that it is very important to treat people the way you would yourself like to be treated. If one can follow that dictum, it allows one to grow as a leader.

Thus, my transition into leadership has been the culmination of various experiences over the years. A bit of baldness and grey hair have been among the numerous rewards earned along the way.

Samatvam: Throughout your distinguished career, you must have had highs and lows. What has been your peak moment? What has been that one most fulfilling experience in your long professional journey?

MM: There have been many high points in my professional life. However, I will speak about those that I have encountered during my sixteen years here at Bacardi. I used to believe in moving jobs every three years, so as to experience ample novelty and challenge. These have thankfully been available aplenty over these years with Bacardi. So, there has been no reason to look outside.

I joined the company as its Marketing Head in 1997, from IDV (now called Diageo). IDV had launched a flurry of brands at that time – Smirnoff, Gilbeys, Archers etc. So, Bacardi wanted to hire me in order to capitalize upon that experience. On the other hand, my intent in appearing for the Bacardi interview was purely to find out what this new competitor of mine was planning to do, so that I could be a step ahead of them in managing my brands at IDV.

My first peak moment was when we started Bacardi India in 1997. Smirnoff was already a well- established white spirits brand at that time. So, I knew it would be tough to shake its image. However, we progressively established Bacardi in the market through astute marketing activities. For instance, we created the concept of the large organized party that was called the Bacardi Blast. The advertising preceding the party was all about the sun, the sea and the sand. It also imbibed the famous Bacardi jingle. The Bacardi Blast became iconic to the point that the local people were there really looking forward to the event every time it went to a particular town. By the year 2000, we had thus overtaken Smirnoff to become the number one international spirit brand in India.

There is one story that I particularly remember from that period. Around March 1997, we were planning the conduct of the first big launch party. While examining the preparatory checklist prior to the party, I realized that we didn’t have our liquor license in place. Despite our application for the permit much in advance, there was a slip up somewhere and the excise department had refused to grant it. Through a few of my acquaintances, I immediately established contact with the Excise Minister. My Managing Director and I met the minister to explain the situation. Our candid discussion made him act swiftly. He organized for one of the Department’s offices to be opened on a holiday, and eventually secured for us the excise permit needed to conduct the event in the evening. It was a precarious situation, prompting me to call my wife saying “I may not have a job on Monday”. However, I earned much praise from my boss for eventually turning it around.

This experience taught me to “Never say die”! Now, I always look for solutions within the deepest of problems. Instead of losing my calm, I try and look around for constructive ways to handle difficult situations. When I was scouting for alternatives to tackle the liquor license issue, one guy suddenly stood up and offered to help. This kind of opportunity would have got missed, had I failed to keep my cool at that time.

In 2001, I got the opportunity to head Caldbeck – the Bacardi business in Thailand. It was a small distribution company at the time – a joint venture between Bacardi and Hong Kong’s Jardine. We were selling wines, gin, and beer, and the total business was about 250 million baht. My job as the Bacardi representative was to inculcate the Bacardi culture amongst the employees, and to build brands for the future.

In Thailand, my prior sales experience at Wipro came in very handy. I was the only expatriate amongst a team of about 70 people, and didn’t know the local language either. The Thai employees initially doubted if I could make an impact on the business. However, in just two years’ time, I had managed to visit every wholesaler and seen virtually every nook and corner of the country. By 2004, we had bought out the JV partner in order to make it a 100% Bacardi company. By 2007, we were doing 1.2 billion bahts – out of which 85% was Bacardi spirits. We had managed to get rid of wine business, and also brought about a significant change in the employee profile. It was then that I returned to India.

The situation here was one of concern. Even though the economy was in boom, Bacardi as a brand was actually declining at a rate of about 8%. The company had decided to reduce its investment in India. As a result, we had lost some good people during the previous two years, because they didn’t see a great future with the company. So, I assembled a team of people from within the company and outside. We convinced the Board that the Indian operations needed more investment, and went to them with a plan that eventually got approved. Business went into upswing from 2008, and we bought out our 26% JV partner so as to become a 100% Bacardi entity in 2009. Since then, we have innovated much and also added new products as well as people. In the last five years, the company has grown three and a half times.

So, it gives me great satisfaction to see the way the people have performed in order to bring about the company’s transformation.

Samatvam: What do you value most about yourself as an organizational leader? What are the top three strengths or talents that have helped you reach your present position?

MM: First, it is very essential for one to know the business from the ground upwards. Today, when I have spent close to 20 years in the liquor trade, I still find time at least twice a month to actually work with the sales people in the field. I visit five to ten retail outlets during the day, and do a round of the bars and the pubs in the evenings. It is obviously important to know what is happening in the field, how the competition is moving, how one’s brands doing, and also the trade challenges. More significantly, it helps you connect with your people and the larger team. Thus, I believe that my ability to connect with people and rally them in a common direction is one of my primary strengths.

Secondly, I have always been a good listener. I listen more than I speak because I feel there is a lot to learn from one’s colleagues and subordinates. So, there is this calm and patient listening that I constantly tend to do.

Finally, there is perhaps some humility. I believe that successes and failures come and go. It is important that you hold your feet to the ground at all times. Respecting each individual comes easily to me, and I can effortlessly connect with even the tea boy in the office. A belief I have always maintained is that every person is potentially a star. You have to provide the person with the opportunity, and then support him or her to achieve success. I trust every person one hundred percent to begin with. If the person betrays the trust, then there is no second chance – of course. However, this mode of operation has never let me down.

Samatvam: What do you value most about the business leadership, and what about it makes you so enthusiastic?

MM: When I view the organization, it is not just from the perspective of the present moment. Before arriving at any decision, I always consider what the shape of the organization and the business environment would be ten years down the line. When you constantly ask yourself,

“Can we sustain it? Do we have the wherewithal to build and grow it significantly”, I think you will automatically see success.

One of the significant reasons why I have remained with Bacardi for so long is because of the sense of ownership that it provides. I treat this organization as if it were my own, and not like a 9 to 5 job. I run the business just as an entrepreneur would, constantly asking myself, “Would I decide this way if it was my money?”, or “Is this the kind of behavior or activity that I would like to see if this was my own business?” There have been ample opportunities to join other corporations for greater financial rewards. However, I believe that money is an automatic by- product of achievement; it always comes. When one brings success to the organization, the phenomenon is always acknowledged and adequately reflected in the monetary and other rewards that one receives.

Money is not my primary driver for the achievement of anything significant. I have found this approach to be synergistic; in my limited experience, it has always benefited myself as well as the organization.

Samatvam: When an organization is operating at its best, what does it look like – in terms of people, systems, practices, and structures?

MM: When an organization is doing really well, its top line and the bottom line as well as the brands ought to be growing. You will also find a sense of team spirit prevailing – almost a sense of kinship. There will also be an acute sense of ownership and pride in working for the organization. I always advise that when you step out of your home every morning, ask yourself if you are looking forward to the day at the office. If the answer is yes, then the place of work is right for you. Otherwise, it is probably time to look for another job

An organization functioning at its best would constantly build people, particularly its future leaders. The leadership ought to be constantly thinking of building capable successors. Such an organization insures not just the present, but also its future success. In the last one year, four of my leadership team members have moved on to other jobs within the Bacardi global organization. Our Marketing Head moved on to Miami to head one of the categories. Our CFO has moved on to Singapore to become the Country Manager for Indonesia and Philippines. One of our Brand Managers has moved to London to become the Global Manager for the Travel and Retail trade. The Sales Head for North India has become the Commercial Head for Thailand. I believe we are one of those rare companies in the liquor business that encourages its people to grow and move on to bigger jobs within the global organization.

In terms of systems and processes, I believe that their quality ultimately boils down to how effectively they are able to support the two primary organizational assets – the brands and the people. However, it is the people who ultimately build the brands. So, the fundamental singular pillar of the organization is its people. I seriously believe that when an organization is operating at its best, you will see a twinkle in the eyes of its people.

Samatvam: In your opinion, what measurable results could an organization achieve? And which of those results are the most meaningful?

MM: The measurable ones are the organization’s revenues, profits and the return on investment. But the value that people bring to the business and their long-term commitment to the organization is more difficult to measure. Organizational surveys help. We undertook one such survey globally, and the Indian operation featured as one near the top of the charts – in terms of effectiveness as well as ownership.

See, one can achieve the top line and bottom line if we chain and whip the employees. But this manner of securing results has only a short-term impact. It may deliver success for a year, maybe two. But, can we simply command and expect to get outstanding results over the next

ten years? Not quite. That would require a team of committed guys who will continue to do great things in the organization even when the leader has moved up or shifted out. That is exactly the kind of scenario that I am looking for.

Samatvam: If you could change three things about the organizational leadership, as you see it today, what would they be?

MM: Too often, I have noticed that CEOs are worried about ensuring that they achieve their personal bonuses at the end of the year. As a result, their business approach is very short term oriented. The focus is a trifle more on themselves, and less upon the welfare of the other stakeholders – your shareholders, your employees or even customers. If these latter set of people are a happy lot, it will ultimately bring success to the organization and happiness to the leader as well. So, my first wish is that leadership should look at ensuring long-term success even as it secures short-term results.

Secondly, leaders must catalyze the permeation of a sense of ownership across the organization – right down to the very bottom of the hierarchy. The moment this happens, the organization itself will transform and do extremely well. I have always believed that every person can act like a Chief Executive; we all are CEO(s) of our own families in any case.

Finally, just as a doctor’s task is to guide patients to good health and make their own services redundant in the bargain, every leader must endeavour to make oneself dispensable in the course of time by building a pipeline of capable successors.

Some people may feel vulnerable when they build strong people under themselves who can eventually take their role. However, they need not fear. No good doctor ever goes out of business; in fact, his practice thrives all the more. Similarly, a leader with a developmental perspective will find himself moving into positions of greater responsibility even as the organization itself gallops to cover great distances.

In sum, if leaders can shift perspective to become more oriented to thinking long-term and operate with the spirit of service to other stakeholders, we shall soon witness a positive revolution across corporate society.

Samatvam: What are your dreams and aspirations for your organization? What three wishes would you make to heighten the health and vitality of your organization?

MM: Our current aspiration is to see India as the second or third most important market within the Bacardi global organization. We are convinced that this shall happen within the next five years. Of course, we need to really transform ourselves and grow nearly seven to eight times in order to achieve that milestone. I draw inspiration from Mr. Azim Premji’s assertion “If people don’t laugh at your aspirations, then these are clearly not worthy enough”. People may sometimes ridicule your expansive vision and audacious goals. However, you should not let that deter you. Instead, you should systematically break down the lofty goals into bit-sized pieces, and then chart out a plan for their achievement.

In our case, such a quantum leap is going to happen on the back of our twin pillars – the brands and the people. We are looking at many innovations in product marketing, and also plan to enter new product categories where nobody has ventured before. Obviously, some of it is very risky. However, I keep reminding our people that a daredevil approach may be necessary to break free from our perceived limitations. Only then shall we grow up to the levels that we are aspiring for. The differentiating factor will be our ability to take risks, and to innovate.

In terms of people, one intent behind our deputation of people to different parts of the Bacardi global organization is the hope that they would return to their home turf within the next three years and take up leadership positions here. We need to build a talent pipeline that can

progressively carry this company to greater heights. It is only then that we can take a shot at achieving our vision of being one of the top three geographies within Bacardi.

Samatvam: What is the best training that you have personally ever experienced? How did this influence your development as a leader or as a professional?

MM: Well, my best training experiences have been those on the job, and in the field. However, one classroom experience comes to mind – the Bacardi Leadership Seminar 2000. They had sent fifty of us executives to the University of Virginia. Even there, the high point was not what we learnt in the class. Rather, it was the bonding that developed amongst the fifty colleagues coming from different parts of the Bacardi world. After that seminar together, we could effortlessly pick up the phone and seek help from one another informally.

The other program that has made a strong impression upon me has been the one titled “Being the Powerhouse of Your Life”. It teaches positive thinking, and demonstrates how one can change actual on-the-ground situations with the aid of constructive thinking. As Lord Buddha said eons ago, “Thoughts are things”. They eventually manifest as action. I have personally seen situations change for the better when we approach them with a positive manner and intent. We take all our employees through such training programs so that a positive environment is built throughout the company, and everybody is aligned in the same direction.

It has now become now a way of life at Bacardi India to view things through a positive lens, in order to create ways and means of achieving our vision. We formulate positive intents prior to all our meetings and events. This has helped us enormously. Recently, one of our brand managers was organizing a music festival. The sky became cloudy in the afternoon – posing a bit of a threat to the success of the event. He immediately formulated a positive intent that the weather God are certainly with us, and that we shall have bright sunshine soon. It actually turned out that way. And we had a splendid evening!

Samatvam: What emerging trends do you foresee with respect to leadership education worldwide?

MM: I believe that coaching and mentoring are the finest tools for leadership education. Leaders who have previously been chastened by the fire can really help their colleagues gain quick- wins, and enable swift learning. Personally, I would also like to deliver many guest lectures in order to share my experience with the students.

The other thing I notice is that many leaders tend to operate almost exclusively from the intellect. The technical side of the work is important, no doubt. However, leadership is perhaps more a matter of the heart. When people go too heavy on intellect, we find aggression, anger and greed emerging. I hope that leadership education of the future gives a little more emphasis to the heart, so as to create that balance of intuition and intellect within the leader’s self.

Finally, the younger generation today is in some hurry to hit the top seat – without going through the discipline of rolling up their sleeves to do the hard work. I hope they realize that life does not offer any short cut to success. Even if one manages to occupy the hot seat within a short span of time, it would be difficult to sustain it without the ground-level exposure. Leadership education must therefore emphasize the development of business understanding from the grass roots.

Samatvam: In the light of this, what advice would you have for an Academy like ours?

MM: Whatever little I know about the Samatvam Academy is what I have heard from you, and of course our fine experience at the training sessions earlier this month. On the basis of that, I think that the Academy in extremely good hands. I see you as somebody who is really grounded, very balanced and knows exactly what he wants. In fact, I see a bit of myself reflected in you.

The Academy must impart and transfer the knowledge of leading from the intuition and the heart- particularly for those leaders who still emphasize the intellect. I think that the Academy is very well placed to teach them how important it is to be balanced. You guys are poised for great times ahead!

Samatvam: Mr. Madhavan, it has been a pleasure talking to you! Thank you for your time.

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