[MUSIC] Hello, my name is Sanjay Khosla. I'm currently a senior fellow at the Kellogg School of Management at Northwestern University and a senior advisor with the Boston Consulting Group. Previously, as President of Kraft Foods, responsible for developing markets, I also spent 27 years with Unilever. I'm gonna discuss one idea, focus. How do you focus on a few ideas and make them bigger and bolder? Focus becomes even more important in today's fast paced digital world, which is a framework Professor Carpenter discussed. My first job was as a salesman, selling detergents on a hand cart to mom and pop stores. My first review was with this legendary sales manager called GP. I was really keen to make a good impression. So I prepared a huge deck of papers which included my 25 objectives for the year. GP quickly flipped through the deck and put it aside. And I immediately thought, this is not going well. He's supposed to go through it, page by page. GP then asked me, Sanjay, how many fingers do you have in your hand? And I said, I'm sorry, GP, I really didn't understand the question. And he said, no, it's a very simple question. How many fingers do you have in your hand? And I said, five. And he said, all right. We're only gonna focus on five objectives. We're gonna agree what they are, we're gonna measure progress against each of them, and that's all you're gonna do. And that really started my journey of focus. In our research, we found many companies, big or small, spread themselves thin by going for more. More markets, more brands, more channels. We call this the seduction of more. Our suggestion is to go for growth through less, rather than growth through more. We believe focus resource can act as a laser, which has the potential to burn through metal. Unfocused energy can be a waste. Take the case of a great company, Procter & Gamble. On August 1, 2014, The Wall Street Journal had announced that Procter & Gamble would focus on less than half their brands. They decided to shed almost hundred brands which contributed to only 5% of Procter & Gamble profits. Analysts suggested that over the years, the company had become complex. This was a case of the seduction of more. On August 7, 2014, we published an article in Fortune Magazine called the Wisdom of Less, How Procter & Gamble Can Grow By Shrinking. So the question really is, how do you go from the seduction of more, to the wisdom of less? I'm gonna focus on three things, which apply to big companies, small companies, independent of industry. The first, how do you focus and pick your bets? Second, how do you unleash the potential of people? By giving them the complete freedom of a blank check. And third, how do you execute? The idea here is to make things happen, because success is 10% strategy and 90% execution. Let's discuss the first theme. I joined Kraft in January 2007. The business had great brands, great talent, but the business was not doing well. In fact, targets had not been met for eight years. What was the problem? Resource was being spread thin across too many projects. We had over a hundred brands and were planting flags in too many countries. So how do you decide on priorities? A simple model that we've used for many years is called the three M model. Focus on areas that have momentum in terms of sales and profits, margins, and materiality. Take the case of the chocolate category, for Kraft Foods. Chocolate was a large business for Kraft Foods, and therefore, material. Momentum, in terms of sales road, was mixed, but potentially strong. Margin potential was good. A decision was taken to identify chocolate as a priority category for the company. As you make choices, it is very important to say no to certain things. And at Kraft Foods, we had to make some very hard choices. For example, we decided to deprioritize categories, like cheese, outside of North America because we felt we had better opportunities, based on the three M model, in categories like chocolate and biscuits. A process we use to decide where to focus and to ensure teams are aligned behind priorities is called a discovery workshop. The objective of a discovery workshop is to co create and align key stakeholders behind priorities. This is done in three steps. Step one involves providing all the stakeholders facts on business performance, clearly benchmarked with others, within and outside the industry. This is in the form of predating sent out before the discovery workshop. Step two involves, typically, a two day workshop where the stakeholders together decide where to focus and what to stop doing based on the three M model. The workshop agrees who is gonna do what, by when, and how resource will be distorted against priorities. And step three focuses on monitoring progress against milestones over the next year. Based on the three M model, we decided to focus on 5 categories, 10 markets, 10 brands in developing markets in Kraft Foods. And we simply call this the 5-10-10 strategy. The three M model also helped drive our acquisition strategy. Identifying priority categories of chocolate and biscuits led to the acquisition of Danone Biscuits and Cadbury. Once you pick your bets, it's important to ensure priorities are widely communicated to the whole company, so that everyone moves in the same direction. Next, we will discuss how to unleash the potential of people. We will talk about a counterintuitive idea, which is to give people blank checks. [MUSIC]
