Former Kraft exec imparts strategy guidance at BakingTech
March 6, 2017
by Joanie Spencer
Sanjay Khosla, senior fellow at the Kellogg School of Management, Northwestern University.
Identifying a mission and setting strategic plans to achieve that mission are common practices for any successful company. But many businesses operate under the assumption that more is better when it comes to goal setting.
Not so, according to Sanjay Khosla, senior fellow at the Kellogg School of Management, Northwestern University, senior adviser at Boston Consulting Group and author of the book, Fewer, Bigger, Bolder.
Mr. Khosla, former president, developing markets at Kraft Foods (now Mondelez International) from 2007 to 2013, delivered a keynote speech at the American Society of Baking (ASB)’s BakingTech 2017 conference, held in Chicago Feb. 26-28, that taught attendees the value of “winning through focus” in strategic planning.
Five: This is the number Mr. Khosla advised that people are going to remember at any given time. So when developing goals, leaders should focus on no more than five objectives rather than drawn-out, overly detailed plans.
“Success is 10% strategy and 90% execution,” Mr. Khosla explained. “It’s all about execution.” In a highly digitized world that lives in a context of constant change, the key is keeping things simple and focused. In conducting research for his book, Mr. Khosla found that companies from a variety of industries around the world consistently identified complexity and bureaucracy as challenges to business success.
During his time at Kraft, Mr. Khosla identified certain brands that had struggled to enjoy the same success outside the U.S. as they did domestically. “For eight years, the business had not met targets,” he recalled. “Great people, phenomenal brands, but for eight years, it underperformed.” After spending an immense amount of travel time to see hundreds of production facilities, Mr. Khosla determined, “Confusing being busy with output is a waste of time.”
In situations like this, focus is key. And to improve focus, Mr. Khosla developed a “Three M” model, which focuses on specific areas: momentum, margins and material. Through this model, companies can “redeploy resources to areas that have momentum, margins and the most material.” This, according to Mr. Khosla, is the strategy that set in motion Kraft’s purchase of Danone Biscuits and Cadbury.
“[The Three M model] laid the foundation for acquisition,” he said. “Once you agree that you want to go after biscuits and chocolate, then you also look at partnerships in those categories. And that led to the purchase of Danone and Cadbury.
Next, Kraft was able to take the three distinct brands and create “one team, one dream,” he said. “The whole idea was, ‘Forget where you came from. Use all the strengths of your parts to create the focus; one team, one dream.’ ”
As certain global sales were declining during this transition period. Mr. Khosla also developed the idea of providing people a “blank check,” a metaphor for offering people total autonomy in order to achieve results.
“For this ‘blank check’ process to work, three things must happen,” he said. First, select the right potential leaders. Next, put together a short, focused business proposal. “The idea behind a good business proposal is to do it roughly right rather than precisely wrong,” according to Mr. Khosla. Finally, identify milestones and deliverables.
Despite that half of all new initiatives fail, Mr. Khosla insisted that leaders focus on what’s working and scale up. Moreover, while learning from failures, overall success is achievable. Then, he said, repeat it, “with boring consistency.”
Oftentimes, companies will change strategy too frequently rather than focusing on getting one strategy right, according to Mr. Khosla. Execute the strategy, and repeat it when it works, he advised.
The proof in Mr. Khosla’s models was seen in the sales for Oreos (at the time of Mr. Khosla’s Kraft tenure, Oreo was owned by Kraft), which went from $200 million to $1 billion in six years under his leadership. “What’s more important is that it was not growth for growth’s sake. It was sustained, profitable growth,” Mr. Khosla observed.