If it works for the competition, it could also work for Unilever.
The consumer goods titan certainly seems to think so, revamping the operational structure of its regional home and personal care (HPC) business along the lines of its global competitors and ensure it's in the best shape to build global brands in Asia-Pacific.
The revamp saw the Anglo-Dutch company step up investments in innovation, relocating three country heads - Howard Belton from Philippines, Nihal Kaviratne from Indonesia and Michel Dallemagne from Vietnam, along with Hindustan Lever's (HLL) category manager for skin care, Vivek Rampal - to Singapore as category heads for innovation in the Asian region.
Innovation managers across HPC brands in all countries will now report to regional brand directors with Asian responsibility, instead of reporting to marketing directors based in each country. Arun Adhikari, managing director for HLL's HPC business, notes that global competitors are structured in much the same way and "this realignment will help us benefit from a common perspective across the region and strengthen our position vis-a-vis our global competitors".
Citing Colgate, Procter & Gamble, L'Oreal and Reckitt Benckiser as key competitors in the region, Adhikari is emphatic that global brands will become increasingly more important in the future, even as local brands remain strong.
The immediate fallout of the realignment at Unilever will be a dilution in the role of the category or brand manager across the region as marketing strategy will now be decided at the regional headquarters. Only sales will remain an exclusively local function.
If activation was given short shrift earlier, it will now be a focus area for the category manager. At roster agency Lowe India, chief operating officer Pranesh Misra notes: "Restructuring from a federated structure to a centrally-driven one needs a huge mindset change. Some disempowerment is inevitable."
At another roster agency, J. Walter Thompson, senior vice-president Tarun Rai adds: "The reorganisation will ensure that the wheel doesn't need to be reinvented again and again. However, any restructuring will have some teething problems, but I am sure Unilever will ensure a smooth transition."
It's not just the role of the four new category heads for innovation that will change. Unilever employees also expect that the functional role of a number of brand managers will also undergo some repositioning, with a few being redesignated. Post-restructuring, HLL officials say the company will pool strategy resources at the regional level, with regional brand directors interacting with regional agency resources more actively than they have done before.
But will the new structure affect the company's relationship with local agencies if the company has decided to tap into the resources of its regional creative partners? Adhikari says the reorganisation will be effective this month and the effects and benefits will be felt shortly thereafter.
Both its roster agencies in India have been working on a similar regional structure with HLL, but expect that changes will be necessary to reflect the restructuring.
While the advantages in aligning regional communication and marketing strategies lie in speeding up the decision-making process, better cost management and stronger brand consistency, there is also the very real risk that communications could be weakened as relevant local consumer insights are overlooked. For example, in a country like India, where detergent bars are marketed differently for different regions, it's not exactly clear how a strategy devised in Singapore for the Thai market will also work in the Indian context.
Says a senior ad agency executive: "One has to be sensitive to the emotional context in India. The global briefs run the risk of becoming the lowest common denominator, sacrificing local insights and, as a result, communication may get diluted."
Adhikari points out that Unilever's HPC business already has a similar structure in Europe and Latin America, and the entire reorganisation is part of a global trend. "Turning into a branch office is an eventuality.
It starts with sourcing of input, moves to marketing and, in the end, only the sales function remains local," comments a senior executive at an ad agency.
Unilever officials, however, point out that it is far too early to even comment on the possibility of its country subsidiaries turning into branch offices.