Role of Creativity in Enhancing the Competitiveness of Unilever Company - Essay Example

? Economic Competitiveness Introduction Economic competitiveness of advanced economies has been challenged in last few decades. The companies such asGeneral Motors, Jaguar, Ford, or Chrysler are struggling for survival. Companies from the developed economies such as UK and the US used to dominate in the international markets at least up to 1990s but they are now being increasingly challenged by the companies from the developing world, especially in the manufacturing sectors. The economies of developing countries such as China, India, and Brazil are developing at the astronomical rates while economies of the developed countries are crawling at much slower pace. Companies from the developed world are fast losing competiveness in their fields; only a few years back, they were known for their competitiveness and efficiencies in the global marketplace. Creativity plays an important role in being globally competitive and helps thwart competition. The paper selects Unilever of UK to study and explore how the company functions adopting creative means and ways so as to remain competitive in their most of the business activities so as to beat competition and spearhead the growth. Understanding Creativity It will be most appropriate to understand the creativity in the larger context before realizing its impact on companies and nations. Mostert (2007) describes creativity as a soft and imaginative process. As soon as the problem crops up, creativity begins. Creativity and Innovation are buzz words in advanced economies. Creative industries also aim at creating and exploiting intellectual property products to their advantage. Creativity is an important process in a liberalized and globally competitive economic environment. Creativity is important because it gives new ideas, new expressions and new ways to do the things. Creativity means a positive response to the issues at hand. Individual creativity is necessary to give ways to innovation. Blackburn & Kovalainen (2009) argue that creativity impacts entrepreneurship. Igniting creativity across all business activities is certainly a big challenge for the management of any firm and Unilever has understood the importance of creativity to its core and that is why the company has been able to expand across most parts of the world. It is the spirit of creativity that has made the company a consumer giant with billions of customers buying its products globally. Creativity Index The global competitiveness report publishes country-wide index of economic creativity that defines how countries through their firms improve their productive activities. Though the index puts most developed countries high in the list (UK is ranked 8th in the competitive list) but crucial thing is that many developing countries are adopting newer ways and technologies and they are fast catching up with developed economies. The index shows how East Asian countries have become more creative to become competitive in several manufacturing processes. That is why it is important for the developed countries to continue with their creative ways to remain competitive globally (Global Competitiveness, 2012). Competitiveness through Creativity– A Unilever Way Unilever strongly believes that creativity can make a strong impact on the organisation and the company attempts to bring forth creativity through diversity of minds. Unilever, in one of the study to research on creative teams, conducted 100 creative sessions using a questionnaire. Researchers finally received 78 completed questionnaires that had enough information. For our understanding, the problem fields to which study was initiated can be described as per the following. Field: alternatives for product A or think about ingredients for a particular benefit. Field: thinking about next generation product or a format for a new product called Y. Field: solving technical products such as how to improve dispensing of the cream or thinking for new application using a new ingredient. Field: cultural issues such as having more fun at work. Each creative session provides suggestions related to products, projects and many other matters and that also helps change attitudes of participants. Such sessions delivered encouraging results as over time it was gathered that in 53 percent of the cases, solutions to the issues were successfully derived. Productivity and ability to compete in global market place are two important parameters for measuring competitiveness of the companies and that is where the company has successfully demonstrated its strength. Creativity enables the company to quickly act on the available opportunities that are available for growth. In fact, it becomes a basis for innovation and doing the things differently (Bilton, 2007). Association of Creativity and Entrepreneurship Entrepreneurship has no geographical barriers and when the countries from developing world embrace entrepreneurial spirit then it becomes all the same more essential for a company from the developed world to show creativity in their efforts to become more competitive. Creativity and entrepreneurship are associated and that is why truly entrepreneurial organisation inculcate the spirit of creativity at all levels (Lee et al. 2004). It is Unilever's creativity and die-hard entrepreneurial spirit that has made them the third largest consumer product company in the world with total turnover exceeding €40 billion. Unilever operates in 150 countries and has established itself in powerful category positions and global brands in the consumer segments of tea, spreads, weight management, savory & dressings, ice-cream, deodorants, skin-care products. The company is the leader in these consumer segments globally. Even in the sectors of detergents and hair-care markets the company stands second globally. By any means, it is not a small achievement that the company has been able to achieve €1bn global sales in 12 brands such as Lux, Dove, Surf, Sunsilk and many such products (Introduction to Unilever 2012). Evidences of Creativity When the company witnessed a declining sales growth from 4% in 2002 to less than 1% in 2004, the company management responded through a renewed entrepreneurial spirit bringing competitiveness in its operations. The company emphasized on three aspects: Creating a simpler and more agile "one Unilever'; Strengthening execution; and Sharpening choices and priorities. The company also divested European frozen foods business in 2005 for $800m and decided to focus on the businesses that provide better opportunities. All these efforts of the company made the company more secured as it entered into 2006 with increased competitiveness and growth (Cescau, 2006). Creative Packaging to Achieve Competitiveness Unilever is known to focus on the smallest business aspects to enhance its competitiveness. Accordingly, Unilever has made concerted efforts to reduce package waste by developing improved design. It not only improves competitiveness but enhances shelf visibility for some of its products range. Pepsodent's Smart clean toothbrushes are now being packaged in a hanger-type package. This reduces waste and lowers costs of product by eliminating primary and secondary packaging. That is how the company produces brushes at lower cost that attracts new consumers. Similarly packaging for another brand ‘Rexona’ has been changed to reduce package weight by 8% saving significant plastic per year. This also saves cap-making time by 34% when compared with the previous package. Even small changes that Unilever incorporates generates savings of thousands of pounds (Greener Package, 2010). Knowledge and Creativity for Competitiveness Andriopoulos & Dawson (2009) argue that knowledge plays a pivotal role to remain competitive. Communication and information technology can do wonders in reducing costs at much faster pace by combining available sources of information and drawing inference from the raw data. In the world of information and technology, data and information becomes useful only when they are put in some order to have some meaningful inferences out of it. 'One Unilever' transformation programme that the Unilever undertook during 2005-2006 deploying IT inputs saved the company over €1bn. That is the huge sum displaying creativity in knowledge front to achieve economic competitiveness. The 2007 annual report of Unilever speaks about the savings that has been achieved incorporating IT applications in manufacturing processes and several cost reduction programmes. This has resulted into the improved margins for all of its products. ‘One Unilever’ programme revolves around the reshaping of the existing businesses and bringing change in many areas of its operations. The company rolled out a single SAP enterprise resource management (ERP) system in whole of the Europe implementing it fully by the end of 2008. The 'One Unilever' concept makes the organisation simple through a single IT platform. It standardises business processes region-wise to bring cohesiveness in its operations. Mexico, Brazil, and Argentina were brought into a single area operation unit in 2007. The US was brought under a single SAP System in the same year. Followed by this, the company also implemented SAP platform in four countries of the Asia. The restructuring did cost the company to the tune of €875 and almost half of that was consumed by 'One Unilever' concept; however, all this resulted into improved margins for the company (Chillingworth, 2008). Creativity at Unilever never halts but it is an ongoing process. The Company wants to optimise its global operations through HANA creating in-memory database. After consolidating SAP Systems in 4 regions, the company plans to run only a single instance of SAP globally and that is where HANA database system comes into play. The company aims at doubling the revenue from €40bn to €80bn by 2020 and when the world is moving towards an integrated economy, the efforts of creating HANA platform are very much helpful to the company to achieve its long-term objectives. Unilever wants to use HANA in every business aspects. Currently, the company's ERP receives over 30,000 transactions per minute. HANA will reduce processing time from 440 seconds to just 30 seconds. HANA helps understand margins better providing huge benefits for the decision making. Due to HANA, Unilever can process month-end closing numbers within three days maximum. HANA helps analyze retailers' sales data thus guiding them where to put efforts. HANA enhances analytic processing thus, helps better decision making necessary for sales and marketing people (Saran, 2012). Sustainability and Competitiveness Sustainability issue is important when the company operates in several markets across the globe. Unilever addresses sustainability issues as the consumers are becoming more conscious and want to patronize the companies who support environmental issues. In 2009, the company began with a new vision of achieving growth without causing any environmental impact. This will help company to sustain its operations and provide a lead over those who do not address these issues. Sustainability issues force Unilever to source raw materials from the places that do not compromise with environmental causes. Unilever’s sustainability initiative is a part of creative thinking that will help attract customers when viewed from the long-term perspective. (Dhawan, Goodman, Harris, Mitchell, 2010). Competitiveness through Sustainable Living Greenhouse gases (GHG) from Unilever's factories in 2020 will be at or below 2008 levels achieving 63% reduction on each tonne of production. By 2020, the use of renewable energy will go up at 40% of the total energy consumed by the company then. As far as global logistics network is concerned, CO2 emissions will get reduced considerably achieving 40 percent improvement in CO2 efficiency. This achievement come through reduced truck mileage; lower emission from transports and through better efficiency of warehouses. Water consumption will be reduced in manufacturing operations and agriculture. A major thrust has been given towards waste treatment and reusing them as far as possible. Its major impact will be visible in terms of cost reduction per unit. The company plans to have 100 percent agricultural raw materials through sustainable practices. By 2020, energy consumption in Unilever's offices will be reduced to half of the units when compared with 2010 levels. All these action of Unilever will translate into significant cost saving enhancing company’s competitiveness in the process (Unilever sustainable living plan 2007). Conclusion Thus, it can be concluded that creativity plays an important and most crucial role in developing and sustaining economic competitiveness of advanced economies. Creativity must spread across the whole gamut of activities within the organization that include operation, research and development, production processes, sales and marketing, product development, financial management, communication, sustainability issues, servicing customers and myriads of other functions. Furthermore, creativity has no bounds whether it comes from the junior most employee of the organisation or from the CEO of the company; it is always welcome because it helps the company to enhance its competitiveness in one way or other. In today’s integrated economic world, companies just cannot survive without an all-round creative approach interwoven as the basic culture in the most aspects of the business activities. References Bilton, C. (2007). Management and Creativity: From Creative Industries to Creative Management, Blackwell Publishing, Oxford. Blackburn, R. and Kovalainen, A. (2009). “Researching small firms and entrepreneurship: past, present and future”, International Journal of Management Reviews, Vol.11, No.2, pp.128- 147. Cescau, P (2006). Restoring competitiveness and growth. Available from http://www.unilever.com/images/ir_CAGNY_Conference_presentation_tcm13-33075.pdf [Accessed 17 December, 2012] Chillingworth, mark (2008). Unilever achieves €1bn in savings, it plays major part. cio.co.uk. Available from http://www.cio.co.uk/news/2589/unilever-achieves-1bn-in-savings-it-plays-major-part/ [Accessed 17 December, 2012] Dhawan, E.; Goodman, E.; Harris, S.; Mitchell, C. (2010). Unilever and its Supply Chain: Embracing Radical Transparency to Implement Sustainability. Available from http://mitsloan.mit.edu/actionlearning/media/documents/s-lab-projects/Unilever-report. pdf [Accessed 17 December, 2012] Global Competitiveness (2012). World economic forum. Available from http://www.weforum.org/issues/global-competitiveness [Accessed 17 December, 2012] Greener Package (2010). Unilever reducing package waste, adding consumer, business benefits. Available from http://www.greenerpackage.com/corporate_strategy/unilever_reducing_package_ waste_adding_consumer_business_benefits [Accessed 17 December, 2012] Introduction to Unilever (2012). Unilever. Available from http://www.unilever.com/aboutus/introductiontounilever/ [Accessed 17 December, 2012] Lee, S.., Florida, R. and Acs, Z. (2004). “Creativity and entrepreneurship: a regional analysis of new firm formation”, Regional Studies, Vol.38, No.8, pp.880-890. Mostert, N. (2007). Diversity of the Mind as the Key to Successful Creativity at Unilever. Available from http://mccim.nl/publications/diversity-of-the-mind.pdf [Accessed 17 December, 2012] Restoring Competitiveness and Growth (2006). Unilever. Available from http://www.unilever.com/images/ir_CAGNY_Conference_presentation_tcm13-33075.pdf [Accessed 17 December, 2012] Saran, C. (2012). Unilever prepares for global HANA roll-out. computerweekly.com. Available from http://www.computerweekly.com/news/2240173851/Unilever-prepares-for-global-HANA-rollout [Accessed 17 December, 2012] Unilever Sustainable Living Plan (2007). Available from http://www.unilever.com/images/UnileverSustainableLivingPlan_tcm13-284876.pdf [Accessed 17 December, 2012] Read More