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Hindustan Unilever: A Quality Product from Surf?

Up until the beginning of the nineties, I remember that quality was a brand  advantage. Packaging spoke of "a quality product from Hindustan Lever". And the phrase " a TATA product" immediately signaled trust.

Just after liberalization, the good professors Demming & Baldridge made their presence felt in India. Any number of companies since then, have strutted their ISO credentials. So product quality was no longer a brand differentiator.

However, even today this is not a hygiene element. With truckloads of cheap imports and small local products on offer, we do tend to instinctively create a basket of "quality" options before we buy. This is particularly true in the case of assets.

When we buy a house or a car, we take pains to buy only from companies known to deliver consistently, and at high standards.

In order to to maintain high standards, brands build the intent, the processes, a plan and a ruthless commitment to implement that plan. Firms that have set high standards demonstrate these effortlessly. We can't possibly associate inconsistency or low standards from IBM, a Honda or a P&G.

But are high quality brands only about only about products and consumers alone? Remember when your grand dad presented you with your first set of TATA Steel or Hindustan Lever shares. Did you wonder why he didn't give you an unknown but rapidly rising mid-cap?

These were called Blue-chips. Not because they provided high returns but because they were dependable, transparent and set very high standards. Why isn't there an ISO for shares then? Why doesn't TQM apply to these assets?

Obviously an Apple did not become the most valuable firm in the world only because it was innovative, brilliant or charismatic. It is valuable because it is, dependably all of the above. Which is why the stock is not regarded with as much esteem as before Mr. Jobs' untimely demise.

Why is the TATA brand more valuable than any of its individual product brands? Hardly because of any sterling performances. But they are still considered to be the most dependable and credible bunch of business leaders this country has seen.

This allowed them to transform themselves from a traditional, conservative, middle-class confederation of businesses into an aggressive global conglomerate. In doing so, it was essentially the TATA brand that helped to raise money for acquisitions, to bring in the most renowned business partners, to acquire top class global talent and most of all to be a desirable acquirer.

There was no stroke of genius in this. They simply adhered to old fashioned values for ever; long before words like governance entered the lexicon of business.

It’s time for investors to demand ‘quality’ from their share transactions as much as much as from their cars and cell phones.  A business often means more to a shareholder than does a brand to a consumer.

I’m sure you have seen enough companies that offer unpredictable, and sometimes unpleasant surprises in terms of ROI.

You would hardly want that, would you?