“Sanjay has changed the culture at Kraft,” says a colleague. “Before, everyone [drove] their own agenda. Now the level of teamwork is so high that we’ve exceeded some ambitious expectations.”
Sanjay Khosla is ruminating about “the journey,” tossing out profound thoughts on trust, belief, the soul, and human potential. The quasi-inspirational spiel is part Deepak, part Oprah, part Obi-Wan. But enlightenment is not on the table here: We’re talking about Oreos.
They may be the United States’ most popular cookies, celebrating their 100th birthday in 2012, but these days, Khosla has found his own history intertwined with that of the iconic treat. Since becoming president of the developing markets division for Northfield-based Kraft Foods in 2007—ten years after Oreos debuted in China—Khosla has seen the brand ascend from unpopular bottom feeder to the biggest fish in the Chinese cookie pond. And in a country of over 1.3 billion people, that’s a lot of cream filling.
“When I started at Kraft four years ago, Oreos were doing so poorly in the Chinese market that we were about to remove them completely,” muses the 59-year-old executive, who was born and raised in India. “I said, ‘Wait a minute. Why not try a different approach?’”
For Khosla, who oversees nearly $14 billion of business in over 60 countries, “wait a minute” translated into a creative hubbub that included hundreds of Oreo ambassadors on bicycles doling out samples in various Chinese cities and the towering basketball star Yao Ming explaining in commercials the traditional “twist, lick, and dunk” technique for enjoying the cookie. Above all, there was a massive overhaul that tailored the Oreo to local tastes, making it smaller and less sweet, with non-Western flourishes like green-tea-flavored filling and wafer rolls. Today, China is the second-largest consumer of Oreo products after the United States, and Khosla has clearly earned his transcendental cookie discourse.
For the moment, let’s put aside questions about pushing a calorie-loaded confection with little nutritional value on hundreds of millions of Chinese children and consider Khosla’s triumph with another aging American product, Tang. In the United States, the onetime powdered drink of NASA astronauts had also languished in Kraft’s developing markets for years. Then it got the Khosla treatment: overhauled packaging, innovative distribution, and locally adapted flavors that put the original American orange to shame—lemon pepper (Pakistan), tamarind (Mexico), and soursop (Brazil). Today, Tang ranks as one of Kraft’s most profitable products, with sales growing 25 percent a year over the last two years, even if few North Americans seem interested in quaffing it.
Khosla had earned stars as a marketing wizard well before landing at Kraft, though he had largely hovered under the radar. That began to change last year, when he took a major role in Kraft’s noisy $19 billion acquisition of the venerated British candy maker Cadbury, a deal that counts heavily on Kraft expanding its markets for sweets around the world. Then, last fall, Khosla and Mohanbir Sawhney, a professor at Northwestern University’s Kellogg School of Management, published a convention-busting manifesto, “Growth Through Focus: A Blueprint for Driving Profitable Expansion,” distilling the strategies Khosla has honed through-out his career. Khosla and Sawhney’s recipe eschews complexity (and mind-numbing PowerPoint presentations) in favor of a less-is-more approach that would make Mies van der Rohe proud.
Since publication of the article in the marketing magazine Strategy & Business, the authors have been in demand at business schools and corporate meetings. “I read ‘Growth Through Focus’ and then invited Sawhney as our keynote speaker to talk about it,” says Laura Hackett, general manager of commercial learning and development for MillerCoors. “The idea that you can line up a company behind a few key priorities and will progress further or that companies don’t have to become more complex but can be stripped down for clearer focus . . . it’s very inspiring.”
Of course, none of this would mean much if Khosla didn’t deliver in his own right, but Kraft’s developing markets business has more than doubled under his watch, now representing 28 percent of Kraft’s global portfolio, leading the CEO, Irene Rosenfeld, to gloat, “Our developing markets business is the growth engine for our company. We’re so glad Sanjay now calls Kraft Foods his home.” Rosenfeld lured Khosla from New Zealand to Chicago six months after she took over the helm at Kraft in 2006, when profits from the developing markets division were flat as a Wheat Thin. At the time, Khosla was managing director of Fonterra, a large dairy cooperative headquartered in Auckland. “I was lying on a beach in paradise, at the last bus stop on the planet, when the call came in from freezing Chicago with an offer I couldn’t refuse,” he recalls.
I first met Sanjay Khosla socially, oblivious to his lofty corporate status but captivated by his tales of übersuccessful marketing strategies. He was like Scheherezade in The Arabian Nights, only his spooled-out exotic narratives featured cookies and teas, soaps and detergents. One anecdote involved a pre-Kraft European product he helped develop that targeted horny adolescent boys eager to attract girls: Khosla and his team figured out how to play on the boys’ desires as well as their insecurities, inspiring them to douse themselves in body products with names like Dark Temptation and Rise (aromas that permeated my own home until recently, when my son outgrew the phase). These sagas seemed epic, transformational, subtly and delightfully fiendish. But it’s safe to say that if there’s a Kraft product in South America, Indonesia, Australia, Russia, or any of the dozens of other countries in his orbit, Khosla has been losing sleep over it, auguring how to sell it better.
Photography: Anna Knott; Photoillustration: Andrew Davis
Getting Khosla to describe how a middle-class kid from Jammu, India, became a globetrotting Pooh-Bah at the pinnacle of corporate America who earns more than $3.5 million a year is as arduous as scraping week-old mac and cheese from the bottom of a pan. He lobs statistics and figures in a desperate attempt to steer the conversation back to more familiar terra firma. Eventually, though, the story begins to slip out. Thirty-plus years ago, Khosla was living in India, a product of the famed Indian Institute of Technology in Delhi, which, considering its 2 percent acceptance rate, is arguably the most difficult university to attend in the world. (A sort of love child of Harvard, MIT, and Oxford, IIT boasts an alumni list of nationally and internationally recognized eggheads and top execs, including Victor Menezes of Citigroup, Rono Dutta of United Airlines, and the founders of Infosys, Sun Microsystems, and Cirrus Logic.) Khosla graduated with honors in electrical engineering, which he chose—despite his claims of not being able to change a light bulb—“because it was the most competitive department in an extremely competitive school, offering the most rigorous education imaginable.” In his spare moments, he reigned as the school’s tennis champ.
But after graduation, while most of his classmates jetted off to jobs and graduate programs in the United States, Khosla remained in Delhi to be near his ailing mother. He had been accepted at Harvard and Berkeley, but a decade would pass before he would set foot outside India. Instead, in 1977, he joined the British-Dutch multinational corporation Unilever. Khosla stayed with the firm nearly 30 years, leapfrogging up the corporate ladder, eventually deployed to England and Holland. But his first task? Purveying soap door-to-door in the Indian countryside.
Those early years as a subcontinental Willy Loman sound as harsh as they were galvanizing to the future titan. “My job was to visit 35 shops a day, selling detergent and chunks of soap off a handcart in some of the smallest villages,” Khosla recalls. “I’d ride country buses for hours, then wait around for these mom-and-pop storeowners, who half the time would just tell me to push off. If I was lucky, they’d buy something, in which case I’d dust off some filthy, rickety shelf and place the product myself.” Thinking back, he laughs: It’s a long way from his cushy, spotless offices on Kraft’s Northfield campus. “I found the experience hugely frustrating, coming from this fancy university, staying in lousy mosquito-filled flophouses, eating rajma [a cheap kidney-bean stew] every day because it’s all my allowance would cover. But to be honest, the learning was phenomenal. Getting down-to-earth at that level with consumers—you just never experience that again. And when you have to meet a daily cash target, it’s very different than reading about it at school.”
One persistent fantasy plagued Khosla as he slogged through the heat, dust, and insects. “I wanted to have an international career, to get out and see the world. But it was nowhere near reality. I was young, struggling, recently married, and thought our life was planned out with a respectable local position in India. A global career was a very remote dream,” says the man who ricochets each month through the time zones of Mexico, Dubai, Istanbul, and Australia.
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Khosla claims that he “lives, breathes, and dreams brands.” He’s been known to miss his exit driving home on I-94, consumed with thoughts of one product or another. Around the world, he routinely drops into tiny stores, checking up on brands he’s shepherded. But out of them all, there’s not a nanosecond of hesitation when asked which is closest to his heart: Wheel. This mundane-sounding laundry detergent changed his destiny, altered Unilever’s history, and crystallized tactics in play at Kraft today.
By the late 1980s, Khosla’s innovative ideas and questioning nature had earned him notice and quick promotions at Unilever. He spent four years in the London office, but on his return to India, he became more sensitive to the fact that virtually no multinational corporations bothered responding to local consumers. Instead, they plied the same products across all borders. “Companies were just planting their flags, with a one-size-fits-all attitude that didn’t work. You can’t just force stuff from one country to another,” argues Khosla. At that point, he was the head of detergent marketing in India, where there was already a cheap, popular laundry soap called Nirma. “I convinced our organization to create a competitor for it.”
Sounds easy enough. But Unilever was hardly a purveyor of locally adapted down-market products aimed at regional consumers, and Khosla’s suggestion met resistance from the London-based directors. According to one executive who worked with him at the time, “Today, it’s fashionable to talk about the opportunity at the bottom of the pyramid. But there was no business model anywhere for what we were doing then: Wheel had to be produced, packaged, and distributed with the lowest possible costs but also satisfying the requirements of Unilever in terms of effectiveness and safety, and we literally relearned the way we did business. Sanjay was the architect. His instincts were right on the mark.”
Wheel became the top-selling detergent in India and one of Unilever’s largest Indian brands, and its success has all the earmarks of Khosla’s vapor trail: (1) meld a company’s global muscle with local expertise, a concept he dubs “glocal”; (2) think so far outside the box that there’s essentially no more box in view; and (3) have an unmitigated, stone-cold obsession with winning.
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Khosla credits his father—a military dentist—with instilling in him the compulsion to win. “He did it in subtle ways and not-so-subtle ways, but I was aware of it from my first memories,” he says. Now, whether playing a weekly golf game with friends or positioning an international product, Khosla admits that if he doesn’t come in first, he’s deeply peeved. “It drives me nuts. Just nuts. And I’m a sore loser,” he admits. Ideal ingredients for toxic boss syndrome, with attendant images of personnel whipped into competitive frenzies and ill will oozing from every BlackBerry. But Khosla is a Teflon-coated anti-Scrooge—current and past colleagues praise his unorthodox corporate style. The man shuns neckties, has forbidden lengthy PowerPoint presentations, limits the number of pages distributed at meetings to three, and rewards innovative thinking, even if it doesn’t pay off in the product. Obstacles, too, can be handled unconventionally.
“When you come in as a change agent, which Sanjay was for us, it’s inevitable that you cannot please everyone,” says Andrew Ferrier, CEO of Fonterra, Khosla’s home before Kraft. “But Sanjay had a way of winning over his adversaries. He would literally challenge them by saying, ‘We don’t need to fight, we need to hug!’”
One reason for the devotion of Khosla’s teams is his willingness to mentor talent, and he has made a priority of advancing women into management jobs—a personal bias, he acknowledges. He and his wife, Neelu, have two children, and their daughter, who lives in London, has followed him into the marketing world. “I want her to have the same opportunities and successes in business,” he says.
According to Shawn Warren, Kraft Foods’ vice president of marketing for the Asia-Pacific region, “Sanjay has changed the culture at Kraft. Before, there was a kind of silo thinking, with little collaboration and everyone driving their own agenda. Now the level of teamwork and support is so high that we’ve exceeded some ambitious expectations as a result.” Warren has another reason to be pleased: He and others on Kraft’s developing markets teams have gotten much larger bonuses in recent years.
That success has a direct link to Khosla’s management approach—identifying the brands with the highest growth potential and heaping resources, attention, and love on them. Referring to “Growth Through Focus,” Ranjay Gulati, professor of business administration at Harvard Business School, says that Khosla and Sawhney “seek answers in simplicity and focus instead of [in] complexity and diversity. Their key points are a very helpful call to arms for businesses to stay focused, which is something that most forget in the heat of the moment. There are few—if any—reminders written by anyone, and the principles are applicable to a wide array of organizations.”
But if it makes so much sense, why hasn’t anyone figured it out before?
“Someone once defined wisdom as a penetrating view of the obvious,” says Sawhney, who befriended Khosla three years ago. They became golf buddies before teaming up on the article—and possibly, a future book. “We’d been thinking independently along these same lines of reverse logic and decided to put it together. It makes sense in hindsight: If you apply the focus argument, you grow more by doing less; you make fewer but larger bets.”
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The day I visit Khosla’s office at Kraft Foods, he’s off in Davos, Switzerland, at the World Economic Forum, but I’m nonetheless allowed a peek: His lair is strangely impersonal, with no mementos, awards, or even a single paper on the immaculate desk. But a trove of featured products lines the walls, including many Tang varieties and a selection of Indonesian Biskuat, which is at the forefront of Kraft’s “affordable nutrition” products—in this case, cheap and popular one-a-day snacks packed with vitamins and minerals. At the other end of the spectrum are the nutritionist’s nightmare, the famous Chinese Oreos and Oreo Wafer Sticks.
Though there’s plenty of outraged squawking about exporting causes of American obesity to other countries, the issue is only part of a complex equation. “Sorry, but as soon as any country increases its income level, the obesity rate goes up across the board, and you cannot point to one successful strategy or food product,” says Lisa Katic, a dietician and nutrition policy adviser to the food and beverage industry for more than 15 years. “People may want to blame Oreos, sodas, or fried chicken, but in developing countries, it’s not just changes in food habits that cause the problems. Lifestyles are more sedentary, systems are more automated, and you cannot dictate what people are going to eat. Companies develop all sorts of healthy options, but people have to buy them. Educating the population is still the best option.”
“It is about choices,” argues Michael Jacobson, executive director of the Center for Science in the Public Interest, a consumer advocacy organization. “But I think that health ministries in developing nations have been totally irresponsible about trying to maintain healthy diets, and that’s definitely the case in China, where they’re just lapping up Western fast foods. They should look at the obesity epidemic and rates of heart disease in the USA and Europe. But it seems they’re going to wait until there’s an actual health crisis, and unfortunately, it’s much easier to prevent poor diets from being promoted than it is to reverse a trend. As far as companies go, they’ll try and make as much money as they can, but if I were a corporation, I’d be more embarrassed than proud of making Oreos a hit in China. It’s only going to undermine the public’s health.”
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Khosla is a chocolate hound who famously stuffs his golf bag with candy bars and frequently proclaims that he works with cheerful people because “everyone’s happy when they’re around chocolate all day.” The serotonin levels surely skyrocketed last year after the struggle for Cadbury ended victoriously for Kraft, despite Britain’s fury that its ancient company fell into upstart American hands and Warren Buffett’s cranky public critique of the deal (with a 9.4 percent stake in Kraft, Berkshire Hathaway is its largest shareholder). The acquisition caused some momentary indigestion when Kraft’s fourth-quarter profits dipped this past February—an apparent consequence of the leveraged purchase. By now, Buffett’s grouchiness may be subsiding: At the time of the Cadbury transaction, Kraft stock was trading at $28.50, and at presstime, it has risen 18 percent, to $33.60 a share. Through it all, Kraft’s developing markets sector has remained luminously unflappable, boasting double-digit growth, with Cadbury’s India business recording revenue growth of 27 percent during 2010.
But the Cadbury brand had been tattooed on Khosla’s memory long before the takeover he helped spearhead. As he tells it, rocketing back to his childhood in Jammu, “Occasionally my brother and I would get a Cadbury Roast Almond bar as a gift or reward. But they were expensive, and my family could not afford them often. We had to share, breaking off small pieces, rationing them for a week, fighting over each one.” Later, as a young manager for Unilever, Khosla lived with his wife in the shadow of Mumbai’s landmark Cadbury House, oblivious to the role he would play in the corporation’s future.
Fast-forward to February 2010, when Khosla approached Cadbury House again, this time to greet some of his thousands of new employees. He asked to stop the car. “I just had to get out and walk a bit, it was such a tough, emotional moment for me,” admits the man whose journey began as a traveling soap salesman. “Soon after the acquisition, a big box of those Roast Almond bars arrived in my office, and I sent them all to my brother in New Delhi.”
So what’s the next milestone for the Titan of Tang, the Cookie King, the Baron of Brand Marketing? All future plans are confidential, I’m told. But one announcement did cause a flurry of international attention in March: For the first time ever, Oreos will be manufactured and distributed in India, all under the Cadbury brand. I’m betting that before long they’ll be available with chai-flavored filling.
CASE STUDY Tang powdered drink mix
THE COUNTRY Brazil
Tang is huge in Brazil, with 18 locally adapted flavors including watermelon, guava, cashew, and the native citrus fruit soursop (pictured).
CASE STUDY Biskuat nutritional biscuits
THE COUNTRY Indonesia
Leading Kraft’s “affordable nutrition” product line, these one-a-day snacks are loaded with vitamins and minerals, and a package of five costs just five U.S. cents.
CASE STUDY Oreo cookies
THE COUNTRY China
Chinese Oreos are smaller and less sweet than their American counterparts and offer native flourishes like green-tea-flavored filling (pictured). The Chinese basketball star Yao Ming demonstrates the “twist, lick, and dunk” technique in commercials.