Innovation is the only way to grow: CavinKare's CK Ranganathan

CK Ranganathan emphasises on investing in R&D

The idea of selling consumer products in sachets in the 1970s and 80s revolutionised the way FMCG companies catered to customers in rural India. Through CavinKare, CK Ranganthan took this concept to new heights, and in the process, built an FMCG company that is resilient, and in many ways, iconic.

On the show Leadership Mantras with Forbes India, he talks about starting the company with Rs15,000, overcoming an inferiority complex, how local FMCG pioneers have made a difference, and what it takes to lead and diversify a consumer brand in a competitive market. Edited excerpts:

Q. Can you take us through the early days of setting up CavinKare?

After graduating, I joined my family business, where my brothers gave me the responsibility of manufacturing. I didn’t know anything about it... it was just a small outfit of about seven to eight people working in the factory, that’s all.

I grew [up] with a lot of inferiority complex because of my lack of English knowledge and poor academic track record. My brothers used to do very well. All these things had given me the [impression] that I’m academically weak and inferior [to them].

But after getting into business, within three to four months, I realised, ‘Hey, business is common sense! I can do it!’ So I started discussing with my older brothers, ‘Why not this way? Why are you doing it like that? We’re making a mistake’, all these things. That didn’t go well at all.

Somewhere, I think, I also pushed too much from my side at that age. It came to a stage where we could not have lunch or dinner across the table together, but still we’re in the same business. I thought and said, ‘Okay, there’s no point hanging on in here, let me move out of my home and start something on my own’. We used to take Rs2,000 salary per month from the business. [With] those seven to eight months’ salary savings, in all, I had some Rs15,000 in hand. I walked out of my home with that Rs15,000.

Just 200 m from home, I took a small room and my journey started like that. Initially, it was a struggle. But I learnt in my own hard way. Seriously, my education and learning started after I moved out of my home and started on my own, because of the fire in my belly. I burnt the midnight oil, slept very little, put in a lot of effort to learn English, and a lot of subjects [like] marketing and sales.  

It’s not a shame… it took me 10 years to understand the difference between sales and marketing, after starting a business. My father was an innovator, but I started my business as a copycat. No shame. But I learnt it. Every mistake I made, I corrected it quickly and went on to the next step.

Q. What has innovation meant to you, and has the definition changed today?

Innovation is the only way to grow. In our R&D centres, it’s a not spelt out that the product either has to be differentiated or significantly better than the competition.

Most of the time, it’s a differentiated product that gets into the market and wins the game. If you want to be a ‘me too’ player or a fifth or sixth player, you can be. But if you want to be one of the top two or three players, innovation is the only way out. That we have experienced.

Q. What do you think Indian pioneers like you, Harsh Mariwala (Marico) and Karsanbhai Patel (Nirma) have taught MNCs in terms of pricing and innovation?

I can say they [MNCs] have taken some learnings from us. But we learnt quite a lot from them as well. Let’s not undermine the MNCs, the power and the kind of knowledge they bring to the table. By observing them as competition, we learnt quite a lot.

MNCs have deep pockets and the best talents in the company. If we [Indian companies] have to beat them, we can’t think in the same way they think or do the same things they do. I can’t beat them in their own strategy. I need to be different. This is a basic rule. Because we tried it, but we failed.

So, for me or Karsanbhai Patel or Harsh Mariwala, it is important that we differentiate.

The first opportunity presented to us was when the MNCs were looking at sachets as a downgraded product and they were selling only bottles. It took about 15 years for them to realise that sachets are a big market to play in. They ignored it because they thought it’s a downgraded product that’ll affect the image of the brand. But by that time, we started growing well. I always invested ahead in our R&D. When I had a 250 sq ft office, my R&D centre was 500 sq ft. Initially even [with] Rs15,000, I had a separate R&D centre. It’s not quality testing, but pure R&D. In the corporate office, we had a 30,000 sq ft building, and R&D was about 40,000 sq ft. Even today, our R&D is much bigger than our office space.

Also watch: Forbes India Pathbreakers: Harsh Mariwala on what it takes to win the game of life and work

Q. How do you keep a brand alive for decades?

The consumer evolves and it is important that the scientists and marketing team predict the next evolution. Understanding the psychology of customers, their evolution and lifestyles, is important to us. In fact, there is a competition in our company, between R&D and marketing—who meets the maximum [number of] customers.

Q. What’s your leadership style, and advice to young, aspiring entrepreneurs?

My leadership style is unassuming, inclusive, and inspiring. Ideas come from anywhere; give employees solutions when they are struggling. Motivate them, pat them on their backs if they do a good job. Coach them along. You can’t just keep telling, do this and do that. You have to tell them why we should do something. If you explain, they’ll learn, and that way, they’ll push you up the ladder. They’ll say, next time, ‘you don’t have to do that, now I know how to do it’. So take efforts in constantly coaching and educating team members so they push us upwards and they grow along.