Knowledge Management at Unilever Indonesia

I NSTI TUT TEKNOL OGI BANDUNG
SCHOOL OF BUSINESS AND MANAGEMENT

CENTER OF KNOWLEDGE FOR BUSINESS COMPETITIVENESS

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Knowledge Management at Unilever Indonesia
Unilever Indonesia (ULI) is one of the worlds leading suppliers of fast moving consumer goods
(FMCG) including soaps, cosmetic products, detergents, margarine, dairy based foods, ice
cream, tea based beverages, and fruit juice. With missions of creating better future everyday by
helping people to feel good, look good, and get more out of life, ULI believes that it will create
small every day actions that will make a big difference to the world. This can only be done
through developing new ways of doing business with the aim of double the size of the
company while reducing the environmental impact.
In 1998, ULI aimed to be 1 billion Company. To support the business ambitions ULI believes
that the way to win is by Winning with People. People are Unilevers greatest asset. Without
great people there will be no great brands. At Unilever Indonesia, people are developed as a
competitive advantage as it is needed to compete in the fast-moving, innovation-led industry.
This notion encourages optimal development of people potential. It was raised in Unilever
Business Excellence Methodology (UBEM) and Senior Line Manager (SLM) meeting. Initiated in
1999, UBEM figured out that a significant amount of expertise available within the company but
not effectively used. Followed by key recommendation that Learning Centre under Human
Resource Department has to be optimized with the focus on: Knowledge preservation; and
Training on Business Excellence Methodology for supporting continuous improvement
initiatives.
1. Background

Unilever Indonesia was established in 1933 under the name of Levers Zeepfabrieken N.V and
renamed to PT. Unilever Indonesia (ULI) following listing in Indonesia Stock Exchange in 1981.
Since then, ULI has been expanding rapidly as a result of investment in product innovations,
new product inventions, and local business acquisitions.
On 22 November 2000, the company entered into an agreement with PT Anugrah Indah
Pelangi, to establish a new company namely PT Anugrah Lever (PT AL) which is engaged in
the manufacturing, developing, marketing and selling of soy sauce, chilli sauce and other
sauces under the Bango, Parkiet, and Sakura trademarks and other brands under license of the
company to PT AL. On 3 July 2002, the company entered into an agreement with Texchem
Resources Berhad, to establish a new company namely PT Technopia Lever which is engaged in
the distribution, export and import of goods under the Domestos Nomos trademark.
On 7 November 2003 Texchem Resources Berhad entered into a share sale and purchase
agreement with Technopia Singapore Pte. Ltd, in which Texchem Resources Berhad agreed to
sell all of its shares in PT Technopia Lever to Technopia Singapore Pte. Ltd. At the companys
extraordinary General Meeting on 8 December 2003, the company received approval from its
minority shareholders to acquire the shares of PT Knorr Indonesia (PT KI) from Unilever
Overseas Holdings Limited (a related party). This acquisition became effective on the signing
date of the share sales and purchase agreement between the company and Unilever Overseas
Holdings Limited on 21 January 2004. On 30 July 2004, the company merged with PT KI. On


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2007, the company entered into a conditional agreement to buy the Buavita and Gogo
brands of fruit-based Vitality drinks from Ultra. The transaction accomplished on January 2008.
More detailed timeline of companys developing events can be found at appendix 1.

In 2007, ULI succeeded in achieving 1 billion Company. Within five years, in 2012 Unilever
Indonesia doubled the business with record sales of more than 2 billion. Overall sales grew
consistently with Compound Annual Growth Rate (CAGR) of 15% from 2000-2012 to reach Rp
27.3 trillion. Operating income was Rp. 6.5 trillion, with an operating margin of 23.6%. In its
80th anniversary, Unilever Indonesia has become no 1 leader in Fast Moving Consumer Goods
(FMCG) industry with winning shares portfolio in almost all categories. These wide variety of
products are classified into these classifications: Home Care (Rinso, Molto, Sunlight, Cif, Super
Pell, Domestos, etc.); Personal Care (Lifebuoy, Lux, Dove, Clear, Pepsodent, Citra, Ponds,
Rexona, Axe, etc.); Foods and Refreshment (Blue Band, Walls, SariWangi, Buavita, Bango,
Royco, etc.).

The Company owns six factories in Jababeka Industrial Estate, Cikarang, Bekasi and two
factories in Rungkut Industrial Estate, Surabaya, East Java, with its head office in Jakarta. Its
products consist of about 43 key brands and 1,000 SKUs which are sold through a network of
about 500 independent distributors covering hundreds of thousands of outlets throughout
Indonesia. Products are distributed through its own central distribution centers, satellite
warehouses, depots, and other facilities.
To maintain its competitive advantage, ULI believes in pillars of success which is: Great People
Great Place, Great Brands and Innovations, Sustainable Living, to create Great Business
Performance. Moreover, the company aimed to increase the business to be 3 billion
Company. Therefore, to support the business performance ULI believes that the way to win is
by Winning with People. In Unilever, people are at the heart of everything the company does.
Priority is given to their professional development, their life balance, and their ability to
contribute equally as part of a diverse workforce. There are more than 6,000 employees
throughout the archipelago.

2. Knowledge at Unilever
Unilever corporate purpose is bringing company's wealth of knowledge and international
expertise to the service of local consumers. Thus, the long term success requires a total
commitment to exceptional standards of performance and productivity, to working together
effectively and to a willingness to embrace new ideas and learn continuously. In short, the long
term success is all about knowledge and learning. Knowledge Management considers
accelerating business growth and organization capability.
The importance of Knowledge Management got support from senior management. Initiated in
1999, Unilever Business Excellence Management (UBEM) figured out that a significant amount
of expertise available within the company but not effectively used. Followed by key
recommendation that Learning Centre under Human Resource Department has to be optimized
with the focus on: Knowledge preservation; and Training on Business Excellence Methodology


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for supporting continuous improvement initiatives. The next year, UBEM 2000 resulted one of
key recommendation to develop Knowledge Management system to preserve and exploit
knowledge through: Best Practice forum, Expert Panel, Knowledge Database in ULInet. The
topic rose at the Senior Line Managers Meeting in 2001. Continued by research, focus discussion
group, and workshop on Knowledge Management facilitated by Andersen Consulting in 2002.
The focus discussion group (FGD) in February 2002 followed by seven Brand Managers and
three Customer Care Managers raised some issues of: The employees are too focusing on work,
no time to learn especially meetings; Some employees are reluctant to share because different
nature of the brands; There is no adequate mechanism on lesson learned sharing sessions; There
is no formal forum between Customer Care and Marketing Division; The need of a more
effective medium and discipline and time; It takes discipline in using the existing knowledge
management system to minimize the time in discussing the ideas; The contents of Marketing
Academy are too conceptual; the employees need website that contains examples, best
practices, marketing tips, and other practical matters.
Knowledge Management Workshop on February 20, 2002 was followed by 4 Directors, 10 SLM,
and 2 Managers. Resulted in three main issues that facing them in getting the knowledge on
their day-to-day working activities: Discipline in documenting knowledge, ability to search
multiple sources of information, and Information resides with individuals. For ULI, knowledge
is a product of learning. Company gets knowledge from learning. Knowledge is considered as
the most strategically important resources and learning is the most strategically important
capabilities for future organization. In order to generate extraordinary value for stakeholders, a
company has to learn better and applied the knowledge faster than competitors to accelerate the
business growth.

2.1Performance Culture
Business strategy tends to increase focus on how firms configure knowledge-based resources to
create value. This is largely due to firms competing less on stable products and markets, and
more on competencies, dynamic capabilities, new ideas, and innovation (intellectual capital).
Such knowledge, often referred to as knowledge stocks, helps firms create competitive
advantage through the utilization and transformation of various organizational resources
required to perform a task (Nonaka, 1994; Kogut and Zander, 1992; Grant, 1996).
In addition to the importance of knowledge stocks, Dierickx and Cool (1989) noted that
knowledge flows are vital for strategic renewal of new knowledge, as well as recombination of
existing knowledge. Especially in dynamic environments, the flow of knowledge both within
and across firms is essential for innovation and continuous adaptationleading to a more
sustainable competitive position (Grant, 1996; Kogut and Zander 1992; Nonaka and Takeuchi,
1995, Spender, 1996). The connection of knowledge stock and flow at Unilever is showed in
Appendix 2.
It is the configuration of knowledge stocks that provides a foundation for competitive
advantage (Grant, 1996), but the renewal and recombination of those stocks that allows a firm to
sustain that advantage (Grant, 1996; Teece, Pisano, and Shuen, 1997). This distinction can be


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important because, as Leonard-Barton (1995) pointed out, without continual knowledge flows
to enhance and renew their strategic value, knowledge stocks can sometimes become the cause
of rigidity rather than competitive advantage.
The performance culture, knowledge sharing, and external knowledge are the foundation of
ULI knowledge management practices. Related to Knowledge Stock and Flow Model,
performance culture can be referred as knowledge stock, while knowledge sharing environment
activates the knowledge flows. However, its the external knowledge that sustains the stock-
and-flow cycle, continuously renew and recombine that knowledge to sustain the competitive
position.
Unilever performance culture is a combination of a winning culture and winning capabilities
that will drive business performance and enable us to win. A Performance culture is central to
companys strategy, and to the achievement of its vision of doubling the size of the business.
Unilever believes that companys strong performance is driven by three strong pillars: Great
people and great place to work; Great brands and innovation; Sustainable living plan (which
will reduce carbon footprint while doubling the business size). Appendix 3 shows visualization
of pillars of ULIs Great Business Performance.
The pillars are manifested in companys values, supportive behaviors, and continuous changing
and improvement in the day to day business operation. The values including: Customer,
Consumer, and Community Focus; Teamwork; Integrity; Making Things Happen; Sharing of
Joy; Excellence. The values drive supportive behaviours such as: Providing focused and clear
direction; Delegating and empowering. Taking ownership, where appropriate; Gathering data
to inform decision making with sense of urgency; Taking calculated risks, accepting
responsibility; Providing encouragement and accepting mistakes, in the spirit of learning; The
work place landscape also change to be more open space that reflects egalitarian spirit and
dynamic environment as can be seen in Appendix 4.
Under management of Human Resources, ULI concerns in creating generative leaders and
coaches. Each person at ULI is trained to be a leader. A manager is endorsed to perform both as
leader and coach that responsible to supervise and each train team members. That generative
coaching culture creates sharing knowledge behavior inside the company. Therefore, the needs
of third party coaching (from outside) are diminishing, while coaching between the employee
become more dominant (see Appendix 5).
Great bussiness performance is also endorsed with Learning Award. It is a program to
encourage all employees to share their ideas, knowledge, skills, and experience to others; Also a
program to reward and organize people who are willing to contribute or facilitate in any
learning activities; and A medium to motivate coaching and cascading best practices and
failures. All employees must open path to growth for the company and do both idea and action
(make it happen values) as depicted in Appendix 6. Examples of award ideas and actions: A
new customer/ consumer insight; The application of a customer/ consumer insight that has
translated it into new competitive advantage; A creative "breakout"/ change experiment which
opens a potential new path to grow; The development of a new capability in Unilever Indonesia


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which enables growth; The development of a new partnership/ alliance for growth; A calculated
risk which fails, but provides valuable learning.

2.2Internal Knowledge
The essence of knowledge sharing activities is to transform tacit (individual) knowledge into
knowledge within organization. Tacit knowledge will leave the organization as employees
leave the company, but organizational knowledge stays within. Several knowledge activities are
established by ULI to create sharing culture amongst employee as depicted in Appedix 7.
SOLAR (Sharing Of Learning And Result) is learning session where anyone can share related
to job or other knowledge that can be useful to employee. Guest speakers are welcome. W1H is
an 1 hour-informal learning session of HR Services team to share their capabilities to improve
performance, conducted every Wednesday. HR4HR is part of people development and
capability building for HR Team by having regular learning session from the senior manager of
HR, including HR Director. Video Caf by watching interesting/ thought provoking videos (i.e.
Harvard Business Reviews), and together discuss the movie to gather some insights.
Conducted in informal manner with set up like in a caf. Cinemania, watching old or new
cinema movie, that might be related to daily work as a team or personally. Afterwards,
participants should make a presentation in regards to their work in Unilever. GLAD (Group
Learning and Development) is sharing extraordinary experience from Unilever employees to
motivate other colleagues such as sharing from employees who has just got back from
international assignments, etc.
Some tools are embedded also to create sustainable learning environment such as: General
Learning Centre (GLC) in Factory, GLC is part of people development and capability building
in factory to ensure all employees can deliver the objective promised within the highest
standard. These facilities was built in early 2011 in Cikarang and Rungkut Factories which
consist of training rooms, libraries, computer rooms, and mini workshops to ensure
comprehensive learning processes based on latest training program and modules; LMS
(Learning Management System), aims to provide aligned curriculum to better leverage the
wealth of learning from within Unilever. By LMS, learning is not delivered anymore; it is
accessed when you need to know something its in reach. LMS provides hundreds e-learning
with just one click to inside Unilever; Learning Award a program designed to encourage all
employees to share their knowledge, skills, and experiences to others. It is also meant to
motivate coaching and cascading best practices and failures amongst ULI employees; Online
Library, start in 2005 to activate employees habits in reading and sharing knowledge. It
contains collections up to 3000 books, 500 e-books, 300 multimedia learning, and 1300 technical
training modules. Training modules made by employees are shared and could be accessed
across factory for cross site training.


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Based on Unilever best practice, formal-classroom education and training shows the least
impact in terms of learning excellence. Meanwhile, on-the-job experience and cross-functional
exposure are the most impactful ways of learning, illustrated in Figure 1 below:

Figure 1. Degree of Impact - Unilever Ways of Learning

Based on the finding, Unilever Indonesia created the 70-20-10 development model. The model
mainly focuses in on-the-job rotation (70%), coaching from managers (20%), and 10% strong
curriculum in classroom learning and learning modules (depicted in Appendix 8). It is the
development principle we believe in order to create effective development plan for the
employees.
Using this model, ULI has been succeeded in effectively develop employees capability across
professional skills, general skills, and leadership. The definition of these skills elaborated as:
Professional Skills, defined as specialist knowledge required to perform certain tasks within a
particular business function (i.e. Marketing Foundation, HR Skill Insight, etc.); General Skills,
Application of the knowledge and skills that are common across all functions and describe the
skills needed to get the job done. (i.e. time and priority management, project management, etc.);
Leadership, Unilever best practices have proven that leadership excellence has been effectively
leveraging day-to-day business operations to the next level. The Standard of Leadership (SOL)
takes a role as pattern of behaviors Unilever believe to adopt, in order to work effectively
together. While leadership moments defined as points at time where people facing powerful yet
challenging discussions or decisions.
2.3External Knowledge
The external knowledge has been one of Unilever concern to continuously renew and
recombine companys knowledge to sustain the competitive position. Being actively engaged
with externals has enabled Unilever to access the knowledge to create sustainable engagement
with the consumer, customer, and the environment.
Consumer Care, the Company handles customer complaints and inquiries through a dedicated
consumer care service Suara Konsumen. Through Suara Konsumen, ULI seek to strengthen
the relationship between the company and consumers and customers by responding to their
concerns and expectations regarding the products, and increasing their satisfaction with the
products. The findings and insights derived from the Consumer Care Line are communicated
throughout the Company in the form of Monthly and Online Reports for each brand. Every
month, a Top Ten Feedback list is submitted to senior management for their review.


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Consumer and Market Insight (CMI), CMI has helped ULI to understand how consumer will
interact with the brands, i.e. triggers, barriers, behavior, etc. It is also support understanding on
market dynamic, competition, and seeking further opportunities. CMI in ULI is done by
business partnering with cross functions, its main objective is to show the business how and
where to grow.
Customer Education Program via Unilever Sustainable Living Plan (USLP, The USLP is
companys public commitment to improve the environment, livelihoods, health, and hygiene of
Indonesian consumers. The action ULI takes in order to implement the plan covers all
operations, and stated as an integral part in doing business. One of the customer education
programs which regularly implemented is the Pepsodent Oral Health Month. In 2012, no less
than 525,000 students in 2,300 primary schools were exposed to the campaign.
Communities Benchmarking, ULI welcomed visits from schools to accommodate their field
trip or the making of final report. ULI also have visit from other companies or other Unilever
sister company as well as benchmarking to HR communities in order to learn and develop from
outside-in best practices.
Internship Program, Unilever also launched several scheme of internship program to get the
fresh idea from students, as well as accommodating students needs to experience real work.
ULI have community-based training for people surrounds the factories, as well as the famous
Unilever Leadership Internship Program (ULIP) for potential students that linked to
Management Trainee program.
2.4Practice of Knowledge Management Strategy

Smart professionals know where to find knowledge. Therefore ULI with the help from
facilitators and lecturers from Sekolah Staf dan Komandi TNI Angkatan Laut (SESKOAL)
conducted group study. Top managements learn three war cases: Pearl Harbor, Normandy,
Falkland. The group discussed what we had to do and changed to beat the competitor.
Documentation of the study can be seen in Appendix 9.

Some learning results from SESKOAL study in building company and employee Mindset: Have
this "war" mentality and never underestimate (any competitors); The best defense is an
offensive more; Sustain Aggressiveness: Prepare for a long war, not just one battle. In building
company and employee Preparation/Planning excellence: Everybody must have clarity in
objectives and focus; Comprehensive and use all functions available (total offense) including
e.g. Legal, Public Relation, IT, and so on; Gather and use field experience to know what will
work; and Always have plan B. In building company and employee Speed/Surprise element:
Maintain confidentiality of plans; Speed to Market: "Do early, Win early". In Execution the


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company and employee learn: Be responsive to early signals from the field; Micro-planning:
win shop by shop, area by area; When you are winning, follow-up with more offenses.

3. Unilever Indonesia as the Most Admired Knowledge Enterprise

MAKE is a research program conducted by Teleos and The Know Network since 1998 and has
been implemented in North America, Europe and Japan. In 2005, it is the first time the
program was conducted in Indonesia, in which Unilever Indonesia was chosen as one of three
companies receiving the national level award and as a result, was eligible for the Asian MAKE
program.
The criteria of the MAKE evaluation covers the following: Creating an enterprise knowledge-
driven culture; Developing knowledge workers through senior management leadership;
Delivering knowledge- based products / services / solutions; Maximizing enterprise
intellectual capital; Creating an environment for collaborative knowledge sharing; Creating a
learning organization; Delivering value based on customer knowledge; Transforming enterprise
knowledge into shareholder value; From the 8 criteria points, Unilever Indonesia was
considered as having performed very well on point 5 which is creating an environment for
collaborative knowledge sharing and 6 which is creating a learning organization.

The Indonesian MAKE expert panel members acknowledge Unilever Indonesias capability in
creating an environment conducive for collaborative knowledge sharing. Unilever Indonesia
has won Indonesian MAKE Study Winner 7 times (2005-2011), becoming the first Indonesian
enterprise to be declared as Asian MAKE Winners (2005), and winning the Asian MAKE Study
6 times (2005, 2006, 2008-2011).


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4. Resources

Morris, S. S., Snell, S. A., and Lepak, D. (2005). An Architectural Approach to Managing
Knowledge Stocks and Flows: Implications for Reinventing the HR Function. New York:
Cornell University: CAHRS Working Paper Series.

Dierickx, I., and Cool, K. 1989. Asset stock accumulation and sustainability of competitive
advantage. Management Science, 35: 1504-1513.

Kogut, B. and Zander, U. 1992. Knowledge of the firm, combinative capabilities, and the
replication of technology. Organization Science, 3: 383-397.

Nonaka, I. 1994. A dynamic theory of organizational knowledge creation. Organization Science,
5: 14-37.

Nonaka, I., and Takeuchi, H. 1995. The Knowledge-Creating Company. New York: Oxford
University Press.

Leonard-Barton, D. 1995. Wellsprings of knowledge: Building and sustaining the sources of
innovation. Boston: Harvard Business School Press.

Grant, R. M. 1996. Toward a knowledge-based theory of the firm. Strategic Management
Journal, 17(S2): 109-122.

Teece, D. J., Pisano, G., and Shuen, A. 1997. Dynamic capabilities in strategic management.
Strategic Management Journal, 18: 509-534.

Websites
http:/ / www.unilever.co.id/ aboutus
http:/ / www.unilever.co.id/ sustainable-living/ uslp/
http:/ / www.unilever.co.id/ media-
centre/ pressreleases/ 2005/ Unilever_Indonesia_Receives_Asias_2005_Most_Admired_Knowle
dge_Enterprise_(MAKE)_Award.aspx

Interview
Interview with companys Person in Charge of KM.

Companys Documents
Knowledge Management Practice in Unilever, Presented to MedcoEnergy by Lala Tobing on 12
August 2008
Knowledge Management Case Study v1, Unilever Indonesia, Agustus 2013
Unilever Indonesia Public Expose, by Maurits Lalisang, 21 May 2013


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5. Appendixes
Appendix 1
Timeline Developing Events
1920 -
1930
Import by van den Bergh, Jurgen and Brothers
1933 Soap Factory - Levers Zeepfabrieken NV Angke, Jakarta
1936 Margarine and oil production van den Berghs Fabrieken NV - Angke, Jakarta
1941 Cosmetics factory - Colibri NV, Surabaya
1942 -
1946
Unilever control discontinued (World War II)
1965 -
1966
Under government control
1967 Control of business back to Unilever under foreign investment law
1981 Go public and listed in Jakarta Stock Exchange
1982 Construction of Elida Gibbs Factory in Rungkut, Surabaya
1988 Transfer of the Toilet Soap Factory from Colibri to Rungkut Factory, Surabaya
1990 Enter into the tea business
1992 Opening of ice cream factory
1995 Construction of detergents and foods factory in Cikarang, Bekasi
1996 -
1998
Consolidation of manufacturing facilities Cikarang, Rungkut
1999 NSD Liquid Detergents Cikarang
2000 Enter into soya sauce business
2001 Opening of tea factory Cikarang
2002 Opening of central distribution centre Jakarta
2003 Enter into mosquito coil business
2004 Enter into snack business
2005 Opening of liquid / shampoo factory Cikarang
2008 Enter into fruit-based Vitality drinks business
2010 The company enters the water purification business by launching Pureit
2011 The new Dove soap factory opens in Surabaya, while the Walls ice cream and Skin
Care factories in Cikarang are expanded



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Appendix 2 ULI Knowledge Stock and Flow Model

Appendix 3 Pillars of ULIs Great Business Performance



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Appendix 4 Changing to Open Space

Appendix 5 Generative Coaching Culture



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Appendix 6 Learning Award Sheme

Appendix 7 Knowledge Sharing Events and Medium



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Appendix 8 The 70-20-10 Development Model

Appendix 9. Top Management Study at SESKOAL



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Appendix 10. Company Vision
The four pillars of the companys vision set out the long term direction for the company where
ULI wants to go and how we are going to get there:
We work to create a better future every day
We help people feel good, look good and get more out of life with brands and services
that are good for them and good for others.
We will inspire people to take small everyday actions that can add up to a big difference
for the world.
We will develop new ways of doing business with the aim of doubling the size of our
company while reducing our environmental impact.

Appendix 11. Unilever Indonesia Performance Data Salient



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I NSTI TUT TEKNOL OGI BANDUNG

SCHOOL OF BUSINESS AND MANAGEMENT

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