Transformational Leadership &Innovation as a Spring Board to Traditional Tea Industry: Success Story of Lumbini Tea.

Abstract

Sri Lanka as the gateway to South Asia and with its strategic location along the silk road, famous for its gems, spices, tea, cricket & beauty attracted foreign invaders for centuries. The first tea field was planted in Sri Lanka in 1867 under the British rule and celebrating its 150th anniversary by year 2017(Ceylon Tea Board). Ceylon Tea the flagship brand popular all over the world, is one of the most significant industry in Sri Lanka economically as well as culturally. For the last few decades Sri Lanka has lost its market share in the market apart from few significant tea brands perform well in international level. Even though, the world production of tea grew 6 percent from 4,990 in 2013 to 5,304 billion kilograms in 2015 (ITC ,2016) our tea export haven’t increased accordingly. This is due to Increasing competition from countries such as Kenya, India and Indonesia has resulted in reduced market share and low prices in the international market. It is a must we have to look back why we have lost the competitive edge and the market position in the world tea map. Apart from few Sri Lankan brands all other tea producers are selling bulk tea through the commodity markets due to short term financial benefits where we lose an ample opportunity of value added tea and other new emerging markets. Even though Sri Lanka is catering to Ceylon tea lovers, it has to face the challenges in increasingly competitive beverage market as variety of teas in the world market is now increasing while consumption of unbranded tea is declining (Wanninayake and Disanayake, 2006). To gain a competitive advantage in the tea industry value creation and the change management can be used as fundamentals. To drive this effort leadership is a must for any organization. “if you wanted to do something new always select something that can be done every day and continuing “is the advice of Mr. D,Jayawardane , founder/chairman of Lumbini Tea Valley to his son and workers in the organization Mr. Jayewardene, charismatic visionary entrepreneur hailing from down south has established Lumbini tea factory in 1984 and despite all the odds he has developed it to become a forefront tea factory in Sri Lanka which fetches highest price range merely because of its quality which never compromised. Nevertheless, his effort to up bring the Lumbinito this stage he has decided to transfer the batten to the second generation smoothly which took almost a decade where he groomed his son to take the reins. Even today he stands behind them and involved with the factory where he plays a shadow role. With the new young leadership Lumbini has taken another turn with his novel management practices and dedication to take the brand global. “Once I have taken the control I have increase the human resource and welfare budget with a considerable amount and this has led to the increase of the productivity. While doing all these changes I have never up-side down my father’s management systems, but I have changed them the way I wanted gradually” Stated Chaminda during the interview. Turnaround of the company has happened in 2003 when they decided to participate in a Tea competition held in USA and won four awards and it has become a catalyst for the morale boosting and to decide to go beyond boundaries. While pumping innovation in to the product and process he has open the doors to open innovation practices where in enabled flow the external knowledge gains from stakeholders as well as out flow from the organisations. Lumbini’s innovation has been multi-pronged. In the area of product development, for instance, finding new products and existing product enhancements in terms of the tastes and aroma is a key area. In terms of market innovation is often about finding solutions to meet imagined or real consumer needs and looking for new markets or expanding the existing market has been forefront. “We have given the freedom to do our experiments and come up with novel ideas to improve the products and processes of tea making. This kind of practices I have never come across any factory in Sri Lanka”, On of his employees expressed his view on the innovations. Chaminda’sleadership &change management practices with strong human resource focus coupled with social responsibility effort bonded to its core business and employees paved way to make a delighting environment for the staff and the coworkers. Also long term rewarding and appreciations strengthen the sustainability of his change management efforts. While keeping focus on new value added tea varieties and novel branding effort Lumbini keep continuing to tap untapped market where they see a blue ocean without competing on already cluttered markets. The effort of keeping the price point high without compromising the quality and conveying the buyers is done through tea experiencing with tea fares worldwide and participation in the competitions where Lumbini has won numerous accolades under their brand giving them a good exposure. Even though they are going strong in exporting and among the tea exporting companies in Sri Lanka the brand name of “Lumbini “has not come forward much to the general public in Sri Lanka which he decided to do some branding and visibility exercises as well and it has paved way to establish tea centers around the country focusing the tourist and up market tea consumers where the first experience center is establishing in Lumbini factory premises itself. Now they have three customer experiencing tea centers including Ella & Hikkaduwa targeting the tourist and tea lovers where at Deniyaya “Dalu” Tea center can experience their own tea trail and make your own tea cup. Among the top innovative products “Tea Ring” product, “Jaya-Chakra”, first part from the name of the founder chairman and the latter was derived from the shape. (Chakra is for the shape of ring in Sanskrit) won many accolades in country as well as overseas. Management has granted an immediate cash reward for the innovator of this tea and though he is not working for the company now still pay a royalty fee for him and this has encouraged and with this innovation drive so far employees of Lumbini has come up with 5 innovative patented teas. By adopting a concept of Vine Yards in France and in European countries they have decided to promote “Lumbini Tea Valley”, with the Lumbini Estate which is situated bordering Sinharaja World Heritage rain forest and special soil condition which gave a unique taste and aroma to the tea. With the prevailing high labor and other cost for production in tea industry it’s impossible to fight with low cost tea producing countries like Vietnam & Kenya. Therefore, the best way to get away from this obstacle is value added tea and high branded teas where we can sell high price, high quality tea as a strategy. Lumbini was the first to export tea direct to a buyer from a tea producing factory. Where the Dilma as a brand have done the brand marketing for Ceylon Tea they also started buying from tea auction and until at the latter stage they went for their own production facilities. Nevertheless, the respect and the gratitude should go to founder of Dilma Mr. Merrill J Fernando, who pioneered to take the Ceylon tea brand in to niche markets around the world and showed the way. The Dilma revolution has paved way for the new entrants like Lumbini and many more where no one believed that we can brand “CeylonTea” at the highest level in the world tea market and capture the premium sector. Along with this Lumbini has selected Going global as a strategy for growth. Usually the internationalization or expansion of the firm across many foreign markets, is related to psychic distance where the initial entry is to a foreign market which is familiar and closer in terms of psychic distance to the host country, followed by subsequent entries in markets with greater psychic distance. Psychic distance is defined as the "sum of factors preventing the flow of information from and to the market. Examples are differences in language, education, business practices, culture and industrial development". But in the case of Lumbini they have taken a unique approach where the new markets are totally new territories and psychic distance is high like Mexico & Latin American countries. They have selected exporting to direct buyers and subsequently joint venturing as mechanisms and first JV they have established “Lumbini Tea Valley USA” to promote tea in North & Latin America. Also Lumbini has nurtured a culture where they use education as a tool for promotions by participating exhibitions and tea tasting events all over the world. This case story is a good example of transformational leadership which drives the innovation within the company and establishment of change management to reach the next level where open innovation has become key instrument of growth with other supporting factors. With the present growth pace and direction Lumbini is in the acceleration stage and ready to be the next big Sri Lankan specialty tea brand in the world.