Danone - Serving Up Servant Leadership

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Danone
Serving Up Servant Leadership

This Bulletin features a discussion between EffectiveBrands
(EB) and Olivier Faujour (OF) of Danone. It talks about
Faujour's experiences as General Manager of the Dairy
Division for kids' products. Kids' products are sold under
different local brand names (Danonino, Danonetje,
Danimals, Petit Danone) in more than 30 countries and
account for $1 billion turnover.

In 2005 Olivier Faujour was promoted to General Manager of
the Dairy Division for China. He had been in his role as
General Manager of the Dairy Division for kids' products
since 2003. Before that, he served in several marketing
roles at Procter & Gamble, in Europe as well as Latin
America from 1989-2002, working on brands such as
Pampers and Ariel. His last position at P&G was that of
Marketing Director Brazil, where he was responsible for
fabric and home care.

EB: Do you have an operating framework in place that
clearly delineates responsibility and accountability?

Faujour: At Danone responsibility and accountability are clearly
defined. Local managers are responsible for growing the
profit & sales of their brand by putting the right strategy
on paper and executing the brand mix - from product development
through local R&Ddown to advertising, merchandising, and pricing.

The primary role of central teams, such as the one I lead, is
to give local markets the tools to do this faster and better.
Their secondary role is to lead and deploy international
innovation projects. The last is to provide dedicated help to
countries not able to deliver their growth budget. I believe
this operating framework is a key contributor to the strong
results that Danone's Dairy Division currently enjoys
worldwide.

There is usually great open-mindedness on the part of local
organisations because they know that the central teams are
there to add value to their work and not to steal their job.
The ownership given to the local organisations creates a
strong entrepreneurial spirit with highly motivated and
enthusiastic people. It also helps us attract top local talent.

EB: Can you give an example of when this local
ownership and entrepreneurial spirit translated into a
global success?

Faujour: Although I am ultimately responsible for P&L, the
local organizations will always be in the driver's seat. It
works both ways: whenever I have a success from another
country that they could benefit from, they're open to hearing
about it and when they want to know what's happening in
other countries, they are always free to give me a call and
get the answer. Overall, there's a high level of trust and
transparency in day-to-day communication. Due to this, we
have been able to roll out a successful consumer promotion
related to the kids' products, which was invented in Mexico,
in more than 20 countries this year and have experienced
double-digit growth.

EB: Is the same true across all of the dairy brands or
is it specific to the kids' brand?

Faujour: The kids' brand is probably the most local of
Danone's four largest brands, the other three being Actimel,
Activia, and Vitalinea. Actimel for example has a much more
global marketing mix. After achieving success in Belgium, it
was launched almost at the same time across several
countries with a unique positioning whilst leveraging the
best practices from Belgium.

However, the key role of my counterparts who manage
brands centrally with a more global mix is much the same as
what I described for the kids' brand. Their role is to identify
and roll out new best practices to accelerate business growth.

EB: In the scenario where you were not happy with
the chosen local direction, what mechanisms do you
have in place to put a check on a country's plans?

Faujour: You sometimes need to temper the enthusiasm of
local countries that want to embark on a project that has not
delivered against expectations in other parts of the world.
You need to act fast and be forceful to ensure that they do
not waste time and money re-testing an idea that has low
odds of success.

If a country wants to implement an idea that did not meet
expectations elsewhere, it is our role centrally to raise the
flag, to convince them to at least run local research or
pursue other ideas with stronger international pedigree.
Discussions happen cross-functionally through informal
meetings where the general managers and the Dairy
Division president sometimes participate. The President of
the division acts as the ultimate arbiter/referee, if
necessary. Most debates "local vs. global" are healthy. They
help question the status quo and can lead to new ways of
doing business.

EB: How do you deal with issues where it is a matter
of interpretation - globally, it makes sense but locally,
it has an impact on how the market is seen to perform
in that particular year?

Faujour: It is sometimes an art to find the right balance
between global and local needs. Decisions need to be made
with the maximum amount of pragmatism, always keeping
the consumer in mind. In my experience, when a central
team is pushing hard for a "global" idea without getting a
positive response from many countries, it suggests that this
idea may not be as good as the central team thinks.

There is always some resistance to new ideas, particularly
when they come from elsewhere. For instance, when we
decided to invest in a common brand character "Dino" to
maximize appeal to kids, there was resistance from
countries that had other plans such as pure licensing. The
resistance was mainly due to the fact that these countries
were not seeing the value of the "Dino" character. We
launched it first in certain countries and when we
experienced success, others quickly followed. Today, the
"Dino" character is one of the hottest among kids in
countries like Spain and Russia and we are now able to
export similar character promotions across the globe at
minimal cost.

EB: What would be your key learnings or observations
with respect to Roles & Responsibilities coming
personally from a centralized to a decentralized
organisation?

Faujour: First, the voice of the consumer must always be
heard and be at the centre of decisions. Danone values that
the consumer is the boss.

Don't try to be everywhere. Try to identify the few countries
that will help you qualify potential big ideas for the world.

Be humble and try to recognize that your intuition can be
wrong because in the end, the local organization is supposed
to know their market best.

Travel enough and spend a lot of time in the markets. Don't
stay in your ivory tower.

Lastly, show enthusiasm and empathy to the countries. Try
to understand their overall business context, not just in the
frame of the brand for which you are accountable.

EB: You mentioned earlier that part of the role of the
central team is to provide local marketers with tools
to perform faster and better. What mechanisms have
you put in place to achieve this?

Faujour: We have ongoing tools (available to all
marketers worldwide) such as the Intranet, e-mails, and
newsletters that help us to share brand-specific best
practices. We also have conventions twice a year
where we bring the marketing directors from around the
world together and the central team presents their vision
and latest best practices. The Conventions are more topdown
as the objective is to share proven ideas to a large
audience all at once. We also have workshops on selected
subjects (e.g. evaluating pricing strategy) which bring group
managers, who are a level below marketing directors, or the
brand managers together for a day or two. There are eight
to ten of these workshops each year and they can be run
regionally or globally. These meetings are working sessions
and are therefore very interactive.

EB: Is there anything that pulls together the Danone
Way of managing a brand?

Faujour: General marketing training is run by the central/
local HR organizations. The Danone Marketing University is a
training program for new hires which consists of 3 waves of
training covering the basics of positioning, market research,
financial marketing in which key experts participate to share
their experience first-hand of working on particular brands.
During this 'University', every new hire gets a godfather (a
senior-level mentor) whose role is to give tips and advice on
business and career management.

We also have something called the Danone Forum, which is
an internal training program delivered by the local marketing
directors once every quarter. The aim is to give local
marketers a little bit of theory on different elements of
marketing such as advertising and packaging using
benchmarks and case studies. Here, as in other areas, the
idea is to leverage the materials developed in other
countries and adapt it to the local situation.

EB: Are there any more informal methods of sharing
information and best practices?

Faujour: At Danone, having a strong network is very
important. We are publicly encouraged by top management
to get together, create a network, and talk to colleagues in
other countries on issues we face, rather than relying solely
on formal meetings. The corporate "Who is Who" Intranet is
also a networking facilitator.

EB: How do you ensure that you also have global
leverage in terms of your external partners, e.g. ad
agency?

Faujour: We use a worldwide agency for advertising, Young
& Rubicam. We ran an initiative recently called the 'Copy
Challenge' to create advertising copy for the kids brand. We
provided some broad guidelines on what the brief should be
(the advertising platform). Each of the fifteen participating
countries then briefed their local agencies using a local brief.
The local agency creatives presented their ads to us in New
York and we selected the top 3 ads, which we then partially
financed in terms of production costs, etc. The countries
whose ads were not selected went ahead and financed their
own ads.

The outcome was very positive; it resulted in many good
ideas, some of which are now proving to be successful. It
was also a good way to make the various local agencies
work harder for us.

EB: As you mentioned earlier, the secondary role of
your team is to lead and deploy international
innovation projects. Where do you find inspiration for
new innovations?

Faujour: I try to keep an eye on what's happening in
the different markets. There are some specialised
websites in nutrition which present all the latest
innovations, interviews with food professionals, etc. and
that exposure can give you a sense of what could be a big
hit two to three years from now. Attending congresses with
key food professionals and other experts (sociologists,
paediatricians) can also give great insights. Lastly, regular
store checks in the 35 countries where my brand is sold can
also be a great source of inspiration.

EB: What approach do you employ with respect to
these international innovation projects?

Faujour: We work on longer-term breakthrough product
concepts that will hit the markets two to three years from
now so the work we're doing is quite upstream, e.g.
definition of what technology we would need to buy to
deliver the product benefits. Once we have identified the
market potential, how big the idea could be, we select two
or three countries that could roll out the innovation and then
they champion running all the market research,
development etc. with our guidance. Countries usually don't
have the time to do the first stage of the investigation.
However, it is critical to involve them early enough so they
feel ownership.

EB: Are there other mechanisms through which
innovations are leveraged across countries?

Faujour: Every local country has an R&D department that
reports via the European R&D to central R&D.

In the case of a concept being developed by a local team,
they brief local R&D to first screen for similarity of concept.
R&D has resources all over the world and can come back to
the local team and ask them to get in touch with another
country that is already working on a similar concept. If no
similarity is found, then local R&D starts assessing the
feasibility and business potential. If approved and additional
resources are required, another country will be asked to join
either directly or via the centre.

Principles of Effective Global Brand Leadership

In this discussion, Olivier Faujour emphasizes the
importance of several principles of leading global brands.

Servant Leadership

Servant Leadership is the idea of helping employees reach
their full potential by empowering them and addressing
their needs. It is all about avoiding the ivory tower
perception of people in the central team. It is about
understanding that, as a central resource, you are there
for the one and only reason which is to make the local
operating companies more effective and successful. Global
marketing takes place in the local market place. A simple
truth forgotten by many, but driving the Danone way of
global marketing.

Facilitate Global Leverage

The role of the central group is primarily to identify and
accelerate roll-out of best practices across local markets.
Global conventions, together with ongoing tools like
Intranet, e-mails, and newsletters, help to effectively
disseminate best practices across the global marketing
community. Investing in a common brand character and
exporting it across the world at minimal cost is one way in
which Danone exploits the benefits of scale. Using a
worldwide advertising agency is a common means for
globally leveraging resources. Having the local creatives of
the global agency compete against one another ensures a
higher quality end product.

Global Innovation

The area of innovation is often the only one without vested
interests. The central group focuses its resources working
on breakthrough international concepts, but ensures local
ownership and relevancy by involving countries early on in
the process. What is also recognized is that good ideas can
come from everywhere and everyone: innovation takes
place on a local as well as a global level. The way R&D is
organized ensures that there is not superfluous repetition
of efforts.

About EffectiveBrands
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