Patience, Persistence and Treating Employees Like Family

The Best Thing Since…

How can Mexico; this nation—its businesses, its people—realize its potential? How will the needed leaders emerge? Can answers, if not clues, be found with one Mexican chairman/chief executive whose company now claims more than one-fifth of the world’s population as its customers and Forbes magazine ranks as one of the world’s most innovative, ahead of General Mills? What can we learn from Daniel Servitje, who has taken Grupo Bimbo, a bakery business founded 70 years ago with 34 employees by his father, uncle and four partners, and grown it from $2 billion in sales to $14 billion in sales and 129,000 associates in 22 countries?

Grupo Bimbo supplies its products to retailers ranging from mom-and-pop stores to Wal-Mart and Costco, in the Americas, Europe and Asia. Its better known brands in the U.S.— Bimbo’s largest market by sales—include Sara Lee, Oroweat, Entenmann’s, Thomas’ English Muffins and Arnold’s. Bimbo is the U.S.’s largest bread seller, employing 22,000, and sells in more U.S. market areas than any competitor. Grupo Bimbo is the third largest Mexican multinational according to Expansion magazine.

Yet, Servitje’s views on leadership differ from most CEOs in the United States, though he might be a kindred spirit of Warren Buffet. At ease with himself and his values, and though we were told he’s shy, Servitje let down his guard enough to share a teenage story that he said he’s never told before, as well as some candid insights about his country and his own role and legacy.

Servitje also has the confidence to set aside concerns about 90-day profit performance, paying dividends and analysts carping over debt levels. He extends the value of culturally strong family ties to his associates (never referred to as employees), cultivates a diverse and inclusive work force and makes big bets on chasing environmental sustainability in Grupo Bimbo’s operations. He enjoys these freedoms because the company is still run on the principles and values of its founders. While the organization has a board of directors with many outside members, and is run like other public companies, the legacy built by Daniel’s 96-year-old father, Lorenzo Servitje, and 87-year-old uncle, Roberto Servitje, is still felt especially in the company´s ability to maintain a consistent long-term view.

Daniel served as Chairman of the Board since 2013, a position he took on top of his role as Chief Executive Officer, which he had held since 1997.

Grupo Bimbo has been named one of the “World’s Great Multinational Workplaces”, based on an employee survey and an audit of company policies and practices, by Great Place to Work, a human resources consulting, research and training firm that advises companies on how to change their corporate cultures. Grupo Bimbo has also been ranked No. 1 in reputation in Latin America for the last two years by MERCO, a business monitoring organization.

Daniel Servitje spoke in Grupo Bimbo’s board room with Horacio J. McCoy, Korn Ferry’s president, Mexico, and chairman, Latin America; Jose Raul Guerrero, Korn Ferry’s director general, Mexico; Michael Distefano, Korn Ferry’s senior vice president and chief marketing officer; and Neal Koch, a contributor to Korn Ferry’s Briefings on Talent & Leadership magazine. Also present were Luis Rene Martinez Souvervielle, Grupo Bimbo’s vice president for public and government affairs; and Monica Breton, Grupo Bimbo’s corporate communications manager.

Q&A

You grew up breathing the spirit of the company your father founded. How did you develop a global outlook that’s led you to extend your family’s enterprise into 22 countries across three continents? And how do you foster a global mindset among your employees?

While I was at Stanford, working on my M.B.A., it was Japan’s global heyday—marketing, manufacturing. That led me to wonder about our company, “Where will we go after Mexico? What does it take now to build a global mindset in our teams?” One practice we’ve established since, is to place a premium on mobility: We encourage our associates to travel or take stretch assignments in operations where they’ll learn something new to find ways they can do better back home. We have tried to remain curious and continue to learn from what happens around the world.

We understand the need to nurture new generations of global leaders; for example, we have approximately 120 management trainees who are expected to be fluent in English and completely mobile internationally.

How do you appeal to food tastes in 22 countries on three continents?

We’ve acquired 53 companies in the last 15 years. Each time, it’s very important for us to retain the talent, the wealth of local knowledge and insights they have, and so enrich our company’s culture. In some cases, we’ve even done a virtual “reverse takeover” where the acquired company ended up being the one that helped us lead our own operations in a market, as was the case when we acquired George Weston Foods in the United States.

Having a diverse workforce and an inclusive approach brings the best ideas to the table. By focusing on our consumers, and relying on local expertise, we have been able to innovate in every market we operate in. We also experiment and try ideas from one country to another. Grupo Bimbo is unlike other multinationals in the fact that we are headquartered in Mexico City—that certainly gives us a different view of the world.

How would you advise leaders of other companies concerned that adopting such values might be at odds with profit?

Our company’s philosophy, if you will, the basis of our culture, lies in our aspiration to be both a highly productive, yet deeply humane organization. We always strive for profitability, but we pursue productivity while being centered on the person. Our Golden Rule is to treat everyone with respect, fairness, trust and caring. This allows the businesses to prosper and, as this is a universal value, it sits well in all cultures.

Having a longer-term view on the business allows us to make bets that may take more time to pay off, but which enable us to build market positions that are more sustainable. That’s a competitive advantage. And because we engage our associates, fostering a place where they see opportunity to grow both personally and professionally, they in turn are fully committed and see the business as their own, and so their relationship to the company is in many cases not just about having a job, but a long-term career. Because of that, they go the extra mile for the company. And, of course, with a public float of around 25 percent, we’re blessed that we’re not as pressed to hit quarterly returns and can focus on the long term sustainability of our growth.

Does that approach breed complacency among employees?

At Grupo Bimbo, you can have a long-term career, but you have to deliver on the goals that you set with your leaders, and you need to change what you must, to make things happen. We are driven by the daily execution of our operation, so focus on performance does not allow for much complacency. Whenever we’ve needed to restructure, closing plants or when we reorganize distribution, we try to find opportunities for repositioning the people as much as possible. But when we can’t do that, we try to look our associates in the eyes and treat them fairly. We don’t try to save the last dime. At the end of the day, for us, it’s important that they see the story behind what’s happened and that we’ve done everything we could do.

Mexico is a country with natural resources, a young, vibrant work force and strength in nearly every industry sector. But it’s also been weighed down by legacy issues that have stymied its growth. What is your vision for Mexico’s leadership? How can the country develop the leaders it needs among its young people?

The work ethic of our Mexican teams is one of the highest, if not the highest, in the world. This is a country where people work the most days in the year. The view that Mexico is sort of a lazy country is not true at all. And their ability to not only work hard, but commit themselves to do the job, to bring ingenuity and a fresh perspective is great. That’s the reason why Mexico’s manufacturing base is expanding so rapidly and why we’re increasing our exports to the U.S. and other countries in many industries.

But we’re coming from behind. We have a very bad educational system. That will take years to change. I’m part of a group that is trying to change public policies in education, and it’s been a huge battle, but I think the needle is moving in the right direction. We also need to become English-fluent. Mexico and the rest of Latin America lags badly behind there. Additionally, our problem is that we need to find more and better jobs for our younger generations, given our country’s demographic profile.

Mexico’s president proposed economic, political and social structural reforms when he took office in 2012, promising they would produce economic and employment growth, reduce poverty, improve health and narrow the economic and social gap between the nation’s wealthiest 1 percent and Mexico’s remaining 120 million citizens, 60 percent of whom were classified as poor. He also allowed for increased foreign investment in oil and gas exploration and production, and increased competition in the electric energy sector. Are these reforms working?

Much has been accomplished in the past two years to transform this country. We’ve been through 11 structural reforms, very deep changes that held us back for 60, 70 years and now we’ve turned the page and have a new set of rules for industries such as telecommunications and energy that really opened the possibility for the country to grow.

Recent events in Mexico changed the perception of the country and I would say that we are at a stage where half of the body [politics] has changed, while the other half, which probably wasn’t in the minds of the government or the politicians to change, is also changing for the better. We need to establish the rule of law in this country to build institutions that can help us turn into what I and many others envision: a developed country in, say, 15 years. But in order for that to occur, things that weren’t in the plan are now happening, such as the coming transparency and anti-corruption legislation in the next few weeks. The challenge then will be making it real and implementing those pieces of legislation, which will be the work for the next four years. Someone was saying that what is lacking in the country is trust. I think that with these actions, with this work, we’ll build trust among ourselves to invest in the capabilities to make Mexico a much better country. I don’t obviously imagine that we’re seen like this at this stage, but we’re making profound changes that were not envisioned and they are very positive.

You got your M.B.A. at Stanford. How prevalent is Mexico’s American-educated business elite compared to the past?

It’s changing. We have many more people from U.S. universities now than 20 or 30 years ago. I know that the two governments are pushing to link us dramatically more than in the past in the flow of students, hopefully both ways, but certainly from the Mexican side. I think this is a great opportunity to also learn about the great parts of the U.S. culture that can be brought more to Mexico.

You and Paul Polman, Unilever’s CEO, co-chaired the food security task force of the Group of 20, a bloc of developing nations. What is your vision for achieving food security as the world heads toward a predicted population of 9 billion from its current 7 billion?

The world will have to feed the equivalent of twice today’s population of China in 30 or 35 years. At the same time, price volatility for food is here to stay. We’ve been blessed by lower commodities prices for two years, but eventually we’ll have a higher price for food, since there is no more land to produce it and not much water. That’s because 70 percent of the water is going to agricultural uses and 20 percent of arable land is degraded. And yet, we have to increase food production and consumption for 2 billion more people. The challenge then, simply put, is to increase food production by 50 percent without adding more land or water. What’s going to happen? I believe that we’ll find solutions from science and technology, with ideas like precision watering among others, and creativity from Silicon Valley. I’m an optimist on this one, but it will require investment and commitment on all fronts—by companies and governments.

When trade barriers are erected, the flow of food starts to be compromised. That’s something we have to take into account. And, at the end of the day, I think that we’ll be fed differently. Some products, like animal protein, will probably not be as prevalent as they are right now. We’ll have other types of protein that are much more accessible to consumers—wheat is the world’s largest source of protein, so we have a role to play there too. Climate change is going to impact this, bringing more volatility to prices.

Creative problem-solving for company leaders—and everybody else—is nourished by a well-rounded life. Do you still race carrier pigeons?

No. I never told anyone this story: There was a point when I was a teenager when I said, “I will no longer be able to compete in swimming.” So I said, “Maybe I can do well here.” I liked animals, and I bred and raced carrier pigeons for six years. I ended up winning the tournament in Mexico City. Eventually I moved on to other hobbies, such as photography, hiking and Ping-Pong, all of which are better for my allergies!

But you know what? I learned a lot about how to manage a business by racing pigeons because to win you had to be the best in everything—food, pairing, genetics and training. So I had between 60 or 80 pigeons, and it took me a lot of time to complete a system for being successful in winning the races. I was proud of my team of winged heroes.

And what about leading a balanced life?

Certainly we need to have a balanced life. It’s the only life you have, so you better enjoy it to its fullest. I try to take —which is something that I encourage my U.S. team to do— all the vacations that I’m allowed to take. There’s sort of a cultural thing in the U.S. that you cannot take the number of days that you have as a benefit. Here we do, like in all the rest of the countries. Balance, however, is not just a matter of number of days or hours one spends at work or at rest, it is more about having priorities that are balanced: personal, professional, familiar, social and spiritual to name a few, and to be able to be present enough to take care of all of them.

What do you like to do when you take your vacation?

I like to visit new places and discover the world. For example, we went hiking to Atacama in Chile last December, up a 5,600-meter mountain. I’ve gone to Nepal in the past, to the Everest Base Camp. I never thought I would climb so high. And I did it with my kids and my wife, so we were very proud of that moment.

Do you see a role for yourself and your fellow corporate chiefs in Mexico to change the country?

I think we have a major responsibility for our country and I try to participate in that role as someone who can probably help move the agenda on some issues. There was this new anti-corruption pledge from large and small companies. We contributed on that, and I think it was a good thing for the country.

And also sustainability, I’m also very committed to this issue. I sit on the board of the Latin American Conservation Council. We try to do as much as we can in the company to have a smaller environmental footprint. For example, we collect and use rainwater. We treat wastewater from our plants and sales centers. We work hard to minimize waste, recycle garbage and design our own electric vehicles. All the electricity we use in Mexico is from wind and is renewable. That was a big bet. Hopefully it will go in the right way. But if not, at least we’ll do the right thing.

I think that’s something we owe to our country, and we’re doing as much as we can.

Can you make a difference?

It depends on the subject, it depends on the moment. But hopefully, yes.

Is there more that you want as your legacy?

This has been a marathon: I’ve been in this position 18 years, much longer than the average CEOs in the U.S. I’m 55 years old and I still have energy to go, but I’m definitely thinking that I also want to have another part of my life doing different things. That’s in my head every day. What I’ve told our board is that’s why we focus so much on talent. A measure of my success will definitely be the team that replaces the existing senior leadership. The other one is that I see us —everybody— as in a relay race. In some ways there are so many opportunities around us that I also see the company as a 70-year-old startup. We have to question everything—all our paradigms and all of our views. We have to keep trying new things, experimenting and learning. That’s my role: To take the company as far as I can, and then pass the baton to other relay racers and that when I do, it will be in a better position than when I received it. That’s as much as I can do. If I accomplish that, I will certainly be happy.