Global Knowledge Management at Danone

Vivekraj S.N.

Samyuktha.C

Prashanth.C

Mythili.A

Introduction

Franck Mougin – implement a concept – “Networking Attitude”. Way to share knowledge across groups in various geographies. Program incurred very little cost & almost no budget. Highly successful by 86% of GMs according to an internal survey. Targeted only managers. Accelerate knowledge sharing across CBUs – strategically vital. “We cannot be Big, atleast we can be shrewd”. Benedikt Benenati – OD Director – responsibility of Networking Attitude. Tools developed – “marketplaces” & “sharing networks”. Focus – help employees connect with each other & share good practices

peer – peer rather than relying on hierarchical lines of communication. July 2007 – variations of original concept – targeted non manager

employees. Danone managers – share practices with suppliers and customers. “Co-building events” – employees from different units networked. Goal – creating new practices instead of sharing existing ones.

Timelines

1919: Danone established by a Greek doctor Isaac Carasso in Barcelona, Spain –

treated digestive problems with yogurt. Carasso – 1st person to perfect an industrial process for making yogurt &

named his company after his son Daniel.1920: Daniel ran the company after his father’s death.1943: Due to WW2, Daniel handed over the company to his friend & fled to US –

established business under “Dannon”. After war came back to Europe and merged Danone with French Cheese

maker Gervais – Emergence of “Gervais Danone”.1965: Antoine Riboud CEO of Souchon-Neuvesel (a family company).1966: Groupe Danone emerged when french glass bottle company Souchon-

Neuvesel merged with industrial glass maker Glaces de Boussois. Antoine Riboud was appointed as chairman of merged company Boussois-

Souchon-Neuvesel (BSN).

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1968: BSN took over Saint Gobain 5 times the size of BSN.1973: Gervais Danone merged with BSN – “BSN Gervais Danone”.1980: BSN Gervais Danone sold off the industrial glass division and built a

strong base in Europe by acquisition of Italian & Spanish food companies. Acquired Russian biscuit maker Bolshevik.1986: Acquisition of General Biscuit with operating companies in Germany,

Netherlands, Belgium, France and Italy.1994: Company changed its name to “Groupe Danone”.1996: Franck Riboud became Chairman & CEO of Groupe Danone.2002: Riboud Launched a research centre in Paris.

2004: Established a vital business division in Asia-Pacific. Acquired 40 businesses in Asia, Latin America, Eastern & Central Europe,

Africa and Middle East.2006: Revenue of €14 Bn, Dairy division- €8 Bn, Biscuits - €2 Bn & Beverages -

€4 Bn.2007: Operating margin of 13.4% - France – 22% & W.Europe – 54% of revenues. 90,000 employees – 47% employed in Asia-Pacific region. Kraft Foods offer to purchase Danone’s biscuit division for €5.3 Bn. A week later – Danone acquired Royal Numico N.V. – Dutch baby food

company for €12.3 Bn.2008: Danone reorganized into 4 Business lines – Fresh Dairy products, Water

and Beverages, Baby Foods & Clinical Nutrition.

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Danone in 21st Century

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Clear Strategy : Bring health through food to largest number of people.

2004 :Soweto, South Africa – Launched Yoghurt Danimal – 13 cents –distribution network – “Daniladies”.

2006:Bangladesh – JV with Grameen Group – “Shakti Doi” – 3-4 cents launched in bio degradable plastic.Danone’s program for children – Zinedine Zidane as ambassador – India, Indonesia & Egypt.

Nov 2006:Zidane inaugurated 1st dairy plant in Bangladesh.

Future of Danone: 1. Ability to explore. 2. Invent new business models & new types of business Corporations.

Danone’s blockbuster products

Activia

Managing Knowledge for Competitive Advantage

Challenge: Making product, customer, and operational information available to all

Danone employees when needed

Questions: Tension between a more efficient top-down approach and local managers’

desire for autonomy. The role of information technology in managing knowledge.

Focus: Local Markets. Decentralization & Integration. Prior approaches to knowledge management. The Human Connection.

Local Markets

Maintaining close touch with local markets. Decentralization essential to Danone’s strategy. MD incharge of an activity – decision maker – HQ merely suggest option

but cannot impose conditions. Success of decentralized management – seen in local brands.

Strategic activity: Products differed from market to market. Staying close to consumers.

Result: New product – Launched in 3 months. Time to market reduced – frontline managers execute good ideas quickly.

Decentralization & Integration.

Decentralization – confusing for frontline managers. The top-down to re-prioritize and re-concentrate. The bottom-up to nourish-to listen to the market , the latest ingredients, the

latest innovations , to know what works with the competition.

Issue: Lacked clear directions from HQ. Didn’t know whom to turn for advice. Little horizontal communication among large divisions.

Reason: Don’t have quantified organizational knowledge. No library or bunch of files for reference to perform a specific task. Key learnings embedded in individuals around the globe. Little incentives to formally categorize things into database.

Solution: Talk to people & network to do your job.

Prior approaches to KM

Prior attempts – leverage company talent (people, knowledge & products) without centralized governance.

Growth Program

Growth TooAcceleration

Units

Growth Program

Short term shift from portfolio management to growth management. 2-5% growth – very volatile. Use our CBU to leverage practices rather than using consultants. Looked for “Good performers” – renovation, innovation, proximity,

affordability etc. Focus on over performing competitors.

Result: Enabled to maintain a consistent growth at around 5%.

Growth Too

Accelerate growth by identifying, analyzing & formalizing good practices in 70 CBUs.

Primary focus – marketing, sales, HR and organization. Ensuring all good practices adopted by all CBUs. Dairy division – diamond concept – 6 key parameters of a brand used to

measure brand’s effectiveness & progress. Diamond – pyramid on affordability mission. Organizes markets and typologies of consumers. Used by all BU today.

Result: Helped BU to modelize their tools and practices.

Acceleration Units

International working groups specialized in specific brand or concept. 4 – 40 high level members from single or multiple functions. Identify good practices within specific areas. Formalize them. Circulate them to improve performance or roll out new products faster. less efficient in certain operational functions but gain in entrepreneurship &

linking operational people to business. Networking – frontline managers talk to each other & exchange practices

faster.

Result: Continuous improvement process – Danone operating model – list of 144

formalized best practices using tool called “THEMIS”.

Themis

Danone’s group wide SAP system. Needed tool for coordination and implementation of well defined procedures

of SAP proved dificult. Lots of struggle – roll out of Themis. Necessity of ERP because organization was so deccentralized. Themis – countercultural because Danone was not process driven. Direct discussion about the software leveraging experiences of those who

already tested it. At EOD people who have same function know which process to change and

its consequences. Frontline managers – face issues daily – not most important people but

critical mission people. Importance – networking frontline managers – optimizing process to

generate resources to fuel top line growth. GMs collaborate to “drive top line growth”.

The Human Connection

The traditional knowledge management - using technology, uploading files, building databases.

It was not the optimal path for Danone. Most people didn’t use the portal. Feel most comfortable talking to each other. Systems and processes also slowed down the business. Sharing wasn’t a natural thing: find a way to encourage people to share.