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Daniel Servitje, CEO of Grupo Bimbo, Exclusive Interview with Fortune México

Daniel Servitje, CEO of Grupo Bimbo, Exclusive Interview with Fortune México

One regular April morning in Mexico City: 40 minutes into traffic on Avenida Constituyentes heading towards Santa Fe. Upon reaching the newsroom, a note begins to go viral in several national and international media: The annual listing of The World’s 50 Greatest Leaders by Fortune. And among the highlights: Daniel Servitje, CEO of Grupo Bimbo, the only Mexican on the list, occupying position #36 and appearing alongside other names such as Mary Barra, CEO of General Motors; Reese Witherspoon, Hollywood actress and producer; and, in first place, the students of Marjory Stoneman Douglas and other schools in the United States that were victims of mass shootings in recent months.

Servitje's profile as a global leader highlights, on the one hand, the priority of offering products for low-income families. This becomes relevant in Mexico, where 62 million people – 50.6% of the total population – have incomes below the welfare line, which is insufficient for buying basic food, goods, and services, according to the National Council of Evaluation of the Social Development Policy (Coneval). The CEO of Grupo Bimbo, moreover, seeks to make his company greener through the acquisition of wind-power credits to compensate for all the energy it uses for its operations in the United States.

To these two priorities we must add a third: today the company is the source of 139,000 jobs in 32 countries. Grupo Bimbo – founded in 1945 by partners headed by Lorenzo Servitje Sendra (RIP), and with net sales of US$14.2 billion in 201 – produces 47 million products every day in 197 plants, and has more than 58,000 direct distribution routes that arrive to 3 million points of sale. It should be noted that in economies such as Mexico, described as emergent by Servitje, the so-called “tienditas” (small family-run stores and stands) represent not just another place to sell products, but a direct point of contact to measure the pulse of the market and the origin of many of the company’s key decisions made throughout its history.

Grupo Bimbo is positioned as the largest baking company in the world and a relevant player in snacks, with Daniel Servitje at the helm since 1997. Meanwhile, last year – according to a message from the Chairman of the Board of Directors and General Director of Grupo Bimbo – was "a transition in terms of reinvestment and restructuring, with the purpose of creating value in the long term and boosting our profitability".

In practice, this was reflected with the Mexican company’s entry into 10 new countries, acquiring Ready Roti in India and Grupo Adghal in Morocco, as well as East Balt Bakeries – originally from the United States and today under the name of Bimbo QSR – with the aim of winning the leadership position in the food-service industry. To achieve this, Grupo Bimbo acceded to capital markets and improved its financial profile by increasing the average term of its debt to 11.4 years. In addition, it created the Global Transformation Office to accelerate its 10 Transformational Objectives and, at the same time, launched ELEVA, a business accelerator that offers mentoring and potential business partnerships to entrepreneurs.

Following the publication of The World's 50 Greatest Leaders 2018 list, Fortune in Spanish conducted an exclusive interview with Daniel Servitje – who, by the way, is a regular reader of the US edition, along with his father – to talk about this distinction as a prominent leader. For this interview he received us at Grupo Bimbo’s corporate headquarters, which for 25 years has been an emblematic building in the Santa Fe area of Mexico City, and is the work of the Eichelmann Architects Office. So, during the 25-minute interview, we gained an understanding of why he is one of the best leaders in the world according to Fortune.

FORTUNE IN SPANISH: Grupo Bimbo has evolved from being a bread and food factory to becoming a global player, not only because it has operations in 32 countries, but based on two key elements. On the one hand, to be one of the key sources of food for millions of people, and, on the other, generating thousands of jobs. How did you start and develop this vision for Grupo Bimbo?

DANIEL SERVITJE: The Company began life in 1945, in basically the same way that the companies of today start: with four young people with a desire to do something different and to resolve needs that were not being met. The project had immediate success in Mexico City. Since then, there has been a lot of effort, reinvestment, and perseverance in its purpose and long-term vision, and to continue growing for over more than 70 years. All these years have been a continuous adventure with a mix of successes and disappointments, both in our country and in the rest of the world.

Grupo Bimbo's corporate headquarters in Santa Fe, CDMX, is one of the emblematic buildings of this area, built in 1993 by the Eichelmann Architects Office.

F.  Since you assumed the general direction of Grupo Bimbo in 1997, what are the initiatives and actions that you have promoted under your leadership vision? And how do you involve your team of associates?

D.S. I am 59 years old, although I was on a distribution route – with the emblematic Grupo Bimbo delivery trucks – selling products when I was 17. I had the opportunity to study outside the country – at Stanford University – and to work in other cities. However, since I worked at the company in management positions I have focused a lot on the international side of the business. This has been with the aim of expanding the company to new territories and modernizing the areas of systems, information, management models, and structures, as well as updating it over the years to get to where it is today, a frankly global company.

“We love to compete and win, but we always seek to respect people, and to a large extent this is probably the reason for our success over these 72 years,” D.S.

F.  Grupo Bimbo is an important generator of employment; however, it has been characterized by going further on this issue. How has this company vision permeated into Mexican society and in other countries?

D.S. I think that this is probably one of the main characteristics that distinguishes Grupo Bimbo from others, and I would say not just now, but forever. Our purpose is to build a sustainable, highly productive, and fully humane enterprise, and it has been our continuous purpose for 40 or 50 years. We do it because we believe that this is the way companies really work.

For us, a company is a community of people who have a common goal, and we have lived in this way through times of crisis in Mexico – when there was a deteriorated economy, for example – and we have still experienced clear growth in the country. We have also ventured into other fields. What we have seen is that our philosophy travels: we are proposing something that is probably not as common for many companies in other countries – including the developed ones – and the fact that we are oriented towards people is something that is valued. And we do not do any of this outside the financial or economic responsibilities of the business. We love to compete and win, but we always seek to respect the person, and, to a large extent, this is probably the reason for our success over these 72 years: that we have always had the commitment of our people.

Grupo Bimbo produces 47 million products daily in 197 plants worldwide.

F. Bimbo is a source of food for millions of people in 32 countries. In what way does the company assume a transcendent role so that food generates a positive impact on people's health, well-being, and lifestyle?

D.S. Our mission is delicious and nutritious food products in the hands of all. What we seek is to please and satisfy the palate, because life is made of small moments, but to achieve that in a safe and healthy way. In this sense, we work a lot in our almost 200 plants so that this part of food security is covered in a very professional and competent way – around 47 million products are produced every day. Our commitment is to be more and more capable of producing foods that are as nutritious as they can be for the consumer, always taking care that they are products that customers like and are attracted to. In this sense, we have alliances with universities and nutrition institutes, such as the commitments we have signed with the World Health Organization (WHO) and with local organizations that help us to modify our nutritional profile. The objective is to reduce some ingredients and improve product profiles.

We also have a lot of activity on other fronts, focusing on the healthy part of life within the company and with our consumers. We work a lot on the subject of nutritional orientation and energy balance. We promote physical activity through the largest single race day event in the world, Global Energy Race, organized by Grupo Bimbo. Last year this race was run in 37 cities. In Mexico we have the Bimbo Futbolito Tournament, which is one of Grupo Bimbo’s most important social responsibility projects, in which more than 50,000 children join every year, and through which physical activity the experience of values is promoted. Like this, we do many more things throughout the year in many countries.

Grupo Bimbo is the first Mexican company to be part of the World's Most Ethical Companies list, prepared by The Ethisphere Institute.

Also read: Grupo Bimbo, the only Mexican company among the most ethical in the world

F. In The World's 50 Greatest Leaders 2018, Fortune distinguished you in position #36, making you the only Mexican to be part of the list. The main variable that was considered to integrate the ranking this year was the degree of decentralization that leaders are achieving within their organizations. As a leader, how do you experience this process of decentralization within Grupo Bimbo? This includes facing the challenge of trusting your associates and delegating decision making, because the position that someone occupies in the organization is not what motivates or limits them to be decisive in the company.

D.S. I believe that this is achieved by being very oriented towards the beliefs of the company. Really our company is based on the person and, if we trust our associates throughout the entire structure of the company, we can relax in knowing that that are doing what they should be. Also, work has been done in this manner for many years, and an administration management model cannot be oriented more towards control or more towards trust.

In this company we have always focused more on trust, so, in that sense, I can rest well every night knowing that the 197 plants are doing what has to be done, and, on the more than 58,000 distribution routes that we have around the world, our sellers are serving all the customers that they have to attend. They are always doing it well, because those 50,000 salespeople are, in essence, the ambassadors of the company to all its customers.

They visit 3 million customers every week – sometimes six or seven times a week – and they do so knowing they are doing it well. This decentralization occurs throughout the entire company – if our salespeople handle this well, it will also be achieved across the group’s different brands.

“In addition to taking care of our associates, we make sure that the immediate environment is better for everyone,” D.S.

F. Following on from the previous point, is there any anecdote that you would like to share about what happened in Mexico or in another country?

D.S. I would say that with great humility I remember the experience of opening in Argentina some years ago in 1991. We went ahead with a big investment, thinking that we were going to have great success with products that were not sold there, like Gansito Marinela. It turns out that what Argentines like are alfajores (traditional sweet cake), so none of our offerings were popular in that country.

In the end, we practically had to stop a plant, but we managed to grow after doing market research. It is these international experiences that allowed us to realize that what works is not necessarily what we bring by our central traditions, but we must also be very careful in doing what works locally. This same case, in reverse, happened in Colombia when we produced a product called Pan Artesano about three or four years ago.

Since then, it has been the most successful product we have launched in the many countries we operate in today, namely Brazil, Colombia, and the United States. Today, we are always very open to finding these successes of local entrepreneurship that have allowed us to learn in the best way and give customers the best from the world of Grupo Bimbo.

F. Some companies and leaders have written several chapters in the history of mankind. For Daniel Servitje and Grupo Bimbo, what chapter would you like to write?

D.S. I would tell you that you have to be very humble with the role of one person in the story, because I really work within a company. And the recognition, that I thank Fortune for very much, is really the work of all the people who have been working for us for many years, and the patience of our Council. They are the foundations that help us contribute to improving our world. In that sense, I would say that I am proud of the steps we are taking in terms of energy consumption based on renewable sources.

We did it in Mexico a few years ago, and we just signed a very important contract in the United States with which practically 75% of the company's energy consumption will come from renewable sources. We have done a lot of work in Mexico and other countries with Oxo-degradable films, which I think is a very interesting topic because they ensure that packaging will not contaminate over time even if it is not managed properly.

Ours is a story that can be an example also for other emerging countries where companies want to play this role, internationalize, expand, and be able to contribute to their country of origin. Take this case in particular: we are the only Mexican company, and one of the few in the food sector, that, for the second consecutive year has been part of the World's Most Ethical Companies list, prepared by The Ethisphere Institute. In an emerging country, this issue of behaving well, I believe that it also has a relevant value in the ecosystem, and I hope we can promote it and make it known. In the long run, other companies will start adding up, and the whole ethical component of the country will rise.

F. Grupo Bimbo is characterized for being a persevering company until reaching its goals. How do you continue to set new goals after 72 years of operations? Do you have an immediate goal or plan knocking at the door?

D.S. I will share how we are living the process of our business plan, as it seems to me to be a different practice than what we have done in the past. Traditionally we have set goals and performed performance evaluations; however, when setting goals we wanted to achieve by the end of the year, two, three, or five months later the environment had changed, and so we were no longer following those goals.

We instituted a one-page plan, called Plan de Negocios (Business Plan) which has a hamburger bun in the center, so now we call it the Hamburger Plan. But that plan, is my plan. We ask that everyone make their own plan based on that document, from servers to the head of sales in Morocco. We want everyone to have a plan that is appropriate to the environment, contributes to the goals of the group's Business Plan, resolves the opportunities that the sales man in Morocco might be finding, and that adjusts as the year progresses. My plan has already seen 15 adjustments since we started to implement it, some of which we already did, some we already deleted, and others that are on the way out.

It became a living plan within the company, and our performance evaluation is already done very differently than we used to do it – quarterly. We are just in this process of learning, but facing this disruptive world I believe that large companies must have the ability to move quickly, to adopt new things, and to discard others. We are very aware that regardless of a country’s situation and the political situation it lives in, the world is changing direction very quickly. Digital transformation is taking place at an accelerated pace, so we need to open ourselves to what is happening in the world and to the factors of transformation. Our vision in the company really is to transform the industry, and, in this process, that is what we are doing.

The Group's production chain stands out for adding value at each stage: from its Sustainable Agriculture Policy to the use of 350 electric vehicles and 185 natural gas vehicles.

F. Final message for the Fortune in Spanish community?

D.S. I believe that we are a society of much effort and hard work. I confirm this because we operate in 32 countries, and our Mexican team is an agile, committed team that always brings out the best in people.

Source: Fortune México