Thank You for Disrupting

by Jean-Marie Dru

  Emmanuel Faber

  187

  thus positioning Danone in the consumption segment of tomor-

  row. “We have bought a part of the future,”10 he said at the time

  of the acquisition.

  This is all forward-looking and highly responsible, and yet

  it does not spare Danone from being the target of criticism. For

  instance, the company is often attacked for pushing its powdered

  infant formula, while many health organizations promote breast-

  feeding. And then, as a world leader in mineral water, Danone

  produces a lot of plastic bottles. On certain subjects, the company

  could be accused of being a bit ambivalent. As Unilever’s Paul

  Polman said, inventing innovative social policies is not enough.

  You also have to actively reduce the negative impact of what you

  do. It’s hard to be totally exemplary from one day to the next.

  Despite these challenges, Faber’s ambition is for Danone to

  become a B-corporation (“B” for “benefit”), commonly known as

  a B-corp. This is a new kind of business entity that balances pur-

  pose and profit, and that is legally required to generate social and

  environmental advantages in order to trade. The Danone Group

  has entities in the United States, Canada, Spain, the United

  Kingdom, France, and Argentina that have already obtained this

  difficult certified B-corp status. They represent 30 percent of the

  group’s turnover. The B-Lab certifying body is very rigorous. So

  far, certification had only been granted to small or medium-sized

  companies. The group set itself the goal of becoming the first

  multinational to be totally B-Corp.

  the Bottom of the pyramid

  The expression “bottom of the pyramid”11 was used some

  20 years ago by C. K. Pralahad to define the four billion people

  living on less than $1,500 a year. If we can allow ourselves to

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  describe people who have access to almost nothing as a market,

  the bottom of the pyramid represents the largest untapped

  potential market in the world.

  To reach these disadvantaged populations, which still account

  for two-thirds of our planet’s inhabitants, we must develop

  products that cost less than a dollar to buy. It’s only by adapting

  products to the needs and means of the poorest that poverty

  can be really reduced. Everything then becomes a question of

  scale. Selling very large volumes can offset fixed costs, in order

  to combat poverty while still making a profit.

  Companies such as Procter & Gamble and Unilever are thus

  looking for ways to make household products affordable for the

  poorest. What these corporations seek to do is to bring into our

  consumer society that part of the world’s population currently

  excluded from it. This is in their long-term business interest.

  Danone’s directors are not being left out of this. They have

  multiplied their initiatives in this direction. This is what first led

  the company to approach Muhammad Yunus, the pioneer of

  microcredit. He has helped millions of workers in the southern

  hemisphere to create their own microenterprises and achieve

  a form of financial independence. Grameen Danone Foods

  was born in 2006 as a result of this encounter, and became the

  world’s first purpose-designed multinational social business. In

  a social enterprise, shareholders recover their initial investment

  after a given period of time, but do not receive any dividends. It

  may well be driven by philanthropic considerations, but it must

  still function as a business. A social enterprise needs to develop

  and grow to cover its operating costs, whereas a charity relies

  exclusively on donations.

  Grameen Danone Foods is one such “no-dividend”12 business.

  In Bangladesh, it launched the Shokti Doi, a yogurt enriched with

  the highest levels of minerals and vitamins ever attained. This

  Emmanuel Faber

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  nutritionist-developed yogurt covers 30 percent of a child’s daily

  nutrient requirements for the modest sum of 6 taka13, or 0.07 cents.

  This also allowed the company to kill three birds with one stone.

  First, it has helped reduce poverty in the countryside by working

  hand in hand with farmers. Second, in factories, by recruiting a

  maximum number of people from the local community. Finally, on

  the ground, by creating 1,500 jobs and employing Shokti Ladies to

  distribute the products in villages. In 2006, Muhammad Yunus and

  Grameen Bank were awarded the Nobel Peace Prize. Later, For-

  tune magazine, at the time of the opening of a new Danone’s Shokti

  Doi factory in Bangladesh, featured a cover story. The headline was

  “Saving the World with a Cup of Yogurt.”14

  Faber wanted to go even further. Using the momentum of

  the success of Grameen Danone Foods, he has injected life into

  a new initiative, Danone Communities. This is an incubator

  for micro-enterprises in poor countries, a network of social

  businesses, disposing of a budget of €70 million. Danone

  Communities is a way of financing and supporting social business

  projects aimed at reducing poverty and malnutrition. Believing

  in the concept, a third of Danone’s own employees have chosen

  to invest in the different programs initiated by Danone Com-

  munities. These projects, all of them innovative, have thus been

  financed in countries where the economy is fragile. If successful,

  these experiences can be replicated in other countries.

  A few years ago, the CEO of Danone managed to convince

  first his board, then 98 percent of the investors attending the

  annual shareholders’ meeting, to draw on the company reserves

  an amount equal to 20 percent of the dividends that would be

  distributed to them that year. Faber’s objective was to be able to

  protect the external labor pool in those regions where his offices

  and factories are located. Danone employs over 100,000 peo-

  ple worldwide, but five to seven times as many jobs are directly

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  dependent on the group’s activities. The idea was to invigorate

  the workforce where the company is present by investing in the

  local communities and, as Faber says, “to strengthen the capacity

  to grow of all the economic actors who live on the periphery of

  a multinational.”15

  For several decades, most multinationals assumed that the

  proportion of turnover contributed by international brands

  within their overall portfolio would be in constant progression.

  Until recently, Danone’s management had expected Actimel’s

  and Activia’s cumulative sales to exceed 30 percent of the com-

  pany’s total revenue. This is no longer the case. Management

  is fully alerted to the recent and underlying disaffection toward

  international brands. For the past five years, all industries con-

  sidered, local brands have been nibbling away at major inter-

  national brands. This has happened in every region, at a rate

  of one half to one point of market share year
after year. This

  trend echoes an analysis by The Economist on the weakening

  of the global company. The article, entitled “The Retreat of

  the Global Company,”16 explained that the profits generated

  by 700 multinational companies worldwide have decreased by

  25 percent since 2012, while those of local firms have increased

  by 2 percent.

  For Faber, the conventional model adopted by the agro-

  food industry for the past 50 years, based on globalization

  to reduce costs, has reached its limits in today’s social and

  environmental context, as well as on the economic front. His

  conclusion is unequivocal: “When obesity progresses, when the

  yield of agricultural land falls, when pollution climbs and when

  the agricultural world has more and more difficulty to live from

  its efforts, it is time to change the model.”17

  This explains Danone’s decision to re-localize its production

  facilities and to promote local brands. In this way the company is

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  191

  looking to improve the biodiversity of eating habits and agricul-

  tural practices. That being said, these local brands that Danone

  supports are neither small nor old. Aqua, for example, is the lead-

  ing brand of bottled mineral water in Indonesia, as is Font Vella

  in Spain. Mizone is the number-one vitamin drink in China.

  Milupa and Nutricia are both leaders in therapeutic food in

  Germany and Holland, respectively. As for WhiteWave Foods,

  the U.S. brand that Danone bought in 2017 for $12.5 billion,

  it was born less than a generation ago. For Faber, anchoring

  Danone’s activities in each of the territories in which the com-

  pany operates is fundamental, because food is cultural, social,

  and local. The company has now pivoted, placing its priority on

  local.

  The ultimate vision of Danone’s CEO, as he said himself,

  is to gradually “resynchronize the food chain”18 to bring back

  together nature, agriculture, food, and nutrition. Social purpose

  and business purpose will then become one.

  Chapter 20

  Marc Benioff

  and Suzanne diBianca

  ON SCALING UP PHILANTHROPY

  When new employees arrive at Salesforce, they are shown

  their desk, given a computer, and fed some information

  about the daily life of the company. Then, after barely an hour,

  Salesforce sends them out to do a day of volunteering at a school,

  hospital, or homeless shelter. The company makes it immediately

  clear how much social purpose is at the heart of its activities. For

  Salesforce, it is a driving principle.

  Salesforce is one of the fastest-growing enterprise software

  companies in the world. The leading provider of cloud-based

  customer relationship management software, Salesforce truly

  fueled the explosion of software as a service.

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  a Native philanthropist

  From the very beginning, when Salesforce employed only a few

  people in a San Francisco apartment, the idea of giving back was

  integrated into its business model. As then, it is based on three

  pillars, two of a commercial order, one charitable. First, the

  company decided to give free access to part of its software on

  the Internet, which was a completely new concept in 1999. Second,

  using another approach unprecedented at the time, Salesforce

  commercialized its software on a monthly subscription basis. It

  was the beginning of a period in the business-to-business seg-

  ment, in which usage has taken precedence over ownership.

  Finally, in a third innovation, the company developed a new

  philanthropic model, which is simple, engaging, and capable of

  lasting over time.

  When it was still in start-up mode, Salesforce invented

  the now famous 1–1–1 model. It has made philanthropy a

  pillar of its activities by donating 1 percent of its products, 1

  percent of its equity, and 1 percent of its employees’ time to

  charity. And to help ensure success, Marc Benioff created the

  Salesforce Foundation in the company’s first year of existence,

  with Suzanne DiBianca at its head. Today, almost 20 years later,

  she is still the chief philanthropy officer of the company. It is

  common practice for firms to create their own foundation once

  they have made their name, when they think they have become

  sufficiently institutionalized, and therefore legitimate, to do so.

  But for Benioff, the time felt right after only a few months.

  Salesforce has since distributed more than $230 million in

  grants, provided more than 37,000 nonprofit and higher edu-

  cation institutions with access to enterprise-developed software,

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  195

  and invested around 3.2 million hours of its employees’ time for

  community service.1

  The Salesforce Foundation does not defend a single cause.

  To the contrary, a video on its website explains that the company

  works for a cleaner planet, fewer homeless people, less hunger,

  more jobs, reduced poverty, wildlife protection, increased lit-

  eracy, productive workplace, healthier communities, veteran

  support, successful graduations, efficient disaster response,

  accessible resources, disease prevention, not to forget educa-

  tion, the company’s explicit top priority. Conventional thinking

  might say that this list is too long, that Salesforce’s initiatives

  are too diversified. Many philanthropy experts insist that efforts

  must be targeted. In other words, there must be a clear link

  between the business activity of the company and its charitable

  projects. Procter & Gamble, for example, has adopted this tar-

  geted approach, as we’ve seen, for its corporate social responsi-

  bility policy. Salesforce acts differently. The company supports

  its own employees in the charitable projects in which they are

  personally involved and, in this way, gives them more weight.

  Most often, Salesforce abounds the gifts made by its employees.

  This leads to pilots, experiments that, if successful, are then pro-

  posed to municipalities, states, or even federal policy makers, to

  be implemented on a larger scale. At the end of the video, a little

  girl says, “1%, when you count it up, it’s actually a lot,” followed

  by text on the screen that reads, “Give 1%. And watch great

  things happen.”2

  As Suzanne DiBianca stated recently: “We believe companies

  are the greatest platform for social change.”3

  There are many ways to explain the Salesforce approach.

  Here are a few: There is no distinction between the company’s

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  drive for growth and its social impact. Profit and purpose are not

  in conflict anymore. Corporate social responsibility is a driver

  to profitability. Running a company with close attention to its

  environmental and social impact is not an act of charity, but of

  self-interest. And last but not least, as Benioff himself says, “The

&
nbsp; business of business is improving the state of the world.”4

  A company that wants to be a force for good outside must

  be, as far as possible, close to exemplary inside. Benioff is

  committed. He has already taken a series of measures to move

  toward equality in four key areas: equal rights, equal pay, equal

  education, and equal opportunities. When he found out, to his

  great surprise, that there were wage differentials between men

  and women in his own company, he immediately released the

  $6 million needed to put things right.

  The 1–1–1 model stands out for its simplicity, and fits perfectly

  into contemporary thinking. As we saw with Danone’s Emmanuel

  Faber, CSR reflects corporate leaders’ growing awareness of

  their responsibilities to all their stakeholders, including the

  communities where their businesses are located and where their

  employees live. Future generations want to see CEOs take on

  the problems of our society, to try to solve them, within the lim-

  its of their means, but with real determination. Benioff intends

  to meet millennials’ expectations; he likes to say that even if he

  is not a millennial himself, he certainly has a millennial view of

  the world.

  Like Faber, Polman, and a large number of other chief

  executives, who are neither skeptics nor cynical on these topics,

  Benioff demonstrates that doing good for society means doing

  good for his company. This view is shared by Jason Wicks in

  his book The Price of Profit: “Sort of paradoxically, for a firm to

  maximize profit, they will actually have to start caring about

  other things than profit.”5

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  pledge 1%

  The success of his 1–1–1 philanthropic model led Benioff to ask

  himself these questions: What if other companies, especially

  start-ups, adopted the same model? What if they mirrored what

  Salesforce achieved? What if other companies shared the same

  culture of giving back?

  In 2014, he spun off the Salesforce 1–1–1 initiative as Pledge

  1%. He began by evangelizing start-ups, and later established

  companies, that the conventional approach using grants is much

  less efficient than the Salesforce way. The foundation created

  “Share the Model,”6 a program designed to encourage other

  companies to embrace his integrated philanthropic approach.

  Benioff definitely wants to help other companies to also have a