This Humanizing Growth session, run by the Institute for Real Growth, pairs the chief executive of Kraft Heinz with the global lead for culture and marketing capability at AB InBev. The framing question is the shift away from Milton Friedman’s position that a business has one social responsibility, toward long term value creation for all stakeholders.
Two arguments run through the hour. Efficiency and creativity are not opposites, though a company can easily organize itself as though they were. And in a crisis the ranking of stakeholders visibly changes, starting with the people in the factories.
Key findings
- Zero based budgeting is defended as a discipline of efficiency rather than cost cutting. The point of an efficient business, on this account, is that it can invest back into its brands. Companies that used the method purely to cut ran into trouble.
- With 80 factories operating through the crisis, safety was put ahead of everything else, and morale in the plants is described as never higher. The company donated 12 million dollars to food banks worldwide.
- The reordering was visible in what the chief executive chose not to do. He did not talk to the media about the quarter’s results, on the view that financial results are a consequence rather than the thing being looked at.
- The proportion of marketers in senior leadership changed over a career. He describes being the only person with a marketing background on the leadership team, and half the team having one by the time he left.
Why a marketer can run the company
Asked why so few chief executives come from marketing, Patricio answers that ambition is not enough. He moved out of marketing to run two zones, North America and Asia Pacific, and says that is what qualified him. His argument for the path is that marketing is the part of a company that thinks about and understands the future, which is a large part of the chief executive’s job in consumer goods.
Four reasons a company is not creative
The diagnosis is unusually specific. Ten years before this conversation, the company was afraid of creativity, because being efficient was treated as the opposite of being creative, and creativity requires taking risks.
A week-long meeting with marketing leaders and agencies produced four things to fix. The marketing leaders themselves did not like creativity, so people had to be promoted or hired to change that. The agencies were safe, so the agencies changed. The company was so process oriented that process was killing creativity. And creativity was not rewarded, which produced a recognition program still called Creative Acts.
The leadership behavior that follows is about not closing options. Saying no solves the problem in front of you and kills the creativity around it. He describes letting a country team pursue a path he thinks is wrong, expecting either that they will reach his conclusion or that they will change his mind.
Building the capability, not just the campaign
Harris describes her role in terms that invert the usual marketing frame. Her consumers and customers are the company’s colleagues. The ambition she cites for the culture is that it takes the same amount of energy to dream big as to dream small.
The obstacle she names is behavioral. Chasing the number one position in a stagnant category produces behavior that is risk averse, short term, safe, and bureaucratic. Against that she sets a line she was given: the opposite of empathy is arrogance, and a closed mind does not learn.
The evidence offered is uptake and engagement. A digital transformation learning program launched with an external partner just before the pandemic, and around 1,200 of the marketing organization had logged on. Employee engagement rose significantly over two years of piloting the wider capability work.
What the first weeks of the crisis changed
Innovation was paused, and the reason is operational rather than philosophical. Retailers wanted less complexity in stores, so the number of product lines was cut sharply, and new products went with it.
Consumer behavior moved in ways the teams tracked closely. Socializing became smaller and more intimate. A phenomenon called e-clubbing appeared in China, and live streamed events were scaled to other markets. Smart drinking grew as a space for the category to champion.
Leadership itself became more visible and less formal. The chief executive cooked on camera with 3,000 employees watching and held an unstructured happy hour with leaders, with no presentations. The point both speakers draw is the same. Companies got closer to their people by showing more of their human side.
Scope and limitations
This is a live conversation recorded early in the pandemic, and the speakers date their own observations to roughly 45 days of experience. The engagement and morale claims are stated by the leaders responsible for them, without supporting data.
Source
This page summarises HGS #15: Miguel Patricio (CEO, Kraft Heinz) & Jodi Harris (VP Marketing, AbInBev) about leadership, by Marc de Swaan Arons.