21 March 2023 in CEO Dialogue Series • 
Podcast available
Antoine de Saint-Affrique, in a frank and open discussion with IMD President Jean-François Manzoni, explains his no-nonsense approach to problem-solving, the importance of speaking the truth, however uncomfortable, and knowing when it’s...
Antoine de Saint-Affrique is a man who doesn’t let himself, his employees, or his investors get too comfortable. Since taking the helm at French food and nutrition company Danone in September 2021, the 58-year-old executive has delivered some uncomfortable truths, clearly calling out the company’s underperformance compared to peers in the past, while being confident that Danone is operating in the right categories and has what it takes to win.
“We took stock of where the company was; we were very open to the market and quite uncompromising on the good, the bad, and the ugly,” said Saint-Affrique. “Was it comfortable for everyone? Certainly not. Was it freeing for the organization? Certainly, yes.”
Speaking the truth is an integral part of Saint-Affrique’s leadership style. His direct approach paid off: he says there was little pushback from the board and senior management, rather a widespread sense of relief. “When you acknowledge that you have a problem, you can start addressing it, including by turning it into an opportunity,” he said.
Founded in Barcelona in 1919 by Isaac Carasso, a physician who started producing yogurt to heal young people, Danone – which translates to “little Daniel” after Carasso’s son – has since then continued to pursue a clear mission to nurture good health through food.
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Carasso later moved the company to France, where it has grown into a global player in four businesses – essential dairy and plant-based products, early life nutrition, medical nutrition, and water – with annual sales of about $30 billion and more than 100,000 employees worldwide.
Saint-Affrique arrived at Danone during a turbulent period in the organization’s 100-year history. The previous CEO Emmanuel Faber was ousted following activist pressure and for having failed to deliver on his pledge to revive sluggish annual sales growth. So how did he go about reviving a culture in which performance and sustainability go hand in hand?
In a first step, Saint-Affrique embarked on a listening tour with employees, farmers, customers, and investors, paying attention to what they were and weren’t telling him. His second task was to restore peace and give clarity by building a compass for the future.
“When you have a company that has been through a very public governance crisis, a company that is, by the way, in the midst of probably the biggest restructuring in its history, you don’t want to add to any confusion or complexity.”
Analysts are extremely smart and well informed. They look at market shares sometimes even more than your brand managers. So there is no hiding from the truth.- Saint-Affrique on respecting the knowledge of the market
Six months into the job, Saint-Affrique announced “Renew Danone”, a four-pillar strategy designed to enable the company to reconnect with a sustainable and profitable growth model that includes restoring its competitiveness in core categories and geographies, selectively expanding some brands, and actively managing its portfolio, while seeding future growth avenues.
The strategy involves identifying the “winners” – those products that are outperforming the market – and assertively driving and renovating the core ranges, while making sure that those categories that are performing in line with the market don’t slow down. For the 25% of the business that is underperforming, Danone will conduct a “root cause analysis” to see if there is a way of extracting more value. If not, those assets could be up for sale, he said.
Saint-Affrique also overhauled Danone’s economic model, ditching targets for a certain percentage of sales growth and recurring operating margin by a certain date and cutting 2022’s target for recurring operating margin to its lowest level in two decades as he reinvested into the brands by ramping up advertising and promotion spending, product superiority, and capabilities. At the same time, he vowed to increase margins over the long term, building on a value creation algorithm that starts from organic sales growth.
You want to stay long enough to go through two cycles – where each cycle usually lasts about three years – so you can correct what you need to correct, and make sure that you transmit to your successor something that is proven and healthy.- Saint-Affrique on not staying too long in the job
While the short-term margin decline might have made uncomfortable reading for Danone’s investors, so far, they have kept the faith. The share price rose after he set out his strategy and is up slightly year-on-year.
“Don’t underestimate the knowledge that the market has of your company,” said Saint-Affrique. “Analysts are extremely smart and well informed. They look at market shares sometimes even more than your brand managers. So there is no hiding from the truth.”
Quality growth with balanced price, volume, and mix is a playbook Saint-Affrique successfully applied in his previous role as CEO of Swiss cocoa and chocolate manufacturer Barry Callebaut, where he more than doubled the company’s share price during his six-year tenure.
Reflecting on his approach to Danone’s transformation, Saint-Affrique explained his strong belief in playing to win rather than playing not to lose. The former requires a willingness to take a risk, and therefore also to fail, while also obsessively monitoring competitors and measuring market share.
The trick, said Saint-Affrique, is to combine measurement with a culture where people are being rewarded for experimenting and taking risk.
“If you blame people who have taken a risk and failed, indeed nobody will take any risk,” he said. “If you create a culture where it is legitimate to ask difficult questions, where we work together at solving those questions, and we take ownership of the resolutions, you create an atmosphere where talking facts and measuring is just the ground on which you grow your people – and your company.”
Speaking up and being true to values are traits that Saint-Affrique expects from his top team. Once trust has been established, he loves solving problems. “Bring me your problems with your recommendations for solutions and we’ll move from there. Put the issues on the table and 80% right immediately is better than 100% late.”
He also expects his executives to be pragmatic and practical, focused on growing people and relentless about learning. “The day you think you’ve learned everything, you become useless,” he said.
This quest for constant learning and renewal is something Saint-Affrique applies to himself. When he took over as CEO of Barry Callebaut, he told the board that he planned to stay for a maximum of seven years to avoid becoming stale, and also to create room for budding talents to emerge and thrive within the organization.
It is about preserving your freedom – your intellectual freedom and your emotional freedom – to be able to be at your best. You play at your best when you are free – not when you are afraid.-Saint-Affrique on his attitude to work-life balance
“You want to stay long enough to go through two cycles – where each cycle usually lasts about three years – so you can correct what you need to correct, and make sure that you transmit to your successor something that is proven and healthy,” he said. “You don’t want to stay much more than that – especially if you’re successful – because you run the risk of killing your succession pipeline.”
Leaving after seven years also prevents a CEO from becoming irrelevant and lazy – either by becoming too full of themselves, or by no longer challenging what they’ve built, he added.
Leading a turnaround at an iconic French brand in today’s complex and challenging world means there is little chance that Saint-Affrique will get bored or comfortable any time soon. He maintains himself at peak performance by recharging from multiple sources, be that spending time with his family, reading (non-business) books, or talking to people who do very different jobs to him. Rather than finding these multiple interests draining, Saint-Affrique says they energize him.
“I don’t ask myself the question of work-life balance because for me the two are totally entangled. What I do outside my daily work nourishes my work; what I do at work nourishes my daily life,” he said. “It is about preserving your freedom – your intellectual freedom and your emotional freedom – to be able to be at your best. You play at your best when you are free – not when you are afraid.”
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