Final Paper for Knowledge Management

W519 Organizational Learning and Knowledge Management

Indiana University – Kelley School of Business

Summer 2016

Final Paper –Global Knowledge Management at Danone

Danone is a Paris-headquartered global leader in food products with over 90,000 employees in 120 countries. Although Danone had its beginnings in 1966 as an industrial glass business, it shifted its focus to food products in the 1980s and grew rapidly through acquisitions in Europe, Latin America, Eastern and Central Europe, Asia, Africa, and the Middle East. As of January 2008, the company consisted of 70 Country Business Units (CBUs) and had reorganized into four business lines: Fresh Dairy Products, Water and Beverages, Baby Food, and Clinical Nutrition.

As a global corporation with a very complex organizational structure, Danone recognized the importance of knowledge sharing. As such, it had launched several initiatives to enable dissemination of best practices across the company. First, it launched The Growth Program in the late 1990s to ignite growth by uniting good performers in key areas within the different CBUs. This effort enabled Danone to go from a highly volatile quarterly growth of 2-5% to a consistent 5%. In 2003, this program was replaced by Growth Too, which was intended to accelerate growth by ensuring the best marketing, human resources, and organizational practices were adopted by all 70 CBUs. Danone then created “Acceleration Units,” groups of high level employees who would focus on a specific concept or brand to identify good practices and circulate them to the CBUs.

In 2001, Danone identified a need for an enterprise resource planning tool which could help coordinate its 90,000 employees operating within highly decentralized CBUs. As such, an SAP system called THEMIS was rolled out. This tool included a list of 144 formalized best practices, and required users to follow well-defined procedures. This posed a major challenge as Danone had never been a process-driven company and “forcing” THEMIS on local managers was not likely to be effective.

In an effort to honor Danone’s culture of autonomy and independence, management abstained from dictating how THEMIS should be implemented at the local level and instead encouraged departments to discuss how the tool could be leveraged most effectively. The resulting dialogues and manager networks proved extremely powerful and led management to rethink their approach to knowledge management at Danone. It quickly became clear that employees were much more comfortable talking to each other than they were accessing portals and retrieving files from a global database.

In the fall of 2002, Danone took a decisive step and launched the Networking Attitude, which moved the focus of their knowledge-sharing efforts away from technology and back to people. Several tools were launched as part of this project, including marketplaces, message-in-a-bottle, T-shirts, Who’s Who, and communities. All of these were meant to encourage managers to share best practices, absorb knowledge from other teams, and strengthen their personal networks.

Although Danone’s management, including CEO Franck Riboud, were satisfied with the results of this initiative, there were open issues that needed to be addressed. The three building blocks of a learning organization, as proposed by Garvin, Edmondson, and Gino, will be used as a framework to understand and prioritize the challenges that Danone’s leadership should focus on as they consider their long-term strategy:

Building Block #1: A supportive learning environment. Based on the information provided by the case, this would appear to be one of Danone’s strengths. CEO Riboud consistently mentions how important it is for CBUs to feel empowered and to operate autonomously. There is a big emphasis on “not pushing” procedures, processes, or guidelines on CBUs, which would imply a psychologically safe environment. Moreover, the existence of marketplaces and the informal nature of the Networking Attitude also signal openness to new ideas and the appreciation of differences within Danone. The one category that could pose a potential struggle for Danone within this first building block is Time for Reflection, as CEO Riboud has made it clear that a priority for the company should be to become faster than all competitors.

Building Block #2: Concrete learning processes. As it stands, the Networking Attitude effort is extremely informal and unstructured, and few concrete learning processes seem to exist. Tools, such as marketplaces, are made available to a certain group of managers, but there is no alignment to business goals, systematic information collection strategy, or processes to absorb exterior knowledge from suppliers, customers, or other experts outside of the organization.

Building Block #3. Leadership that reinforces learning. Danone’s leadership is consistently looking for ways to improve its knowledge sharing practices and to encourage participation in related activities. Prior initiatives such as The Growth program, Acceleration Units, and THEMIS suggest commitment to the creation of a learning organization; however, there is an opportunity for leadership to more strongly reinforce learning by setting up a reward system for those who actively participate in knowledge sharing activities, as well as providing the infrastructure, IT or otherwise, necessary to do this more efficiently.

Based on this analysis, this paper argues that Danone should focus on and prioritize the following five challenges as they are the most critical to the success of their long-term knowledge management strategy:

1. Think about knowledge strategically - What is the business goal that Danone wants to achieve? Is it to increase revenue, minimize cost, or improve any other aspects of their business?
2. Measuring impact of knowledge management on business results - How can the impact of Networking Attitudes be tracked, quantified, and tied to this business objective?
3. Role of technology and information systems - Should Danone continue to sideline information technology or is there an opportunity for systems to play a support role in their knowledge management strategy?
4. Deeper - How can the Networking Attitude go deeper into Danone’s ranks to reach its 90,000 employees, as opposed to their 10,000 senior managers?
5. Wider - How can Danone overcome their “not-invented-here” syndrome and start absorbing external knowledge to achieve their business goals?

The goals that Danone wants to achieve by leveraging knowledge include increasing revenues and decreasing costs. Mougin and Benenati realize that much of the knowledge about how to do this is already resident in the systems and people of Danone. In addition, they know that additional important knowledge lies outside of the firm, in the customers and the suppliers. Going forward, they need to access and utilize this knowledge.