Jean-François van Boxmeer, former CEO HEINEKEN | SparkOptimus CEO stories

Every time technology makes you have to retrain people, but every time you never have to doubt for a second that you have to embrace the latest technology because you know that you never go back, you have only one way: it is forward. So that's what we tried to do at Heineken too.

Thank you, Alexandra. Nice to be with you.

Yeah, it was as you said fairly logical because you quickly realized that digital is only one channel more to communicate, to sell, communicate internally, externally, and also sell to your clients. That is what we realized. So it's a natural evolution of society, it's not for us a revolution, but it's certainly a very strong evolution. And if we look back at how digital entered, of course it was first and foremost into our office life and administrative life. It's the way you build clients, the whole ERP systems were invented a long time ago. So digital is a very loose concept, but I think it went in three steps. The first one was the automation of all the administrative tasks. The second step was communication. I think it revolutionized the way we communicated with our end customer, which is the consumer. Instead of hanging out with billboards and pre-formatted movies, we were kind of entering a direct dialogue with people, and that was quite a revolutionary thing to do. But that happened already, I would guess, with Facebook popping up what was that, 15 years ago? So it's not so long ago. And then the last mile would be the online trading of things, which is a new channel for us. So all three things happened over a period, but it's just a continuation of using new technologies to our advantage.

Yeah, that's we can go back to the 19th century. Making lager beers was something which was innovative. It was invented by the Czechs a long time ago, but it could only be produced in wintertime because the fermentation process to make a lager beer or a pilsner beer is only possible when the temperature stays well below 20 degrees. So they could only make it in the winter. And it's really with the invention of the cooling compressor in the second half of the 19th century that you could industrialize the process the whole year long. And if you look back at our founder, Gerard Adriaan Heineken, he was keen to adopt that new process and that new technology. Back then it was very revolutionary. So he imported the machines from Germany, the cooling compressors from Germany, and he imported also the brewers from Germany who could make that type of beer, and he also imported the kind of yeast that was used to ferment that beer. And he was the first to do it in the Netherlands, and it was quite innovative. And in those years, the ones who were the first took the market, and that's exactly what he was doing. Afterwards, his father always perfected the techniques to make a very good quality beer and make it stable through time so that we could export it. And Heineken after all developed because it made a superior product that could travel overseas and hold its freshness for quite a long time, and so it was exported overseas all over the world and got a premium out of it. So that was innovative. So I would say innovation is in the DNA of the company. Beer is all about the taste, the refreshment, and bringing people together ultimately. And so digital is a way, a means, to still bring our trade, if you will, our traditional trade one step forward.

Well, it's the realization we were very much on the outlook. We were at the stage where we were very well exploiting the digital world to build the brands, but we realized that we were not exploiting it to sell the brand. How can we explore these new technologies to improve our sales capacities? That's where we realized we would have to take a step forward. The way we went about it was a little bit kind of: we started to have the discussion in the executive team as a team, a conversation: what can we do? We booked ourselves into Silicon Valley, I know it's very classic, perhaps a little bit cliché, but during our visits we continued to speak about what we could do. Then we returned and we chose not for an approach of a big bang, but for developing initiatives that could immediately make sense, bring business, and be examples for the whole organization of what the new possibilities are with these new technologies. For that, your executive team must be very well aligned, understands, is equally passionate and fired up to do it. Then you have to positively infect the rest of your organization as step two. For that, you have to develop initiatives not at the center, but in the business, where people realize in a country that by developing a system and deploying technology, it really improved their life and their performance. As a CEO, and maybe for other CEOs on this transformation journey, I'd say: we all got inspired, executive team needs to be aligned, you really need to do initiatives in the countries. What else can I say in terms of inspiration? You can be quite lonely on this journey; it needs vision, stamina. When you say to an organization 'we go more digital,' naturally people will cheer you up because it's just, you know, we're surrounded with it in our daily life. That is not the difficult goal. Everybody sees we have to go where the whole world is going. The real issue comes when you have a problem. It's a process where you have to accept that you make errors. Big organizations like Heineken are used to flawless planning and execution and don't know how to deal with problems along the way. So it's developing adaptive capacities: when things don't work out, to take a step back, saying it's not a problem, try another way. Installing that kind of mental agility to deal with something you cannot plan in advance. You have to have a direction, but you cannot plan the exact outcome, and you have to be able to live with that. As an organization, you have to learn, and as leadership, you have to show tolerance for failure more than ever. Then you have to have a lot of resilience. In the beginning, you may pay a hefty price for little success. If you pull the plug too early, you forgo gigantic opportunities. But you also need to know where it really doesn't work and exit a project, learning from it. You have to show a certain degree of calmness and look at facts rather than getting emotionally infected when things go wrong. The crucial thing is to capitalize on learnings, get learnings from mistakes, know what to do and what not to do, not repeat the same mistake. You have to create an ecosystem that is an open book, transparency is required. People should feel safe to work and tell the truth in a large organization. At Heineken, we chose an approach where some initiatives were developed at arm's length from the group rather than within, because early integration would have killed or made development difficult. That's more or less what we did.

Yeah, and the vision again. The vision is how you deploy as a brewing company, a leading brewing company. It's how you deploy your product portfolio, but also your approaches to clients, customers, and consumers. And that's in constant evolution. The product evolves obviously at a very slow pace, and society evolves a bit more quickly, and you always have to find the right equation between these two speeds. With digital, you had a noticeable acceleration of habits of people and the technologies they're using in daily life. When I started in 1984 and did my duty as a sales rep, you were calling on individual clients, and it was important to develop a personal relationship with them, knowing who they were, the names of their wives, their children, the dog, where they went on holidays. That personal contact was very important to set a good atmosphere to conduct business and develop a business relation. Now fast forward to the grandson of that pub owner. He would still be in pubs, but he would be much less interested in my visit talking about his dogs and last holidays. He would be more interested if we offered him a digital environment where he could quickly make his own choices, and also look into other things beyond just my product category. If I can help him find the best architects or kitchen fitters, that creates a larger universe than just the wall of my product. With a digital tool, because today people consult themselves on screens, you must create an environment where they can quickly and easily find solutions. So what you do is still the same fundamental steps: look at what adds value to your customers. At the end, only the means change over time. Exactly.

That's obvious. We are Heineken, a fairly decentralized company. Why? Because we operate everywhere across the world and we have one brand that unites us all, and that is Heineken. But mind you, Heineken is only 15% of the volume we sell; it's a lot more of the profits, but 15% of the volume. It grows faster than the rest, which makes us special. Next to the Heineken brand, we have another 350 local brands, beer, cider, sometimes non-alcoholic products. When you visit the 80-plus countries where we operate with own production sites and the whole supply chain, those are very local operations. The best way is to devolve power to local management. So we are fairly decentralized. But there are things we do centrally, like purchasing and IT. When it comes to digital deployment, it is new, so it has to work for an operating company. You have to create an environment where others can look into the kitchen of the company developing an initiative, so they get excited and don't reinvent the wheel. That's the ecosystem. You need a vision from the executive team going in one direction, crystal clear, everyone behind. Top management must realize it costs money and there will be flaws, but you must believe you'll find nuggets that, when scaled, make a difference. You have to start deploying in the operations, not in head office, because you don't sell beer in head office. That's how we chose to work.

You had, if I recall well, two initiatives. Remember, I retired from Heineken, so you're speaking to a pensioner. First was the digital app we gave to customers. In Mexico, typical mom-and-pop shops are visited once or twice a week by a sales rep who takes orders for truck delivery. We complemented the sales rep with an app for customers to order directly. That was developed first, now exists in many countries, but Mexico was a big deployment. It's an addition, not replacement, offering convenience. Second was more a people thing: City Labs. Instead of management deciding, we sat with district sales reps and asked what we could do differently to sell more and serve better. People gathered, shared examples. Spark Optimus helped recognize patterns. For instance, in a hot country, beer must be sold cold. We deploy thousands of fridges. The key is not having a sales rep come at 2 PM to find the fridge broken or poorly stocked. Better to do it online with photographic recognition: people take photos, send them, get feedback via WhatsApp, and get replenished if needed. Then we can automate further. The beauty of collaborating with Spark Optimus is reaching milestones that deliver business while leaving room for improvement. The Mexican operation was very enthusiastic and wholly embraced it.

Yeah, in South Africa it has been a bit of serendipity, I must say. The opportunity created the strategy. We came across a startup called Touchstones that developed what is effectively a cash register machine for a sales outlet. But it also allows ordering towards the supplier, offers analysis of product categories and the competitive field, and also offers a possibility to...

In South Africa, Heineken had a small market share. To grow in a vast country with dispersed small trade, we needed a cost-effective way to gather market intelligence. Touchsites provided an electronic sales rep that could be installed in many outlets, collecting data on consumption patterns. This was a big discovery. The founders wanted to exit but stay involved. Spark Optimus helped us scale and integrate the technology.

Yes, it's about training people to use the technology. Deploying the technology is a matter of money, but retraining sales reps to work with data rather than oral information is crucial. It's a big human retraining effort, similar to the automation of the supply chain 20 years ago. The sales process is now undergoing the same digitalization.

The same goes for finance activities, which went even earlier. I remember in my first brewery in Africa, they were still using carbon copy books in the 1980s. Technology forces retraining, but you must embrace it because you never go back. That's what we tried to do at Heineken.

Beerwolf was exciting, one of the few B2C initiatives. The idea was to cater to the growing interest in craft beers, offering a wide variety through a digital store. We chose to be an open platform, not favoring our own products, to maintain credibility. We started in the Netherlands and expanded to 10 countries. The logistics are challenging but viable for high-priced special beers. We set it up at arm's length from Heineken, with an experienced manager, Hansberg, who had entrepreneurial experience. Spark Optimus supported us. It's been a journey of constant evolution, with many stops and goes. Not all B2C ventures worked; some like a beer delivery service lost money. Digital commerce is exciting but has many graveyards. The key is to respect the laws of gravity in logistics. The big benefit for Heineken is in B2B and market intelligence.

It's not just the money, it's how you deal with people. You can't say digital is important and then not promote those who lead it. I learned that from my career in Africa, which was once considered not career-worthy. But my predecessor ensured that people who worked in Africa had good careers afterwards. The same applies to digital initiatives: if you're serious, you must show that people who work there and get results are promoted.

I wasn't your pick as CEO; I defer to Yonder Vancouver who brought you in. He was politically intelligent to introduce your company to the full management team, so everyone understood your role. You did a great job educating the executive team, providing a constant feedback loop at both operational and strategic levels. That made our collaboration special. On the ground, you have a practical approach, not selling grand plans but forcing us to set our own goals and then guiding us. Patience and focus on practicalities are your great qualities. You have a network of suppliers for the technology side. You are a great company to assemble the journey for us. I've enjoyed the adventure.

Thank you, Alexandra, for this conversation. It's very nice that during these interesting times we could zoom together and talk about this adventure. All the best to all the Sparkies.