If you don't have a long-term perspective while going international, don't do it. It took us many decades to achieve the global leadership of our industry. If you don't have the support of the board for this long-term commitment, maybe just go for smaller things.
The bigger a company gets, the further its leaders get from the front line, from the customer. It's just what scale does. Growth separates leaders from the folks that make and sell their products, from the folks that buy their products, from the players on the field, from the truth. Daniel Servitje has spent 27 years fighting this. His enemy's not growth. We'd all want his track record. It's distance. I'm Jimmy Allen, and this is Founder's Mentality: The CEO Sessions.
Daniel is the executive chairman of Grupo Bimbo, the world's largest baking company. 80 years old, 39 countries, nine times the size it was when he became CEO, and he was on a bread truck yesterday. This conversation is about how you fight distance at scale across decades, across cultures, how you move fast when it matters and stay patient when it counts, and how you set the tone of a business, not from the boardroom, but from the bakery floor.
I went on a hot summer in southern Spain to visit one of our bakeries. We had acquired a company like 18 months ago from a lady that was an entrepreneur that developed a business on gluten-free. And Maria, when I saw her, she had fire in her eyes. She basically was telling me all the nice things about the company, all the energy that she had felt in the company, all the good intentions and the human quality of our leaders. But she also basically said, 'I don't want to be prudent, I want to tell you how things are.' She mentioned all the frustration with our processes, with our CapEx process, with the long meetings, and the number of people getting involved in making decisions. I ended up in the tour filming her with my phone and asking her questions about how she developed the products, the connection that she had with the heavy consumers that she was working with on those developments, and it was very inspiring to see someone so refreshing in the company.
Just internally, do you take these voices of the founders and use them yourself to change behaviors of your team?
Much so. We have some big events in the company, and the biggest of all occurs in the fall of every year, and we bring people from the 39 countries in which we have presence from all areas, but more importantly from the marketing and sales areas, and the top management team. And a year ago I was hearing all those things from different entrepreneurs on what they were doing, or our own people telling me how we were not moving as fast as we used to or we need to. So I ended up bringing all those voices and asking our teams to revisit our way of going because we have been growing, and as you grow, you get more complex, you get more focused on meeting budgets, on reviewing things in detail, on how you're gonna assess risks. But at the end of the day, you slow down the company. You miss opportunities. You see competitors gaining ground on many fronts. And I said, 'It's on us, it's on the company to see things with a new light and question yourselves.'
And in this trade fair, what were the two things people took away of how do you keep the entrepreneurial spirit in a large, successful company? What were the actions everybody walked away with?
I would say that they were surprised that I was so firm in my understanding that this was a breaking point in the company. At the end of the day, I had been the CEO of the company for 27 years. I had been able to grow the company nine times from where I received it. I was no longer the CEO, I was the executive chair. But I had a little bit more space to see how things were going, and that was like, yes, let's do it. You're right because we're all seeing the same thing, but we were not comfortable in moving ahead and breaking the glass to start anew on changing processes, on expedite, on many things that were basically the norm at that time. And it's taking time. Big corporations don't move swiftly one day from the other, but I see that the pace is moving now in the right direction.
It's an amazing theme that I think there's a myth that as you become CEO and become huge and big and, you know, everybody views you, that CEOs walk around with big thoughts, thinking big things, and yet every time I talk to you, you're always talking about the little things, the specific things. Why do you do that?
I do strategy in the field. I don't do strategy in the boardrooms. When you get in discussions and you just talk about generalities, you don't sense where are the issues. But when you get deep inside what makes things work in the bakeries or in the sale centers or in the marketplace, then you understand what works and what not, and it's very specific. So I usually try to get deep into the small things so that then from there you get the big ideas. And it's the same as with Maria. Maria, she developed the products with a very small set of heavy users, and she understood their needs very closely, and from there she had a lot of confidence on the things that worked for their products to be superior to others.
Think about what it takes for that conference moment to happen. First, I mean, how many leaders would do that? Stand up in front of thirty-nine countries and hold the mirror up? And not to their predecessor, to themselves, to the company they built. And second, how many leaders understand the huge power of small things? Letting Maria speak her truth. That only works in a culture where people aren't afraid to tell the truth. That only works in a culture that listens first to the voice of the front line, the voice of the customer. And that's the culture Daniel has been building. Not from the top down, from the field up, from small things. When he became CEO, Bimbo was basically a Mexican company. That's it. But winning on home turf is one thing. Playing internationally is a different game entirely.
What I always say is if you want to go international, you have to make sure that you have a strong foot in your own market. If it's a weak foundation, international won't solve anything. It will only get you into more problems. But that was not our case. The business was strong in Mexico, and we decided that we could have an international opportunity. But the biggest lesson of all is that if you don't have a long-term perspective while going international, don't do it. Because it took us many decades to achieve the global leadership of our industry. If you don't have the support of the board for this long-term commitment, maybe just go for smaller things.
Often I think people forget how long it takes to develop your first position. You know, your Mexico position took years to develop, and then you wanna go into the US or go to another market and expect success overnight, and it takes just as long to develop that second market as your first and the third, but most people don't have the boards with the patience to be able to let it happen, and I think that's one of the magical things you guys have is public company long-term patience.
That to me was the most important differentiation between us and many other players. The long-term perspective and the consistence of the board to continue to invest even if there were no results or even where there were bad results for that specific country. And I would say that the third one, which is probably less common, it's a very deep understanding on the original founders of the company that the business priority was first and the shareholders came second. In terms of the uses of the profits, the reinvestment in acquisitions, CapEx has always been the first priority in the company, and the percentage of the dividend is much smaller than what goes back into the business. So that allow us basically to compound our growth and to sustain the competitive issues that we have in a different market.
As you went international, I mean, the classic case, and I can imagine this especially for the kind of culture you had, is how much do we export our culture and impose it on each of our acquisitions, each of our markets, and how much do we allow our culture to change based on the new company? And I'd just love to hear what your experience, 'cause it's such a classic issue for founders.
This is a great question, Jimmy, and one that we suffer through the times, especially when we moved from Mexico to the US. That was like a culture clash. I would say that we have a very special philosophy. We aim to be a sustainable, meaning a long-term surviving company, highly productive, and fully humane. So in a sense, the highly productive is very much into what most large companies understand, but a fully humane was like, 'What are you talking about?' And we had a very good atmosphere in our company in Mexico, and when we tried to translate that into the different cultures, it worked well, mostly in Latin America. In the US, we had trouble at the beginning, but then we also have had the opportunity to understand what the companies that we were acquiring, what were their values. And we have in the past been on incorporating the most important components like safety that we did were not strong, or diversity that also have been very important in the past years. So now we have a very well-accepted global culture. And when we acquired companies, for example, we acquired a couple of companies in Eastern Europe, in Romania and Serbia, and I was truly impressed by how easy the culture was accepted and cherished by our associates there. So as time has passed, this culture and our values have been embraced because are now very much global values. We have become a much more open company than what we were before.
You mentioned that there was a fourth-generation member going to a boot camp. Do you have boot camps? Do you have opportunities where people really do get together to get a complete immersion in your culture and how you operate?
We have, like, five different courses, a two-day seminar for every leader in the company. She may be a president of a country or a sanitation supervisor in a bakery. The same seminar applies. There might be some chats that are global, like for example, me giving a chat of half an hour or an hour or the CEO. But the main thing is that the seminar is given by the leaders of the company because what we want is that the culture gets seen in real time. If the leaders speak about something, it's not that they're just saying this thing printed in the wall, it's that the leaders act and lead with the integrity, with the values of the company, because the culture is what the leader does with their teams, not what is written. It's what you see in the day-to-day actions with your leader.
Culture isn't what's in the handbook or on the walls. It's what everybody does every day when folks aren't watching. It's where the leader is. It's what happens with distance as you grow. The strongest cultures tend to be the most hostile to external influence. If strong cultures acquire a new company, they demand that that company changes. Yet Bimbo's different. It's a strong culture that is reshaped through international expansion. Each acquisition brought something back: safety from the US, openness from Eastern Europe. And it makes sense. If you lead from the field, then the field shapes everything. New field, new changes. But hold on, we've seen this movie. Growth creates complexity. Each new market, each new acquisition comes with its systems, its processes, its ways of working. And all that complexity brings energy vampires, and those vampires, well, they fly around sucking the life out of entrepreneurs. Eventually, the Marias stop speaking their truth and start leaving. The question is this: How do you keep the entrepreneurial instinct alive while expanding across dozens of new markets and growing 900%?
A company that keeps its entrepreneurship is willing to fail, willing to make mistakes, willing to take a risk. Oftentimes, the frustration I hear of very senior founders is they have more risk-taking appetite than a lot of their people, and I'd just love to hear how do you... You know, A, is that a problem you're seeing?
