Danone’s Sustainable Competitive Advantage
Danone was an early adopter of environmental and social impact improvements in its business, starting as early as 1972, when then-CEO Antoine Riboud said, “Let us conduct our business with both the heart and the head”, which has led to its consistent sustainable progress (Sustainable to the core: How Danone is changing the world from inside out, 2021). Danone is registered as a Certified B Corporation with an overall “B Impact Score” of 96, where most companies score a 50 (Danone North America – Certified B Corporation – B Lab Global, n.d.). Seventy percent of Danone’s business is covered by the B Corp certification, and their goal is to reach 100% by 2025. B Corp is a movement and certification process around “companies meeting the highest standards of social and environmental criteria” (B Corp – Danone, n.d.). Commitment to B Corp status is a strong signal of Danone’s commitment to social and environmental impact, which is a key part of Danone’s sustainable competitive advantage.
In addition to becoming a B Corp, Danone is contributing to the United Nations’ Sustainable Development Goals, consisting of 17 Sustainable Development Goals (SDGs) and 169 targets. The UN’s Sustainable Development Goals balance economic, social, and environmental dimensions. Danone’s “One Planet, One Health” vision is in alignment with these United Nations Sustainable Development Goals. One of the major focuses of Danone is in the circular economy, relating to its management of waste and natural resources, recycling, and the supplier and infrastructure ecosystem that support that circular economy (UN’s Sustainable Development Goals, n.d.). Danone’s commitment to the SDG’s is a serious competitive advantage around sustainability.
Danone mixes sustainability and business priorities, so sustainability is driven from the leadership at the top of the business (Sustainable to the core: How Danone is changing the world from inside out, 2021). Danone’s focus on their circular economy with their partners and suppliers, and their Danone Ecosystem, established in 2009, invests environmental sustainability to projects supporting their circular economy, distribution, sustainable sourcing, and regenerative agriculture (Danone Ecosystem, 2022). The Danone Ecosystem is a sustainable competitive advantage, investing in continuous improvement in their sustainability.
Technology as a Sustainable Competitive Advantage
Danone is making technological investments as well as investing in waste management infrastructure, as their effort is to use recycled plastics and bioplastics in their bottles (Umapathy, 2020). Danone also teamed up with Microsoft to offer a software product called the AI Factory, including the AI Factory for AgriFood, enabling start-ups to benefit from Danone’s “One Planet, One Health” initiative (Microsoft and Danone join forces for AI at the service of responsible agrifood, 2020). Additionally, Danone is investing in its own “future proof technology” in its IT and data science infrastructure to support operations, data collection, and data-driven decisions in the future (Danone, 2022).
To improve efficiency and sustainability, Danone has also redesigned its processes behind procurement and manufacturing, in addition to restructuring their heavy and previous siloed management structure. Henri Bruxelles, previous Chief Operating Officer and current Chief Sustainability and Strategic Business Development Officer said that COVID forced Danone to focus on technology to evolve logistics, supply chain, and manufacturing. In fact, supply chain and procurement, research and development, and manufacturing are all in the same team at Danone now. Bruxelles highlighted that Danone is making a digital transformation, with 40 sites planned to be digitized by 2023, in addition to implementing several data-enabled tools for better analytics and supply collaboration (Nunes, 2020). Danone is seeing that this data-driven decision making, along with agile thinking, has allowed them to have wargaming sessions in order to virtually test business plans. They also point to wargaming as a competitive advantage (Gardere, 2021). Combined with Danone’s social footprint, their data-driven decision-making is their sustainable advantage.
Danone Succeeds Where Competitors Fail
Danone’s competitors include Nestle, Coca-Cola, PepsiCo, and Kraft. Danone succeeds against their competitors in product innovation capabilities. Danone is currently beating its competition developing products in the fast-growing plant-based, probiotics, and protein categories. Danone has become the market leader in the plant-based products. Danone is also succeeding in innovating offerings from a consumer enjoyment point of view (Doering, 2021). Danone’s reputation for being a B Corp, aligned with the UN’s SDGs, and being sustainable and environmentally beneficial is a huge advantage over Nestle, who is associated with controversies relating to child labor, price fixing, and unethical behavior (Comparing companies, n.d.).
Danone Connects with Customers
Danone uses a customer relationship management (CRM) system to manage email campaigns for their customers. They custom-tailor email campaigns to customer segments like pregnant women and to mothers (Creating a fully automated eCRM system for Danone, n.d.). Danone uses AI-driven social intelligence products like Linkfluence to analyze consumer habits and identify changes and new trends, which allows them to drive innovation. Linkfluence pulls data from social media and allows Danone to put customers first using social data (Linkfluence, n.d.). Danone leverages similar platforms like LiveRamp’s Safe Haven for eCommerce and online customer engagement (LiveRamp | Data Connectivity Platform, n.d.). Danone’s approach to social listening increases their social engagement and their ability to innovate based on customer needs and wants (Pham, 2021).
Danone has developed 63 processes for engaging customers on social media, always using the customer’s name when addressing them. They have a dedicated team to manage their customer community. They private message consumers on social media, giving advice and having conversations with mothers and other consumers (Gilliland, 2016).
In other firms and industries, developing an analytical and fanatical approach to social listening, social engagement, and tying that information to the customer relationship management (CRM) system can create much more customer loyalty. Forming those relationships can let clients in any industry inform innovation. That informed innovation allows firms to deliver products to market that the loyal customers actually want.
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