Introduction to Danone as a Disruptive Company
Danone is a food and water company with sustainability, regenerative agriculture, and human health as core values. They are a B Corp (Danone North America – Certified B Corporation – B Lab Global, n.d.), and they are dedicated to the United Nation’s Sustainable Development Goals. Danone was able to gain a competitive advantage by consistently pushing forward its missions of public health and environmental sustainability. Their “One Planet, One Health” vision is Danone’s current theme (UN’s Sustainable Development Goals, n.d.).
Harvard Professor Clayton Christensen created the theory of disruptive innovation which has been used by companies like Intel and Salesforce. The theory of disruptive innovation indicates that these innovations start in low-end markets or new markets. Christensen also says that disruptive business models are often very different from their competitors (Christensen, Raynor, McDonald, 2015). Danone meets this definition in that they have a business model that is genuinely based upon delivering health and sustainability, rather than simply generating profit. Danone is an example of disruptive innovation in that their circular economy, including their innovations in waste management, recycling, bioplastics, and supply chain allows them to provide products in recycled containers, regardless of where they are produced. As they continue to innovate, they will accomplish a place where they are 100% recycled and highly sustainable. Currently, 70% of Danone’s business is covered by B Corp certification, but they are aiming for 100% in 2025 (B Corp – Danone, n.d.). Technology is an enabler of this innovation and disruption as Danone propels itself forward by creating its own data-driven supply chain on its own circular economy.
As a result of innovations in technology around data handling, supply chain, marketing, and sustainable packaging, Danone is #1 in dairy, #1 in plant-based, #2 in water, #2 in infant nutrition, and #4 in adult nutrition markets. Danone is geographically distributed, and they have a wide geographic reach (Facts & Figures, n.d.). They also have deep research and development experience. In addition to their sustainability credentials, their data hub, their communities, and their innovation, Danone has many attributes which are competitive advantages.
Major Issues Facing the Danone Brand Identity: Pollution vs. Sustainability
Danone’s brand, which is now focused on sustainability, has been associated with high levels of pollution. According to the Changing Markets Foundation, Danone is known as a brand with one of the largest plastic footprints, ranked as the fourth worst offender for plastic pollution (McCarthy, 2020). Creating 820,000 metric tons of plastic packaging, Danone gained a negative reputation in the 2017 and 2018 Break Free From Plastic Audit (Tangpuori, et al., 2020). Considering that Danone was an early adopter of environmental and social impact improvements in its business, the fact that they are a major contributor to plastic pollution is alarming.
Strategies and Solutions: Overcoming the Major Issues with Disruptive Technology
Danone’s focus on environmental and social impact started 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 conquering this disparity in their past and in their brand by creating disruption in their markets: dairy, food, infant nutrition, plant-based nutrition, and adult nutrition. They created this disruption through technological innovation in data handling, supply chain, marketing, and sustainable packaging. By being radically sustainable, proactive in taking care of health and the environment, Danone is overcoming their major brand identity issue.
Innovation in Data Handling Technology
Danone has a competitive advantage due to their Danone data hub and strong IT capabilities. The Danone IT & Data Hub focuses Agile and DevOps methodologies to drive advanced and innovative IT solutions to create true revolution and digital transformation (We’re Looking for Changers, n.d.). 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). This data science capability allows Danone to mine data for consumer preferences as well as production and supply chain data, which can be used to create data-informed decisions. In one example of leveraging this data, Danone 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).
Innovation in Supply Chain Technology
Danone has implemented solutions like the Digital Brain from o9 Solutions as a platform to manage its supply chain and production, linking Danone’s commercial teams, operations and finances. The Digital Brain allows Danone to plan into the future across the entire enterprise. This innovation is groundbreaking because it helps Danone to collaboratively tune production and supply chain while allowing every stakeholder to participate in the planning (Danone is Modernizing Its Global Supply Chain With AI-Driven Insights, 2022).
Innovation in Marketing Technology
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).
Danone has brought in specialized firms for data analysis and to test concepts on Google and Facebook (Macdonald, 2020). Using LiveRamp with Numberly in order to fortify its media strategy with consumer intelligence, LiveRamp’s Safe Haven product creates an analytic data collaboration platform. Numberly is a digital marketing platform and marketing automation system. In this case, Numberly deployed LiveRamp to gain access to the consumer data (Danone Boosts Customer Intelligence and Addressable Reach Using LiveRamp’s Safe Haven, n.d.).
Innovation in Sustainable Packaging Technology
Danone has been innovating in bioplastics, recycling, and waste stream management (Umapathy, 2020). Danone worked with LanzaTech in order to develop 100% recyclable bottles as well as new manufacturing technology that can capture carbon emissions to in order to produce the chemical material used in bottle production (Adams, 2022). This technology is a part of Danone’s circular economy. They offer food and drinks in packaging that is recycled in a circular infrastructure, where they are investing in developing waste management and recycling systems in order to provide the packaging material needed (Circular economy of packaging, 2022). Danone even launched their Circular Economy Accelerator (CEA) to build policy to get local governments to support their renewable materials infrastructure. By focusing on recycled materials and consumption habits, Danone is creating disruption and positive change (Coulter-Parker, 2020). Danone can disrupt with this cause by giving a sustainable purpose to the consumer (Fisk, 2017).
Danone has lived up to their commitments to the environment and human health, overcoming their legacy of pollution. By being more sustainable than their competitors, Danone has broken through as the voice of the environment. Danone has disrupted the dairy, waters, plant-based nutrition, infant nutrition and adult nutrition markets with technological innovations in data handling, supply chain, marketing, and sustainable packaging. Danone, facing competition and scrutiny due to plastic pollution, should continue to focus on sustainability as their core driver, continue to focus on B Corp status and UN Sustainable Development Goals, and continue to innovate in technology around packaging and sustainability.
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