(nb eNG eee Dak Oak MORE AND BETTER LEADERS HIP Strategic Management Society. 15th Annual International Conference. Mexico City. October 17, 1995. Roberto Servitje S. GRUPO INDUSTRIAL se Wf BIMBOI, is my privilege and my pleasure to be with you in this important event in which, we, academicians and businessmen, are making a sincere effort to know each other better and achieve a synergy understanding, The only titles that ! can present to you this morning is my experience as businessman and officer of our group, in which I have worked for half a century. | am particularly happy of having this opportunity to address such a select, and numerous group of persons related to the academic world, because in my formal and informal academic learning experiences, | have always felt that something had been missing, particularly the attention and ‘emphasis in the human and social aspects. Thave been asked to comment with you this morning on the operation and experience of a Mexican enterprise with an accent on leadership and business ethics that may have promoted continuous growth and success over 2 long period of time. In order to present a more comprehensive picture, | will give you a short description of our group. We are mainly a food company, manufacturing and distributing bread, cakes, cookies and crackers, salted snacks, chocolate, candy and similar products, We also have other companies, mainly of vertical integration, such as flour mills, machine manufacture, plastics and fruit preserves. We are associated with other groups in sugar mills, polyethylene and polypropylene film manufacture, printing and other operations. We have a substantial participation in the largest ice cream manufacturer and distributor in the country. Our sales figures for 1994 were close.to 1.4 b that they will be around 1.8 billion dollars for 1935. We operate 46 companies in Mexico, 8 in Central and South America (7 countries), and BintheUS.‘We operate approximately 14 thousand trucks serving different routes through 360 depots scattered all over Mexico. We have over 45,000 people working in the different companies. The number might sound large in regard with the amount of dollar sales. Part of this is because we are quite integrated, doing many things that nor- mally could be assigned to other companies. We do all the maintenance and repair of our equipment and machinery, as well as of the trucks and trailers. We do all of our engineering design, calculation and drafting for the civil construction and the plant lay-outs. We manufacture our own fruit preserves, we also supply flours, eggs, and other key ingredients, mainly because we have not been able to receive a trustworthy service from other existing suppliers. Its evident that we are a labor intensive company, deeply involved with, and commited to, people and the social responsibility of the trade. J was informed that in a poll recently made at a very respectable school of management, it was reported that 90% of the students considered Social Responsibility an important issue and that 80% said that they would like to learn more on these issues. I deeply agree with you that this isa subject that has to be explored, lear ned and then practiced, mainly because it is a serious matter of justice and responsibility towards our fellowmen and also, secondly, because it is the only durable way to attain social peace, happiness and success. In Grupo Industrial Bimbo, the company that I have the privilege to pres de, we have tried over the years to live under the light of these principles. ‘Our written credo express that “we want to create a highly productive and a fully human enterprise”. We have to accept that we have not fully succeeded in neither one of the two, but we also have to declare that we have made important advances and the! Social responsibility has its foundations in the princ ty, jus:In our case, we, as businessmen, must also thrive for these high values be- cause the rest will come as a logic consequence. These high values, translated into our daily work, mean: * To respect each and every individual because of his dignity as @ human person. * To exercise justice to all at all times. * To exercise subsidiarity, namely pul to learn and grow. * To understand the value of “work”. Work is the only thing that gives dignity to a person. In one word, to put people (ail people) before things. g the stimulus on letting people There are other values like: * Giving always the best product or service for their money to our custo- mers. ‘+ Estimulating hard work, creativity, interest. ‘+ An atmosphere of austerity and financial prudence. * Orientation at long-range results (not quarterly) * Reinvestment of profits, * Quality, and * Participation and involvement. In my introduction | mentioned the principles that we believe are the ba- sis of a responsible social conduct, let us examine briefly each of these principles: Solidarity. The toot of this word comes from Latin “solidare” that means to put together, to weld. It means the reciprocal of being united and obli- ged one to the other. Iti, in a way, a midpoint between the egoist indivi- dualism and the unacceptable colectivism that deprives the individual of its personal dignity. The concept of society is based in a characteristical condition of unity and relation and come about tueIn our case, we, as businessmen, must also thrive for these high values be- cause the rest will come as a logic consequence. ‘These high values, translated into our daily work, mean’ * To respect each and every individual because of his dignity asa human person. © To exercise justice to all at all times. * To exercise subsidiarity, namely putting the stimulus on letting people to learn and grow. © To understand the value of ‘work’. Work is the only thing that gives dignity to a person. In one word, to put people {all people) before things. There are other values like: * Giving always the best product or service for their money to our custo- mers. ‘+ Estimulating hard work, creativity, interest. ‘© An aimosphere of austerity and financial prudence. * Orientation at long-range results (not quarterly). * Reinvestment of profits. © Quality, and © Patticipation and involvement. In my introduction I mentioned the principles that we believe are the ba- sis of a responsible social conduct, let us examine briefly each of these principles: Solidarity. The root of this word comes from Latin “solidare” that means to put together, to weld. It means the reciprocal of being united and obli- ged one to the other. Iti, in a way, a midpoint between the egoist indivi- dualism and the unacceptable colectivism that deprives the individual of its personal dignity. based in a characteristical condition of unity accept going back to only one of them. The concept of society and relstion and dees ne the basic principtes that round justice as the vide tha one. constantly and alweys, wh belongs te ther:In our case, we, as businessmen, must also thrive for these high values be- cause the rest will come as a logic consequence. ‘These high values, translated into our daily work, mean: * Torespect each and every individual because of his dignity as a human person. © To exercise justice to all at all times. # To exercise subsidiarity, namely putting the stimulus on letting people to learn and grow. © To understand the value of “work”, Work is the only thing that gives dignity to a person. In one word, to put people all people) before things. There are other values like: © Giving always the best product or service for their money to our custo mers. Fstimulating hard work, creativity, interest. ‘An atmosphere of austerity and financial prudence. Orientation at long-range results (not quarterly). Reinvestment of profits. Quality, and Participation and involvement. In my introduction | mentioned the principles that we believe are the ba- sis of a responsible social conduct, let us examine briefly each of these principles: Solidarity. The root of this word comes from Latin “solidare”’ that means to put together, to weld. ft means the reciprocal of being united and obli ged one to the other. Iti, in a way, a midpoint between the egoist indivi dualism and the unacceptable colectivism that deprives the individual of its personal dignity. ‘The concept of society’ is based in @ characteristical condition of unity rede of iviJustice is the great ordainer, orderer and auditor of life in community. Since Aristotle, the occidental tradition recognises three fundamental forms of justice. The commutative justice, which is the form that has more practical applications for every individual, and the distributive justice and legal (or social) justice, that has more to do with the legal and administra: tive aspects. From the principle of common good derives the principle of respect to each and every human person. It would be an error to interpret the needs of the common good, in detriment of the individual person. ‘And we must mention the principle of the importance of work. Work is the only mean that humanity has to fulfill its needs; physical and psycho- logical. Work is about the only thing that confers dignity to a human. being, Nobody in his complete faculties can be considered dignified if he doesn’t work; if he is only a parasite that makes use of what has been cre- ated by others with their work and sweat. Work is not a punishment or a simple need, it is the most sublime instrument created by God to allow the full development of the individual and society. These, among other principles and rules of action, in my opinion, are the base and substratum of any social philosophy. It is a great responsibility of the leader of any enterprise to first know and then live and instill these values and principles in his professional life. But it is sad to verify that there is a serious lack of authentic leadership in all societies, We are aware of the enormous change that is taking place all over the world, particularly in countries denominated as “third world”, but also, in a different way, in every other nation. these subjert: ‘efore in my address today | will touch hriet Leaders in Society idership. Characteristics of a Leade4, The Company Leader. 5. Need for a Company's Philosophy. 6, Moral Values of a Company Leader. 1. Lack of Leaders. When problems begin to overflow their capacity of solution, when these, instead of decreasing, grow and become worse, itis clear that among the varied and complex reasons, one of them isthe lack of true leadership. Mankind necessarily needs leaders, not only to help achieve different ob- jectives, but also to help to identify them and desire them. It is sad to accept this, but the majority of mankind lives without knowing what they really want. Ortega y Gasset tells us in his visionary work '"The Rebellion of Masses”, that “...soclety is always a dynamic unit formed by two factors: minorities and masses..." and the difference between them lies in the fact that the former, a small minority, “have a clear wish, idea or ideal” and that this, select minorities are not conformed by the ones who believe themselves to be superior, but by those who putt higher self-demand on them”. The problem which we face today, and this is almost a worldwide problem, is the dangerous scarcity of leaders who may guide the rest of society to its wholesome development. We mentioned that when problems overflow us, it is, no doubt, due to the lack of leadership. Problems are overflowing worldwide today. Misunderstanding amongst nations and ethnics groups. Ecological problems. Violence problems. Problems of loss of values and corruption. Demographic problems and overps Problems of uneriployiment Problems of exce « Prob © Broblems in educatio:‘A problem that both affect and concern all businessmen is the lack of pro- ductivity. The world’s productivity balance is poor, this is why this topic is transcendental and well-timed, If we wish to waik paths which will allow many countries to advance from the third world to levels of developed countries, itis essential to rely on ideal leaders, many leaders, big and small, in all fields: politics, workers’ unions, intermediate organizations, churches, and of course, in compa- nies (private enterprise). We are in an urgent need for strong, honest, active leaders with a deep Let us review the HL. Nature of Leadership. | believe that leadership is a gift some men are born with, and that it fre- quently develops as a consequence of a given environment. There is no doubt that it can be developed and that, 10 a ceriain extent, it is acquired by those who have clear ideas and perseverance, as well as a strong will to accomplish something, However, there are some experts on the subject such as Professor John Kotler, of Harvard University, who states that leadership is a combination of abilities, none of which are mystic, but attainable. Kotler insists that today, more than ever, the world needs such le- adership. He points out that the great majority of companies have excessi- ve administration and a lack of leadership. He mentions that there is a gre at need for a change and for people who may bring about such change. There is a surplus of those who only administer. “Doing what has been done before and improving it by 10% ‘is no longer a formula for success!” Peter Drucker, whom we all respect and admire, says that the majority of aders wham he met were neither born nor made traders, but ra shed them: thar 6On talking about leadership, aspects of hierarchy, equality and ine- quality, as well as about the main differences between being simply ma- agers and being real leaders, must be considered. ‘American zoologist Robert Ardrey states that “In every animal society there is a system of domination, there is a certain ‘status’ where indivi- duals set themselves by ranks. Each one knows whom he must fear and whom he must yield. But this animal leader, in exchange for his privile- Bes, is the one who has to confront enemies, run risks, fight, and, if neces- sary, perish in the fight”. We find the same structure in human society. It is understandable that, in, order to function as such, any society of inequals requires and favors such mechanisms of hierarchy. Claude Levi-Strauss states that in any human settlement there are men who are different from others, who feel a strong call for responsibility and that the load of social responsibilities becomes their main compensa- tion, ‘A moment ago | spoke of "a society of unequals’”. We hear constant refe- rence fo these unequal societies. From multipie tensions and social conflicts emerge the tendency that pur- suits equality and, on the other hand, the reality which is the evidence of inequality. Part of this serious problem comes from the fact that mankind, every man, is essentially equal for having the same dignity, origin and destiny, and those who are Christians or Jews, even more, because we clearly know that all men, without exception, are God’s children. But, on the other hand, we are existentially different, due to many and va- ried circumstances, The assumption of en equal soc only thing achieved aven greater differ are more difere ed al, nompraciicat, ety mere powe and mote pConsidering lacks and limitations of the majority, there is a duty and a res ponsibility towards reducing the gap between thase differences. He who has received more in certain aspects, has, no doubt, greater responsibi- lity. He who has more, be it talent, education or fortune, has to give mo- re, A leader is the one who dreams, risks, innovates, seeks circumstances, When these are not sufficient, he modifies them. When they do not exist, he creates them. The leader guides, communicates, persuades, inflames people with enthusiasm, helps others to identify and to aim for new ob- jectives, {i there are no leaders, society does not function, it’s all confusion. Ifthe- re are bad leaders, society does not function correctly. If they are corrupt, society tends to corrupt. But if there are healthy leaders with a true cons. cience for service, and if they are strong and qualified, there will be a he- althy and progressive society working in peace and harmony. Therefore, the leader, leadership, is essential in any given human settle ment. Anarchy does not work, and our deep longings for freedom must submit to the rules of order; otherwise, such desired freedom becomes chaos. | was a little child in Barcelona, Spain, when the anarchist took control of the city. This was a real chaos, without anyone having any po- wer to impose order. Nevertheless, it is necessary to recagnize that these concepts of le adership and authority, can be dangerous when abused or perverted in their applications. Abuse of authority becomes tyranny. Excess of leadership alienates people. Excess of order may end up in fascism Excess of liberty may end up in anarchy. Therefore we could say that leadership. is essential he servie of great valT have a strong conviction that the company must meet the standards of its social responsibility, because the society in which it stands is strongly influenced by its performance. By accepting this responsibility, the future development of our society de- pends, in a very important way, on the quality of their jeaders. I is natural that they draw our attention, being concerned on the. improvement, of those aspects which offer better opportunities of qualitative change. It is obvious that companies have to be transformed. This is not the pio- per time and place to analyze the nature of all changes. | shall only men- tion those that are, to me, most urgent: © Technological Change. * The inconditional acceptance of Total Quality. © and the continuous and never ending search for Productivity. We have already stated that a country’s wealth is not measured by its na~ tural wealth but by its people’s productivity. In my long years of business actitivy, | have reached the conviction that the responsibility of good and bad things, of what is done and what is left undone; growth; technological change or stagnation. and obsolescence is of the entrepreneur, that is, of the head that sets directions to follow, the one who makes the final decisions and assumes responsibility and risk. In his wonderful book “The American Spirit”, Lawrence M, Miller says that ‘no worthwhile change can be carried out without the firm and con: sistent leadership of an executive ofthe highlest level” V. The need for a company’s philosophy. ‘Most institutions have their particular philosophy. Some have it well defi- ned and written down, Others are more or less put into practice but are not clear enough and there are others that just jump into the business world barchanded. However } 4The backbone of these institutions does not lie on their organization, or their systems or their technology. Their philosophy is.their foundation and their suppor... Outlining it is the first thing that must be done. Facing the forthcoming problems and opportunities, specially for the glo- balization of economy, the worldwide economic opening and the inter nal and external sociopolitical changes, it is necessary to rely on an ins tutional philosophy; a deep, enriched mystique that embraces not only the main values, but also the great social principles. It is necessary to have a clear ideology, within which, solidarity prin- ciples, individual respect, justice and the value of work, occupy a pre- ponderant position. There is a need for regulations to promote good habits, to impel develop- ment, to stimulate participation; to promote fraternal relations so they are of service to all, not for just a few. A philosophy inspiring quantitative and qualitative growth, supporting reinvestment, research, innovation, creativity, dynamism and a longterm Vision. Values that attract people with high ideals and keep away those who would only intend to negotiate or speculate. Values that promote in- tegrity and discourage corruption. Ways to take care of ecology, of res- ponsible advertising, law abidance and the accurate fulfillment of legal responsibilities. Outlines and attitudes which would induce civic and po- litical responsibility, and promote savings and austerity. In other words, a set of rules tending to strengthen internal well-being and to develop general welfare. The company, in order to be able to accomplish its internal and external responsibilities must have a clear and accurate enterprise philosophy, to guide and inspire its personnel, specially decision makers. lt must abolish relatio workers and fight for ‘air any advers:However, as they say, “one cannot give whatever one" ‘does'nt have’s.< Even'if the leader really means it, hé must transform hi Self first that is to'say:cohe must change some ideas and efirich others;'He titst study. t he must educate himself. the way, create and achieve. : We keep on insisting thatthe managers are adel to thir Subordinate whether they like it or not, whether they fealize it Or nét, helt people” ” reflect what they are like. “This happens not only because they ave the bostes, those. who select and hire people, but also because the daily actions and decisions establish & way of being and acting. if I the Boss tes, if he steals other's ideas or uses the company’s goods oF... services for his personal benefit, or accepts expensive gifts; f he is not a hard worker, if he is frequently late or if he is aggressive or arrogant... how could we expect his people to be different? fous tt would not be possible to think of a-reliable company if its leaders are not reliable. In the same way, itis not possible to think of an honest com: pany when its bosses are not upright pefsons. : ‘That is why, inspired on the company’s mystique we talked earlier, the selection of managers must be very rigorous. Finally, Vi. Maral Values of 2 Canrnany Leader. shen we talk shout “husinassmen”, leis generaliy'on broad lines.change others. But it is possible that-we —each one of us whe somehow are, or shall be leaders in our society—-have, reflect and behave within ethical limits, aatbns My presence in this important forum would be sterile if, having come to talk about the need for leadership, Heave duit the tetm better leadership. Leadership, by itself, does exist, eventhough fis scarce But tesponsibie, enlightened leadership with vocation of service and-with a strong moral inspiration is what we urgently need, ‘Quoting again the idea that no One is able to. give what:he does not have)> itis evident that present or future leadersineed to. consolidate their values and develop themselves, not only professionally but socially.» = Fiet they will be yeas, and then, the light and engine for the cultural change that our countries need. Asa cofollary, I would like to summarize in a few words (andl shall finish with this) my vision of the company and of the entrepreneur we need for mankind in this new era We need leaders with vision efficiency, productivity and profitably conscience dynamic creative innovative: Wewant leaders who are responsible Participative fair fravernalWe want leaders who give affection and allow their subordinates to achieve their best. with high values, who bring up men and women and who are respectful of the society that sponsors them. We need a company with an enterprise mystique which raises and exalts those who are in it, and wich serves as a model for the development of our countries. | mentioned at the beginning my intention to transmit these thoughts. 1 have tried to do so by addressing myself to the presenttime responsible leaders and to the young future ones, in whose hands lies the future of the world. | wish you, for everybody's benefit, good luck. Thank you: Roberto Servitje S.