Reconnecting with core values to unify a divided organisation

In July 2001 Fonterra co-operative group was formed by the merge of two rivals and the New Zealand Dairy Board. It became New Zealand's largest company and world’s 4th largest dairy business by volume. Demand for dairy was growing and it was hoped this giant could compete on a world stage and satisfy its 10,000+ farmer shareholders. It was an ambitious task and a gamble.

Internally however the entity remained divided and lacked a coherent story and a coherent strategy. Results whilst good were not great and farmers were unhappy with this mega business they thought was far removed from their Kiwi values and roots. Without wholesale support the cooperative capital structure became a burden that limited growth.

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The executive team should create the Fonterra Story. One that encapsulated vision, strategy and values.

What does Fonterra stand for?

In March 2009 CEO Andrew Ferrier briefed The Zone: align the executive team and help roll out the company values to the entire Fonterra organisation of 15,000 people with a presence in almost 100 countries.

Following an extensive interview and discovery programme with farmers, the Board and the Leaders, The Zone was ready to start. Our recommendation was the executive team should create the Fonterra Story. One that encapsulated vision, strategy and values in a language external stakeholders could understand.

Split into two teams and armed with a dossier on the history of Fonterra the executives were given four hours to create a compelling story about the giant cooperative. When they came together to present their stories to each other, they had one clear similarity. Both groups had realised how important Fonterra’s heritage was and what a crucial role the farmers had played in getting them to this point. The executives then thrashed out one compelling story which in essence was about pioneering.

The next step was to tackle vision and purpose. The executive team had tasted the success that came from an aligned team working together and they were ready for more. Together, they created a robust vision and an inspiring purpose.

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"What sort of business would you be proud of?"

We then recommended the values be created by the employees, not the executive team. We designed a process that involved training 60 Fonterra staff, in 19 different countries, to conduct more than a 1,000 employee interviews over a period of eight weeks. These were blended with marketplace interviews comprising wholesale customers, New Zealand farmers and members of the public who were asked "What sort of business would you be proud of?"

The interviews came from every country Fonterra had staff and they represented a proportional cross section of the entire organisation. When they were complete the data was gathered together and the people who conducted them were flown to Auckland from all over the world. For three days the team of 60 worked together to shape the values.

On the final day Ferrier and his executive team turned up to see what had been created. They were blown away. The values team had perfectly captured what Fonterra was about. The energy inside the organisation had taken a dramatic shift. Alignment within the executive team had increased significantly and there was growing buzz rippling throughout the rest of the organisation. People could feel something big was happening. Fonterra was discovering who it really was. 

The final part of the jigsaw was to answer the call around strategies, by using the organisation’s top 150 leaders and pooling the collective intelligence that existed within that group.

This is Fonterra

All that remained now was to package the thinking and take it to the farmer shareholders. With this in mind The Zone recommended they create a book that honoured the farmers and brought the cooperative’s heart to life. That book was named "This is Fonterra" and the energy it contained helped set the company up for global success on an unprecedented scale.

Fonterra was ready.

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People could feel something big was happening. Fonterra was discovering who it really was.

When the farmers came to the nationwide roadshow Ferrier stood up and said, "We've been doing some work and we think we've discovered what Fonterra stands for". Then he and his team unveiled the story...

The story founded on values, and with a bold commercial and social vision backed by solid and market aligned strategies was instantly applauded and led to the acceptance and creation a new capital structure involving external non farmer shareholders. It meant that Ferrier and his executive team were able to invest with confidence in long-term, global opportunities, build on Fonterra’s competitive advantage and maximise returns on dairy.