Kraft Foods & Cadbury: The Merger

Who doesn’t remember the 2010 acquisition of Cadbury by Kraft Foods? And weren’t many of you silently quaking in your boots, knowing that the job of assimilating two well-known brands administrative services could fall into your lap? Here is a fantastic story of how a proactive change management initiative made not only for a smooth transition of the customer service and logistics functions – but set the foundation for growth ahead.

Don’t miss the great videos that the Kraft communications team has made to showcase their journey and their success. You might steal an idea or two from them!

The image: The Kraft CS&L team in Bournville on the morning of ‘go live’, June 27th 2011

The past 22 months have been a period of unprecedented change within Kraft Foods. In this article we will share an overview of how we have developed our Customer Service and Logistics operations and capabilities as a result of this transformation.

In reality, we are in the early stages of our journey, so some of this will speak to our ambition and direction, rather than where we are now. As the articles focus on how we managed the people change, there are sure to be things that will also relate to circumstances outside the world of customer logistics.
During the integration, our mantra has been to create a new business that builds on the strengths of both legacy businesses – in other words to be "Better than Both".

But before we move on to this, let us take a look at the starting point of our journey – which began on February 2nd 2010 with the acquisition of Cadbury by Kraft Foods.

Both businesses have a fantastic stable of well known brands. And both businesses have held at their core the need to delight our consumers and build strong collaborative relationships with customers – as we can see below when we look at historical service performance and feedback from the Advantage Survey.

Better than Both
Unsurprisingly, despite the similarities, there were also quite a few differences that required alignment, some compromise, or the development of new ways of working, in order to build the new Kraft Foods in UK&I.

Our objective was to create a new organisation that was "Better than Both"; that reflected the scale and ambition of the new combined business. But achieving this required a lot of change and we were mindful of the need to manage this change particularly in relation to the needs of our customers.

This short video provides a glimpse into the scale of what had to be changed, the breadth of the new CS&L function and, the external context within which we were changing…

Managing the Change Agenda
So, we had a huge agenda, which could broadly be characterised as two big challenges:

• A need to harmonise and integrate our processes and systems
• A need to establish the new "Better than Both" team

As we saw in the video, in Customer Service & Logistics, the systems and process challenge was significant.

However, given the context of the acquisition and the scale of changes driven by the office consolidation – it is the People changes which have provided us with a unique challenge.

It is this aspect of our unprecedented change agenda that this two part paper will focus on.

Broadly speaking, we put in place four key pillars to support our People Change agenda:

1. Establishing a clear and unified vision and direction
2. Implementing a personal approach to enrolling our teams on our change journey
3. Putting in place the right organisation to support our vision
4. Equipping our people for success; particularly important given the scale of team change and new people

1. Establishing a clear and unified vision and direction

In any change agenda we all know how important it is to establish clarity of direction and a vision for the future. Unsurprisingly Kraft and Cadbury had differences in service offering and in some cases different views on priorities.

The first task was to set about establishing a fact base, to understand customer expectations and the respective strengths and weaknesses of both organisations.

This fact base was built from research by Kantar with our customers, as well as feedback from the Advantage Group and internal focus groups. At each stage of the process, ideas were stress-tested with the teams to ensure we were on the right track.

After a number of iterations, the Customer Service & Logistics messages were distilled into a simple 3-tiered model of customer engagement. The foundation of this model is a commitment to excellent "Basics"; for example good service levels and knowledgeable contact points for our customers.

A second key element of the model is a commitment to "externalising our business"; organising our customer service operations around our customers and channels and having the roles and resources to collaborate externally.

The final key element is our desire to "build capability" in key techniques that enable us to optimise our joint Supply Chains and pursue the future strategies that will differentiate Kraft Foods.

2. Implementing a personal approach to enrolling our teams on our change journey

The second pillar of our approach was a strategy for enrolling our teams.

The acquisition had brought about a unique situation in which most groups felt they had in some sense "lost". Cadbury colleagues had been taken-over - but Kraft colleagues also felt they had been taken-over, because in the UK Cadbury was twice as big as Kraft and the office consolidation meant moving to legacy Cadbury locations.

Our initial priority had been to jump into the practicalities of integrating the business; organisation design and process and systems development.

But it soon became clear that our people could not engage with this agenda because they were preoccupied with the impact of change on themselves and their colleagues. So organisationally we had a huge "IT" agenda – but individually we all had massive "ME" agendas that eroded our ability to deal with it.

When we recognised this we realised that we needed to do something different. Getting the "ME" and "US" agendas back in balance was a priority to enable people to engage with the future and the delivery of the overall work programme.

We achieved this via a programme of change workshops which focussed initially on the "ME" agenda; recognising where we as individuals were on the classic change curve, what it was we needed to let go of and what it was that we wanted from the short, medium and long term.

This enabled people to start to hear the messages and see the opportunities that the new organisation had to offer. Investing in this part of our change management agenda yielded huge benefits in our overall capacity to manage change and the work programme.

See Video: Individual hopes & concerns about the integration of Kraft and Cadbury

3. Putting in place the right organisation to support our vision

The integration of our businesses offered us a number of opportunities in terms of organisation development:

• We were, for the first time, able to co-locate a team of more than 250 CS&L professionals in a Centre of Excellence in Bournville
• The role of this team was "to connect our Categories to our Customers" – and a key aim in the design was to ensure that connectivity – upstream into our SC and Category organisation, as well as externally to our customers.

A particular focus was on creating a customer-facing organisation.

From customer feedback we understood that our customers valued having clear contacts, staff that were empowered to make decisions, and most importantly, people who understood their needs and could act proactively.

We therefore decided to organise our customer-facing resources into multi-functional Customer Business Teams that would be physically located together.

These teams would have clear functional accountabilities and reporting lines – but were united in the common goal of servicing an account or channel.

As we start to establish these teams we believe they will have a powerful impact on our ability to join-up internally by breaking down functional team barriers as well as providing a second lens on our operations.

4. Equipping our people for success

The fourth and final element of our approach was to equip our teams for success.
This element of our change programme was particularly important given the scale of team change and new people.

As we saw from the video, a third of our people in CS&L were new to the function – and many of those new to the business. It was clear that we needed to create a comprehensive training and induction programme.

This programme was designed to cater for a number of needs]

• Inducting new staff to the new business
• Inducting our current colleagues into the different products and categories that they would now be working across
• Introducing everyone to our customers and channels and the scope of CS&L
• And finally training people on the new IT systems

We developed this training wheel to summarise what was available – and using this we created a tailored training programme for all colleagues.

At the start of the change process we recognised that training would be an important part of equipping our teams for success. However, our goal at the time was more based around providing people with the tangible day-to-day skills and awareness of our business.

What we have come to realise is that this programme has become a key part of instilling a sense of understanding and pride in the business that we are creating.

Key Learnings:

We started this article by saying that the last 22 months have been ones of unprecedented change for Kraft Foods in UK&I.

As we have moved through our journey, here are four key learnings that we have distilled from our people change agenda

• Firstly, when you have to align behind a new vision and direction a clear fact base approach drives alignment and reduces the tendency to protect the legacy
• Secondly, change eats organisational and personal "capacity" and the old mantra communicate, communicate, communicate does not work if people are unable to hear
• Thirdly, externalising our organisational structure has helped us join-up internally by breaking down the functional silos and is helping us to bring our customers into our business
• Finally, any change management approach will always highlight the importance of training; for us it was also a key tool for instilling a new sense of pride in our business
• We believe that we have established strong foundations on our journey to be "Better than Both" and below are the four goals that we are pursuing to get ourselves to the top of the customer engagement pyramid.

This final video shows you where we are now on the journey and our vision for the future. Some way to go but with the ambition and commitment to get there.

About the authors:

Marcus Dunsmore, CS&L Director UK & I
Marcus joined Cadbury in 2007 from Unilever where he had an 18 year career spanning both manufacturing and logistics. In Cadbury he led a number of global Supply Chain programmes which transformed customer service across a number of countries, not least the UK+I business, which gained a # 2 position in the industry-respected "Advantage Survey", beating both Mars and Nestle. Marcus was appointed as CS&L Director in July 2010, responsible for creating a new combined organisation for the business.

Helen Harrison, CS&L Change Management Manager
Helen joined Kraft Foods (from Reckitt Benckiser) in 2000. Having started her career as a Marketing Graduate, Helen has held a variety of increasingly significant Marketing roles within Kraft, having the opportunity to lead various pan-European projects as well managing the local category agenda. In 2009, Helen took an assignment into the HR function where she headed up the Learning & Development team, and for the past year, Helen has been linked exclusively to CS&L, supporting the significant change agenda in the UK.