Rockets, Fuel, and Budweiser – To Dream or Not to Dream

How an aerospace engineer and a former nuclear severe accidents specialist became the King of Beers? 

I joined the world’s largest brewer on September 21, 2015. This article is the second part of a series about reflecting on my first 5 years with AB InBev. Read Chapter 1 here. 

“Writing is a mechanism to try to deliver value to others” – Stephen King

Chapter 2: To Dream or Not to Dream

The answer is to dream big. 

It’s almost certain to dream if you sleep more than 90 minutes straight. Sleeping and dreaming are normal biological and psychological processes. Sleep is the most effective thing to reset our brain and body health each day. Sleep boosts memory, lowers food cravings, protects from cancer and dementia, lowers risk of heart failures, and makes us feel happier. 

Between 20 and 25% of our sleep time is dedicated to dream sleep. According to scientist and writer Matthew Walker, dreaming offers a form of therapy by regulating our emotional well-being. Besides, dream sleep is essential for intelligent information processing that inspires creativity and promotes problem solving. 

To stay healthy, we must sleep. And when we sleep, we have no choice but to dream. For our brain, there is no differentiation between ambitious dreams and reasonable dreams. In other words, big dreams or small dreams take the same amount of time and energy. So why dream small?

Challenge Accepted

Effort doesn’t matter in dream sleep but does matter once you are awake. Fortunately, effort and attitude are the only 2 things we have 100% control over, 100% of the time. That was a timely reminder, as I entered a unique procurement organization on September 21, 2015. 

Traditionally, procurement, accounting, FP&A, capital management, and treasury operations are driven by a CFO. I joined a group making decisions over $30 billion expenditure and led by a CPO with a seat at the table. 

Traditionally, the procurement function acquires the goods and services the company needs to operate, leveraging scale to save money. I joined an organization on a transformation journey; within 5 years, we’d expand our scope beyond procurement, and evolve from adding value to creating value. That journey has included spearheading sustainability, managing vertical operations, and launching ventures based on brewing by-products.

After 2 years of career interruption, I was determined when I checked in that morning. My mantra was: collaborate, lead, and compete. 

Jason interrupted my daydreaming and picked me up at the reception. Jason, also an alumnus of Duke University’s Fuqua School of Business, had joined AB InBev 6 months earlier. We were now part of the same team, the sourcing pool: a high-pace, 18 to 24 months, rotational program; an internal strategic consulting job across all procurement disciplines and multiple geographies. 

Reviewing the rules of the game was part of my onboarding process: sourcing pool candidates are expected to learn on the job, contribute, and explore disruptive ideas at the same time. Candidates run projects in parallel, report indirectly to project leaders, and report directly to the global procurement capabilities director. The position requires travelling worldwide to engage with and influence partners. 

Success in such a complex environment demands 2 skills: resilience and adaptability. At the end of the program, individual performance and potential are signaled when all VPs want to hire you.

Training Day

2 p.m. Day 1. Video call with Obara, packaging director, for my first task – strategic sourcing for PET bottles in Dominican Republic: “Here is the PET demand and the breakdown by SKUs for next year; here you have details on the supply landscape with incumbents, challengers, and disruptors; and here you have our local contact information. I need you to follow the 8-step sourcing methodology to finalize and execute the sourcing strategy before December. Have a look on how I applied that methodology for the strategic sourcing of PET bottles in Brazil. I’ll be travelling for the next 3 weeks but call me anytime you want to discuss. By the way, how is your Spanish?” 

9 a.m. Day 2. Meeting with Ties, raw material director. Ties needed help for the strategic sourcing of Budweiser malt for Europe: “Start with updating the analysis on step 1 and step 2 using this historical data set; this should be done by the end of this week. On step 5, I want you to assess RFP (request for proposal) responses I’ve just received from suppliers. Here is a framework to help you run pricing comparison and volume allocation scenario analyses. Think about how we could use game theory to improve the outcome and let’s review your e-auction approach in 2 weeks. And please set up a 30’ bi-weekly routine.”

I was clueless. What is that 8-step sourcing thing they keep referring to? One is about PET bottles, the other is about malt. One is a 1-year contract with an 8-figure budget, the other is a 3-year contract worth 5 times more. One expects me to be smart and learn from my own mistakes, the other expects me to be wise and learn from his experience. One is hands-off, the other is structured. How do I go from there?

I shadowed Ties on the raw material task and used that experience to navigate Obara’s packaging task. Then, I acted on Obara’s feedback and used it to challenge Ties, anticipate requests, and manage expectations. Instead of focusing on differences between both assignments and both leaders, I took the best of both worlds. Therefore, I learned faster and contributed more. 

Training Day lasted 2 years, 19 projects in 27 countries, and over 210 hours of live negotiations. 

The Dream

November 2015. Tony, Chief Procurement Officer, requested that someone from the sourcing pool have a look on renewable energy. Being the rookie was a fortunate stroke of serendipity. 

Greg, a senior director, approached me with the odd request. I was working on 5 other assignments and I was overwhelmed. He asked if I was interested. I said yes, not only because I felt under pressure, but also because I could relate to the subject. Exploring renewable energy became my night job. While the other projects sucked my energy during the day, I was replenishing my batteries till late night with renewables. Paradoxically, doing more, by managing energy, was crucial for my surviving the intensity of the first months.

In January 2016, renewable energy was soaring and attractive: maturation and failing costs of technology, increasing fossil fuel price volatility, emergence of carbon tax, and proliferation of green incentives. In some markets, that enthusiasm had resulted in the supply to exceed the demand. There was however a limited number of large corporates with tangible and ambitious renewable energy goals. AB InBev’s adoption of renewables was close to 5%.

The next step was to deep dive and provide a recommendation for AB InBev’s sustainability targets. 

“What do you think that goal should be?” a VP asked. 

“I’d focus on the U.S. That’s the most mature market,” I replied. “We could target 50% renewables in the U.S,” I added. 

There was a silence in the room. 

“I think we can do more,” Tony said. 

“What about 100% in the U.S?” Greg returned. 

The atmosphere in the room was getting tense. After 5 minutes of back and forth between myself, Greg, and the VPs, the boss jumped in again: 

“You don’t understand,” Tony said quietly, with a smile. “I want us to be 100% renewables. Globally. By 2022,” he stated. “And I want a strategy, business case, and roadmap by December,” he concluded, sucking all the air in the room. 

Why dream small?

Stretch #1: The Fear Zone

I’m now leading a global and cross-functional team (Supply Chain, Corporate Affairs, Treasury, and Procurement) of 25 people. Mission: make the dream happen. Approach: find reasons to believe. To do this, I’d first examine markets making up to 80% of our electricity consumption worldwide: U.S, Mexico, Argentina, Brazil, and China. 

I had a plan but then got punched in the face: the case for renewables fit a wider agenda and needed to be finalized in June instead of December. 6 months ahead of time. Greg asked if it was possible. I said no. “Listen, I understand this is a stretch,” Greg said. “But I need you to pilot this,” he continued. “This project now has Tony’s attention. Eventually, this goes through Brito and the Board. If you execute right, we change the company,” he added. 

Greg was right. I was working on shifting 6 terawatt-hours of electricity annually to renewable sources. That’s equivalent to solar panels covering the area of 400 soccer pitches. That’s a carbon reduction of 2.4 million metric tons of CO2 per year. Besides, transitioning to renewables would have a tremendous impact on the communities where we operate and create shareholder value. 

“If you're offered a seat on a rocket ship, don't ask what seat! Just get on.” – Sheryl Sandberg

A day later, I had a revised plan. Which meant almost doing twice the work in half the time. Indeed, in addition to the renewables project, I decided to keep 4 of my other activities. I wanted to stay way beyond my comfort zone, at the edges of ignorance, and accelerate my development.  

Stretch #2: The Learning Zone

I was responsible for building knowledge on energy markets, renewables technology and sourcing alternatives, and contracting of sizable energy projects. I knew less than 5% of what I was supposed to know. 

“Renewable Electricity 101” consisted of 3 parts: theory, field visits, and market test. A by-product of which was benchmarking and building a network across the industry. 

• Theory: the easiest part, especially for an engineer working on a technical subject. I started with online research to effectively engage with people from different segments across the industry: OEMs, project developers, R&D, power utilities, energy consultants, commodity experts, private equity, NGOs, and peer companies.
• Field visits: when theory meets reality. Grasping the complexity of the value chain and connecting with the product was critical. I needed to understand how technical requirements would translate into financial implications. In May 2016, I spent 2 days in the Mojave Desert, about 80 miles east of Palm Springs, California, visiting solar and wind farms. 
• Market test: reasons to believe in the dream. I launched a non-binding tender for the 5 key countries to test the market appetite and collect preliminary data points. Thanks to our global footprint and powerful brands, it was flattering to receive hundreds of proposals from developers worldwide. Compiling, vetting, and processing the information was less glamorous.

The dream was taking shape. In June 2016, Brito was enthusiastic after the presentation: “I like it. Now make it real. Let’s talk again when you have your first contract in hand.” 

Stretch #3: The Growth Zone

Why would you take unnecessary risks and enter 15+ years fixed-price energy (trading) agreements unrelated to your core business? 

AB InBev is data-driven; before being able to persuade (opinion-based) people you first need to convince (fact-based) them. Therefore, the challenge was two-fold: 

1. Secure NPV-positive projects while mitigating over 15 major (market, credit, operational, and business) risks embedded in power purchase agreements. 
2. Tell a story to create a shared sense of purpose: “Energy might not be our core business, but sustainability should.”

One side required influencing external stakeholders, the other required influencing internal stakeholders. The latter was more difficult than the former.

There was still more trouble to come. On October 10, 2016, we announced the completion of the combination with SABMiller. AB InBev was now the producer of 1 out of 4 beers globally with an extended footprint into Africa. As part of the integration effort, we needed to assess SABMiller’s procurement capabilities in Africa; I was expected to visit 14 countries in 8 weeks. 

My excitement about doing business in Africa conflicted with the necessity to carry on my negotiations with renewable electricity suppliers. Chasing both ends at the same time was daunting. But why dream small? I was about to enter the growth zone… 

Epilogue