Sunny Verghese: So how did we come 15, 20 years old and compete with very entrenched competitors with all of the power of incumbency and become a leading player? We couldn't have done that without being able to have differentiated. Jimmy Allen: Look, we know this by now. Growth creates complexity and that complexity kills future growth. It's inevitable. So what the hell do we do? How do we satisfy our customers with our growing scale while still keeping that insurgent edge, that intimacy that made us famous? Well, part of the answer is to understand that our company is always made up of two motions. The first is deliver. When we know what we're doing, we just execute on existing playbooks and keep customer promises, day in and day out. And then there's develop. When we don't know what we're doing and we need to test and learn our way to new solutions, new business building, always with the customer front and center. So today we're going to take a deep dive on that deliver motion. In a nutshell, no pun intended, it's about the repeatable models that get things done. And here's the paradox. It's also about discovery, empowerment, innovation, and agility. And to explain why, we're going to talk about cashew nuts, obituaries, and a single string instrument from Uganda. I'm Jimmy Allen and this is Founders Mentality, the CEO Sessions. Today I'm joined by Sunny Verghese, co-founder and group CEO of Olam. Over the past 36 years, Sunny has led Olam from a bold idea into a global force in agribusiness. Olam now operates in over 60 countries serving 22,000 customers and employing 92,000 people. But this is also the story of the transformation of a leader and what happens when repeatable models not only shape a company strategy, but also lead to the reimagination of the company itself. Sunny Verghese: And since I was young and I was 30 when I started Olam, I clearly realized that I had to invest in growing and maturing as a leader. So I invested in my own proficiency in the various skill sets and things that I needed to learn about to become a better leader. But then I soon realized that in addition to doing what a leader needs to do, I also had to change my mindset from being a very successful, efficient manager to becoming a true leader. I suddenly realized that I have to step out on that high wire of uncertainty and everything else, knowing fully well that there is no safety net underneath me, but there is no one I could delegate those calls to. So I felt that I had to have the mindset of being comfortable in discomfort. I was always waiting for getting all the analysis done and removing as much of the uncertainty as possible. And then I realized that that is not going to happen. Jimmy Allen: I love the phrase getting more comfortable with discomfort, not being able to know everything to make a decision. Tell me a little bit more about that. What did that require from you to be comfortable in discomfort? Sunny Verghese: Yes. So there were very many assumptions we were making in affecting those investment choices or the capital allocation decisions, for example. So when an initial feasibility report was submitted, you knew that all bases and all aspects of the project that led to significant potential risks. We didn't have all the information available and we had to act without that information being forthcoming. And you can go back and tell them, come up with answers to these questions, but after four or five, even a dozen iterations, you still had gaps. You have to start getting comfortable in that discomfort of not having everything that you needed to make that commitment. Jimmy Allen: My guess is that you had to get good at what risk meant. Sunny Verghese: Yes. Jimmy Allen: I mean, did it mean that you learned to sort of sequence your investments to make it manageable risk? Sunny Verghese: Yeah, so we were thinking of all those big decisions, investment choices and capital allocation decisions, et cetera, in light of some boundaries. So we didn't want to make such a big bet on one individual project that could kill us. So having those boundaries in terms of how much of your market cap, how much of your net worth, how much of your profits you'd put at stake in any one project from the period '89 to 2007, we only did organic greenfield growth. We moved to acquisition led growth from 2007 where we did our first acquisition. But again, we had a playbook that we developed which gave us some guidance on the boundaries and perimeters within which we will make these choices so that if some things go wrong and we are to expect it could that we would not have staked the whole company on that one single bet. Jimmy Allen: I want to pivot a little bit because you used the word playbook and Olam is famous as a company that mastered repeatable models, and I just want to start there for a moment. I think that probably helped you manage risk is that you actually had these playbooks. Can you describe Olam's progress as kind of a set of repeatable models that you did, how you expanded, but I'd love to hear that story. Sunny Verghese: So the first rule that we followed was focus on differentiating your business before you scale it. That was very important for us because we are in a commodity business and the definition of a commodity business is standardized attributes and standardized products and standardized contracts. Any differentiation is not relevant. It is differentiation that matters that can you to win. So for example, in our staples business, food, staples, business grains, oilseeds, these are very basic commodities and staples. What have we done in terms of differentiation? Firstly, we have created a cost structure, which is the lowest in the industry. When I say here cost structure, I'm talking about the overhead costs investments needed to create a procurement and trading network. So we have a cost per ton of one and a half dollars per ton. Our competitors on an average have a cost per ton of 10 to $12. We achieved that cost advantage by deciding not to go right up to the farm gate to source these raw materials and commit investments, heavy fixed asset investments. That was because we felt that the competitiveness of who's the most cost competitive wheat producer is changing. So Canada and North America 10 years ago, they were the most cost competitive at $20. Today they are very expensive compared to the Black Sea ports, and we felt that if we are stuck with billions of dollars of fixed capital investment in the traditional sources of wheat production, we would be stuck. We have the flexibility to source from the most cost competitive origin. We do not have the burden of having that. The third is we are differentiated in the fact that we are independent in these countries. So a Cargill and a Bungie and a Dreyfuss and an ADM who are competitors have these billions of dollars of fixed capital investment in the producing countries, and therefore they're competing with the other exporters in Brazil and in Argentina and in other places. Whereas we go and tell these exporters that we are not competing with you. We are buying from you. We have no vested interest or conflict in the prices that we declare to you or the market intelligence that we provide to you in terms of when you should sell and all of that stuff because we are not conflicted. And that put together becomes a winnable strategy, and that has been demonstrated by the fact that most of our competitors, so Cargill is a roughly 160-year-old company. ADM is a hundred-year-old company. Bungie is a 225-year-old company. So how did we come 15, 20 years old and compete with very entrenched competitors with all the power of incumbency and become a leading player? We couldn't have done that without being able to have differentiated. Jimmy Allen: So I'd love to just understand even more this issue of playbooks and repeatable models. So what else did you do to differentiate from these incumbents? Sunny Verghese: So in our edible nuts business, which is under all of our food ingredients, as you know, we started live first with one product, cashew, which we were sourcing from the producing countries and exporting to third parties where we were processing. We started by exporting first from Nigeria. Then we went to the adjacent geographies where cashews grown, Cote d'Ivoire, Benin Republic, Cameroon, and then we started integrating in the value chain. Instead of just buying the raw cashews and exporting it to processors, we started processing this ourselves by investing in processing facilities in the main processing centers of the world. So in India, in Vietnam, in Brazil. And then we went further down towards new customers. So instead of just selling the Blanche cashew kernels to roasters and salters, we went into salting and roasting and providing private labels. So the Kirkland Signature brand for Costco for example. So we followed different vectors of adjacent growth where there were customer sharing or cost sharing or capability sharing or channel sharing. And that made that growth quite routine and reflexive because we had followed that model and that model we repeated started with cashew, then we went from cashew to almonds and then from almonds to hazelnuts and from hazelnuts to macadamia nuts, from macadamia nuts to walnuts, every time extending in the value chain. That is another example of how this became very routine and reflexive. We started with one product, cashew, in 1989, and then we built a business dealing in 47 commodities across different parts of the value chain. Jimmy Allen: So let me ask you a simple question. Do we actually get better the more we do something? Well, in 1960s, Nobel winning economist Kenneth Arrow noticed a trend in production patterns. Every time a task was repeated at scale, the unit costs dropped. That's the whole idea behind repeatability. The more we do something, we get on an experience curve and we get better at it. But it requires learning. It doesn't just happen magically from scale. So let's take an example. Let's look at Billy Bookcase. IKEA's wonderful product. If you don't own one, chances are someone who does. And the incredible thing about this bookcase, its unit costs have dropped by 76% in real term since it was introduced. How the hell did they do that? Because they've learned from every bookcase they've made. Just one example, during the manufacturing process, they learned that by sucking air out of the wood, they could increase strength and by putting air into the wood, they could decrease material costs. So they learned to suck air out where the screws go in and added it everywhere else, dramatically reducing material costs with no change in quality. Ikea needed the routine and the playbook to learn. Repeatable models free up the organization to learn and turn those learnings into insight. They allowed Olam to scale rapidly, and they're also now allowing Olam to reimagine their organization because ultimately Sunny's faced with a question, "What do I do next to deal with the complexity of Olam?" Well, let's have Sunny tell the story. Sunny Verghese: We have now said that after 36 years and becoming large and complex and a bit cumbersome and overly diversified, we need to simplify the portfolio and we use the organizing principle of looking at the key structural long-term secular trends that is underpinning the global food and ag sector, and then took a portfolio of 47 products and multiple SBUs, et cetera, and said around which of these trends these SBUs and BUs really conform to. For example, the Olam food ingredients, ofi business was created to tap into the secular trends of customers wanting traceability, granular traceability, customers wanting less carbon-intense products. There was another major trend which is all about food security because a lot of countries, Singapore imports 95% of its food. The Kingdom of Saudi Arabia imports 77% of its food, and they were all feeling growing food insecurity fears. In the case of the Kingdom of Saudi Arabia, they had identified 11 strategic commodities, which impinged on that food security. And we have now come up with a value proposition where we will be able to source all of these 11 products and also the supplier of last resort if there was a flood, a drought, any other kind of climate phenomenon that disrupted the supply chains meaningfully. So we created a food security platform called Olam Agri, which was catering to this set of long-term secular trends. But everything about the repeatable model of looking to see whether it was customer sharing or capability sharing or all of that criteria was still at the core of the logic that we use to tie these businesses together into one company. So that has now dramatically de-complexified our business, sharply increased the focus, unleashed a new wave of entrepreneurial energy. Although these are substantial businesses, but for the people in those businesses, they feel that they're just starting because there is a long, bright, standalone independent prospects of these businesses and they feel like they are back to day one as far as these businesses are concerned, and therefore they're very excited about all of that energy that that's unleashed. Jimmy Allen: A typical incumbent would look at your business problem and say, "Let's take out those parts of the business that are low growth or X growth, put them in one place like a whole, and then let's take the stuff that's high growth and put it here." And by doing it, they doom both businesses, they announce that the low growth business are low growth, they doom them to low growth. The high growth businesses, that same bureaucrat's never going to be able to manage high growth. So they doom those as well. You said, "No, I'm going to divide it by fundamental trends and business need. And within each, they're going to have a set of repeatable models, the delivery side, and they're going to have entrepreneurial goals." So you've unleashed both the ability to gain benefits from a repeatable model and the ability to be an entrepreneur in each of these three areas. Sunny Verghese: Yeah. I have been quoted as saying that there are many paths to heaven. So the typical view of a board that deals with my business and therefore my peers and incumbents is that you need to push to dramatically increase pricing power and profit margin. That's a great ideal on its own, but we should not mistake profits for value creation. And on that, I can add, as Warren Buffett says, that anybody on the planet can do, you can sit on your rocking chair, invest more capital, you can grow your profits, but that profits might not be value creating. So everybody in Olam understands that difference and everybody in Olam understands that differentiation and pricing power is with the end game of creating value. So being very clear on how that value is created, and you cannot create value if you're not differentiated, but it doesn't matter whether the profit margin is 20% or the profit margin is 5%, but profit margin and asset turns and leverage all three combined together will determine value. Jimmy Allen: Look, I hope this is now sounding a little familiar. Last episode we spoke with Nirav Tolia about mastering these two business motions, deliver and develop, and Sunny's strategy is a master class in delivery, repeatable models for every product, every category, and now every strategic business unit. But if you think repeatable models only belongs in the boardroom and business plans, time to think again and to tell that story, I'm so proud to introduce to you the legend that is Tabu Osusa. He spent nearly six decades in the music world as a musician, songwriter, producer and cultural curator. And together Tabu and I co-founded Singing Wells. It's a project dedicated to preserving East Africa's rich musical heritage by recording it at its source. And I can tell you it is an understatement to say at the beginning that was tough, expensive, disorganized, unpredictable. We did not know what we were doing. But slowly we built our way forward by defining our unit of experience, in this case, a field recording and then figuring out how to do it smarter each time. Can you describe the first field visit you ever did of singing Wells? Tabu Osusa: The first one we did was in 2011. Of course, it was a bit of a chaos. First we drove all the way from Nairobi, which is quite many hours, and by the time we were living from Mombasa to Malindi, it was pitch dark and it was scary. Anyway, when we got to Malindi, the hotel that we were booked in, well, it looked great, but it turned out to be something else. Anyway, I remember there was no water, there was nothing. So we had to actually to find another hotel, actually. By that time we had to go with a proper computer workstation. And of course we used to have a very big tent always because of the tropical sun. Also, we always carried the generator because we're not sure of getting electricity. And then I remember always travel using two vans or Jeeps. It was difficult and it was also very expensive because we didn't even know how to negotiate or I would explain to the artists that, "This is what we can give you." So it was tough at the beginning. Jimmy Allen: Okay. And then my understanding is that you brought together this extraordinary team and part of the goal was how do we make that more efficient? So then tell me, contrast, where are you now in terms of how good you are at field visits? Tabu Osusa: I think when we recorded Malin in 2011 was spending about $2,000 for the trip. When we compare what we did in Rwanda, it's 90% saving. Right now, it's easier for us to do because we don't have to travel with that bulky instruments anymore, and the computer workstation is longer there. We travel light and we don't even have to drive in two Jeeps. Sometimes just one is enough for us and then we plan better. And so we always avoid driving at night and stuff like that. Jimmy Allen: Folks, just to clarify, Tabu is not the money guy. So when Tabu talks about $2,000, it's not for a trip, it was to record each individual song on that trip. By now, we've streamlined the whole process, set up, recording, breakdown is just four hours. The thing I want to get at with Singing Wells is once we got that model down where we could set up in 15 minutes, it then allowed you to listen to the music. Tabu Osusa: I think we didn't have to run around and take 90 minutes setting up. It gave us more time to scout around and see exactly what was around us. In fact, I remember at the time, I think I was just walking around and there was this old lady sitting under a tree and I was wondering what she was doing because I could hardly hear. She was inaudible, but what attracted me to her was the way she was playing the Adungu, because the Adungu mostly played using the hand, of course using her hand, but then she was also using the chin, which was, I'd never seen anything like that. Here they call it Tic-Tic and Tic, actually in the Choli dialect it means chin. So she was using her hand and the chin. So anyway, when I came back to the group and I told him, "Hey, I think we have got a real artist we should record." And at first, most of the guys weren't really impressed because she was really not audible. So I think it's Jim, you're the one who said, "Why don't you mic her properly?" And then she was mic'd and my goodness, it was magic. She was one of the best voices that I've heard during that trip. Jimmy Allen: We simplified our field recordings into a repeatable model, but those routines then liberated us to truly listen to the musicians. They gave us that freedom within a framework we talk about. And look, that phrase is thrown around a lot, but it became huge in business in 2003 when the CMO of McDonald's launched their 'I'm Loving It' framework, but it also then liberated each country and market to have freedom when it came to menu, marketing and community involvement. But too often though, I suspect that leaders spend more time on the framework side than the freedom side, and it just becomes a nicer way to introduce more central control. And that brings us back to Sunny. One question I ask every founder is this, if you were young again, would you join the company you've created? And sadly, most founders answer no. They feel the company they've created has become too big, too complex, too bureaucratic for their younger selves. I mean, how fricking awful is that? But for Sunny, the answer is yes, firstly, because he was willing to make bold organizational changes to radically simplify Olam again. But secondly and crucially, he intentionally works at keeping entrepreneurship alive at Olam. He keeps his emphasis on freedom, not just framework. Sunny Verghese: So we have a couple of signature processes that allows us to develop entrepreneurs. So we have, for example, the Code Process Workshop. We now call it Designing Winning Business Models. Everybody who's joined the company and has spent more than six months in the company, we bring them for a four-day program. I conduct that program. I devote four days twice a year, which means eight days of my life is spent in talking to people about our business model, how it evolved, our culture, our values, our spirit, so that in two pages they will all understand at the end of it, they have to write our business model down in two pages. But it's also about what they want to leave behind as a legacy. So the first thing that they do when they join the program is to take a piece of paper and write down their obituary. God forbid something were to happen to them, how would they like to be remembered? They don't need to share it with me. It is for them, it's a personal thing for them that this is what they want to be talked about or be remembered for or to be known for. So there's a lot of introspection on how they develop their leadership capability. How do they develop an authentic leadership core? How do they develop intuition? How do they develop instinct? How do they develop judgment? How do they develop emotional intelligence? How do they develop the capacity to win trust by being authentic, by being able to reveal their weaknesses and feel confident about revealing their vulnerabilities and their weaknesses? So that the teams that they're working with really want to help them by complementing that. And those team members have other suite of strengths, but also have some developmental areas and issues and they can call upon you or others in the organization to actually help them. So investing a lot of time in developing that core. The only thing I tell them is I can't train you or develop you for motives. I can help you build your leadership capacity. I can help you build your managerial capacity. I can help you understand sustainability and the importance of being climate positive and nature positive and livelihood positive. I can sensitize you to all of that stuff, train you, develop you. But if you've got bad motives, I can't do much about that. Jimmy Allen: I love that one founder said, "The best organizations end up being islands of misfit toys." And what they mean is people that are super edgy and phenomenal at a couple of things, which means by definition they might not be great at everything, but they're self-aware enough to then get the help they need on where they're weak. You in describing this, used the word authentic four times. And I just like to pause for a moment. Does that word authentic leadership mean something special to you? You used it four times in describing that eight-day workshop. Tell me a little bit about what you mean by that. Sunny Verghese: Yeah. Everybody who has tried to follow, these are the 20 behaviors of effective leadership, and this is what you need to practice. And then after a couple of years, they feel that it is asking for you becoming a superman or a God himself because you're to be good in all of these things, find it very unfulfilling that they are falling short of all of this stuff. So the respect and the credibility you have is in being authentic and recognizing that you play and leverage on your strengths and you complement your effectiveness by combining with other people and their strengths. But be more of what you really are and don't try and ape or imitate. There's only one Warren Buffett or there's only one Jamie Dimon or whatever else you want to become, but the organization and you benefit more if you can be more of your true self and be more authentic. Jimmy Allen: Look, if you've learned one thing here, repeatable models aren't just about process. They're about people. As a leader, you have to let your people discover their authentic selves, strengths and weaknesses, and then you have to deal with yourself. David Tudehope at Macquarie Technology Group said it best. He got this piece of advice that stuck with them. "We have to be far more tolerant of people doing things differently, even if at first we think they're making mistakes because often they'll get to a good result, just not the way you would." But then he added something remarkably honest. The hardest part wasn't just accepting that it was figuring out what he had to do after that. And his answer? "Get out of the way." That's true leadership. It's not control, it's not correction. It's making space. Because real trust isn't when you let someone do something on your terms, it's when you let them do it on their terms. It's about freedom within the framework. And Sunny empowers his people by giving them a sense of purpose. He wants them to double down on their skills while being vulnerable and admitting where their weaknesses lie. But to teach humility, that means we ourselves need to be humble as leaders. Sunny Verghese: I am not naturally inclined to adopt technology. I can adopt to business model innovation and building people advantage. But say AI, I would need a lot of help from somebody who really gets it. I don't get it naturally. There was another thing that I didn't really get. Till the age of 47, I didn't really understand about climate change and I didn't understand about nature and biodiversity, and I didn't understand about livelihoods and how important they are because I did not have one of those nine intelligences that have been discovered. One of those nine, and the latest one that has been discovered is naturalistic intelligence, which is all about environment and nature. Nobody has all the nine intelligence. So I don't have musical intelligence, I do not have spatial intelligence. I have linguistic intelligence, I have analytical intelligence, I have intrapersonal, interpersonal intelligence. So I have worked very hard from the time I was 47, for almost 20 years now, in getting to deep insights and understanding on climate change, on sustainability, nature, on livelihoods and all of these issues because it is so central to my business and it is so central to our mission and purpose as a company. And people see that that is just lip service if you're only talking about it, but not really understanding how it is square and central to your vision and your strategy and everything else. So I spent a lot of time in improving my sensibility. That's not my natural intelligence. I don't get it naturally, but an example that I can improve my sensibility, I can improve my sensibility by investing in understanding what it's all about. Jimmy Allen: I love that. But that demands of you, Sunny, an insatiable curiosity. Because even the way you can describe the nine intelligences is a curiosity because it says, "I know I'm going to be good at a couple of them, but not all of them." Is that something you look... Because you said we look for engagement with the people we recruit. It must also be that the Olam entrepreneur is endlessly curious about the world. Sunny Verghese: So I tell my colleagues in my team that I cannot go to bed satisfied if I cannot identify one new thing I've learned that day. It might be of smaller importance, it might be of significance. Does not matter. But for me, the day is wasted if there isn't one new thing that I have understood better, learned more about, that's a wasted day for me. So being curious and being humble that there is so much more you don't know and that you need to learn, that wasting a day. And it can come from any sources. Sometimes I learn from a driver, sometimes I learn from all the visitors and the bankers and all the folks who come and see me. It can be from any source, but I want to lay my head on my pillow knowing that that is something that today I learned and I'm a little bit wiser today than I was yesterday. That's a hugely important thing for me. Jimmy Allen: Sunny puts it so well. Great leaders never stop learning. And over the years we've collected stories from hundreds of CEOs about what they do to keep learning. To explore, find the link in the show notes. And now we're back to Sunny with some rapid fire questions. What gives you energy, Sunny? Sunny Verghese: I think my purpose and mission for what we have gives me energy. My personal ambition to learn every day and grow gives me a lot of energy. The purpose itself and my own purpose. The big P and the small P. Jimmy Allen: Do you have energy vampires that you encounter in work? Sunny Verghese: I think there's excessive form just going through the routines of something. The routines are important, but if it is just to tick a box or fill something, that for me is energy-sapping. Also, the good motives, bad motives. A lot of people take positions and stances mainly because of bad motives, and that frustrates me. And therefore any bureaucratic mischief that comes as a result of that is energy-sapping. Jimmy Allen: How do you deal with those energy vampires when you see them? Sunny Verghese: To confront them. And in a way that feedback is received, whether it is public feedback, which I'm not very much in favor of, but as when that even happens to engage privately with the people involved. Jimmy Allen: Wonderful. What's the thing you're most passionate about? Sunny Verghese: I think growing other entrepreneurs and leaders. When I see them being successful and I see them making a mark, that truly gives me satisfaction. Jimmy Allen: Amazing. So let's recap some key takeaways from our conversation with Sunny. Sunny Verghese: So we started with one product, cashew, in 1989, and then we build a business dealing in 47 commodities across different parts of the value chain. Jimmy Allen: So that's the experience curve in action. One routine repeated relentlessly, becoming smarter with every pass. Rather than constrain you, routines liberate you to listen, to discover, to invent. Sunny Verghese: So the first rule that we followed was focus on differentiating your business before you scale it. Jimmy Allen: Look, it's not enough to just agree on a set of routines. These routines need to differentiate your business. You need to be able to win with them. They need to serve customers better than the competition Sunny Verghese: Until the age of 47, I didn't really understand about climate change and I didn't understand about nature and biodiversity, and I didn't understand about livelihoods and how important they are. Jimmy Allen: Repeatable models aren't just about processes. They're also about people. To create a culture built on curiosity, vulnerability and authenticity, one way to do it, leaders need to lead by example. Guys, just a quick interruption before I close. I want to ask you something that I've been asking all my guests, and it's a single question, which is, what's the one thing you've actually learned from business that you've been willing to take home to family and friends? Now we're going to be featuring the best answers in an upcoming podcast. So let's wrap up. Look, repeatable models are powerful tools. They help you deliver consistently, and as you grow, they reduce complexity, but they also unlock freedom and create the conditions for discovery. They free us up to listen. Repeatable models are that key to the deliver motion. But what about the developed motion? What about when we don't actually know what we're doing for our customers or they need new-to-world solutions? Well, in our next episode, we'll shift to development, to business building, and we're going to be talking with Tanuja Randery, managing director of Amazon Web Services for Europe, Middle East and Africa. And she's going to give us a masterclass on what it takes to create a culture that encourages business building at every level of the organization. So we'll see you in the next episode, and until then, stay curious.