Yeo Valley

Yeo Valley is a family business, Tim Mead is the Chief Executive and his mum looks after the cows and the cows are central to Yeo Valley, they feature on and in nearly all of their products – just have a look at the packaging. They are pedigree Fresians and look bigger and shinier and healthier than any other cows you have ever seen and that really sums up Yeo Valley. At Yeo Valley they care about every thing and the result is a big, shiny, healthy business and cows.

The offices are attractive and calm, their machinery is state of the art their cows are wonderful and they care for the dry stone walls and the hedgerows and the wildlife.

I heard a man singing in the corridor and calling out to people as he passed their offices then he burst into the reception area where I was waiting. This was Tim CEO and majority owner of a group of companies employing 850 people. As he introduced himself he exuded energy and we positively bounced into the cafÈ style meeting room.

Dan, one of the marketing team, who brought the interesting perspective of having worked for Diagio until about 18 months ago, joined us. At a recent reunion Dan had trouble convincing some of his former colleagues of just how good life at Yeo Valley is.

One of the first things you notice at Yeo Valley is the attention to detail, everything is immaculate and well thought through and this is obvious to a first time visitor to their head office. Tim confirms this he believes that every area of the business is an opportunity for excellence and an opportunity to be better than the competition.

However Tim’s definition of "everything" goes far further than most business leaders. At Yeo Valley they take enormous care of their hedgerows, their dry stone walls, their ponds, their wild life, their cows and their people (The accident rate in their facilities is 75% below the industry average) and you can taste the results of this care in the yoghurt.

Tim sees the point of Yeo Valley as a challenge. The challenge is to prove that you can build a company up to be a major industry player and a self perpetuating enterprise without selling out, either literally of ideologically. You would have to say they are a considerable distance down this route. They are certainly a major player and not only do they retain ownership but they have no borrowings, having been able to pay back earlier loans from retained profits.

This financial security gives Yeo Valley enormous autonomy in their decision making. It allows them to choose to focus on the areas that they know are vital for the long term security and success of the company and community even if they do not offer short term returns. In an industry dense with consolidation, losses and factory closures this is a remarkable achievement, which receives little coverage in the business press, which is so focussed on public companies.

Part of the attention to detail is avoiding wasting money. Dan explains that there is a family attitude to saving money. Unlike previous jobs where people would routinely stay away at expensive hotels for extra nights and each take individual cars, at Yeo Valley people take it upon themselves to avoid unnecessary expense.

One of the things that Tim is very conscious of in other businesses is the kind of silo-based factionalism where departments feel that they are competing for resources and recognition. In Tim’s view this leads to damaging and wasteful self-aggrandisement and protectionism. Departments can easily get into trying to spend more money to justify their existence and then having to work harder to justify the extra spending in a vicious circle.

The Yeo Valley response to this is to have an aligned and trusted work force who aim for a shared objective rather than personal or departmental glory.

And part of Tim’s job is managing the balance between departments and not allowing some part of the company to run away with things. Working to maintain a low staff turnover and not bouncing people around the company is crucial to this as it allows people to develop relationships skills, trust and intuition about their tasks.

Yeo Valley are very conscious to avoid is complacency. They have a strong market position and it would be all to easy to let things slip. The buzzword for 2003 is simplicity. As Tim says "It is easy, as you grow to allow things to become complicated – like in the decision making process – decisions here get made very quickly without endless reports and focus groups and consultants".

"It is not so much the quality of decision but the enthusiasm with which it is carried out that makes the difference". Says Tim. With that attitude from the CEO it is not a surprise that people at all levels feel confident enough to take responsibility for their actions and decisions.

What Tim and Dan seemed to be saying was that these values of care and commitment seem to be shared by the entire workforce from the dairy to the boardroom. Pride, passion and care are evident in all sections of the business. People understand the part they play in the business as a whole and caring and quality encourages caring and quality.

Having established the best service levels and the best products in the industry people are reluctant to let the company and their colleagues down. It is a recognised phenomenon that people are less likely to litter in areas which are kept clean and tidy. The same, it seems, is true in a more general sense. You can foster a sense of exemplary behaviour by behaving in an exemplary way, it certainly seems to work at Yeo Valley.

I asked Tim what the advantages and disadvantages of doing business in this way were. "Life is to enjoy and to spend 30 years doing something you do not enjoy is a waste of a life". He remembered, from his time as an accountant in the city, people having two coats so that they could leave one on the back of their chair so that people would not think they had gone home before 10pm. "What is the point in that?" He asked.

"Whatever you are doing has to be inspiring, our business has to be enjoyable for all so that they choose to do it. Otherwise there is no point. If commercial pressures force you to run the business in a way that you do not agree with, you like to think that you would walk away. But you do have responsibilities." And there is the rub. If things start to go wrong do you focus in on what you know and what makes you different and special or do you give up your differentiation and go the way of the market?

Is it more responsible towards your workforce to tough it out with your individual approach even when things get hard or is it better to drop the profit related bonuses, make people redundant, stop maintaining the hedges and walls, let the machinery age basically to cut costs for short term gain? If the time comes perhaps that is a question best answered by the workforce themselves.

In the end Tim says " You have to believe that behaving badly towards people and the environment is likely to become a significant commercial risk and those who are socially and environmentally responsible are likely to be at an advantage". It is certainly possible to use marketing to overcome a lack of substance and integrity. Many companies manage to fool a lot of the people for a long time but you have to hope that eventually having integrity pays off.

I asked Tim about how they measure their performance. After a long pause he replied, rather enigmatically, "QSPPP." Fortunately he went on to explain.

QSPPP stands for Quality, Service, People, Plant and Profit – in that order.

Quality – The quality of products is based on your own opinion and on feedback from their customers. Quality else where is based on a gut feel of how good things are in the company.

Service – Levels are set for each part of the business interestingly this applies to both to external customers and when dealing internally with other parts of the company. I get the feeling this is no box checking exercise that would not be the Yeo style, more a set of principles that are understood even if they are rarely articulated.

People – Yeo puts a lot of time and effort into people there are frequent reviews and training and induction lasts for a week. Yeo are also keen to

recruit the best people believing that if you recruit someone at a 20% lower salary they might be less that half as good as someone for 20% more. That extra 20% might be worth a great deal more in savings and revenue every year.

Plant – Yeo are big believers in investment in first class facilities, which are efficient and up to date. While the cash flow side of the business is kept tight the capital side of the business benefits with constant input. If you avoid spending £150 on a hotel for the night you can spend it on your own place and continue to enjoy the benefit.

I guess the last word on the Yeo commitment to purpose should be that they have changed the Memorandum and Articles of association for the Organic business so that the main purpose of the business is not just to make profit but to grow the organic market and profit as an outcome.

Yeo Valley is a truly inspiring company. Yeo Valley are a significant and profitable company, which sees caring as an integral part of their success. Not just caring about profit, but caring about people, wildlife, their customers and suppliers, their environment and their cows. They prove absolutely that if you stick to a few principles, some generic and some your own, it is possible to build a thriving business in a highly competitive sector without selling out either financially or ideologically.