Interview with Nick Shreiber, IAB Member
Thinking Outside the Box

Nick Shreiber, the recently retired President and CEO of Tetra Pak and a member of IESE’s International Advisory Board, talks about how his diverse background contributed to his leadership style; how he revitalized not only company growth but the growth mindset; and how leaders today need to avoid easy answers and instead learn to live with complexity.

Chances are, no matter where you are in the world, if you open up your fridge or kitchen cupboard, you’ll find a Tetra Pak package inside. Whether it’s milk, juice, soup or wine – basically, any liquid food – Tetra Pak has produced the carton for it, using its patented aseptic technology, which keeps fresh contents from spoiling when stored at room temperature.

What started as a Swedish family company in 1950 has since grown into a $10 billion multinational business (what is it about the Swedes, who so effortlessly and lucratively manage to blend form and function, to combine cutting-edge design with dollars and sense?). Though now based in Switzerland, Tetra Pak has 21,000 employees, producing 120 billion of the ubiquitous carton packages every year, which are delivered to consumers in 180 countries. Overseeing this accelerated business growth over the past five years, until his retirement at the end of 2005, was Nick Shreiber.

Prior to serving as President and CEO of Tetra Pak, Shreiber spent over a dozen years with the company, holding a number of senior management positions, including heading up Tetra Pak’s operations in the Americas during the 1990s. In February, Shreiber came to IESE Business School in Barcelona to share “Salient Leadership Challenges” with MBA students as part of IESE’s ongoing Global Leadership Speaker Series. He talked about managing apparent paradoxes and turning them into business opportunities; selling the benefits of pain when hard choices have to be made; and learning to work multilaterally in partnership with others, rather than counting on “silver bullets” - one-time fix-alls - to solve your problems.
One thing he stressed to the MBA student gathering was, “Don’t ever feel that your background will exclude you from entering an area where you have no prior experience or background. No matter what your background is, use it as a springboard to opportunity. Every sphere in life needs strong leadership, and you have a tremendous responsibility as the most educated population in the history of the world, to bring those leadership lessons into every sphere, whether that’s in business or even in the world of politics.”

Shreiber knows what he is talking about, as this exclusive interview with IESE Alumni Magazine reveals...

Your CV states you’re Argentine by birth, and Russian-Scottish by descent. Can you elaborate on your background, and tell me how that may have contributed to or defined your particular leadership style and character?
I think a lot of my background did define how I turned out in the end. I have what I would call a bit of a diverse background. My mother was Scottish. My father was born in St. Petersburg, but he was obliged to leave Russia as a kid, with his whole family, after the Bolshevik Revolution, and so he grew up in England as a Russian exile. My father became an engineer (as I did, too, initially), got an expat job, moved to the United States, and then was assigned to Argentina with an oil company. He loved the country and never moved back. My mother’s father had been expatriated to Argentina to work on the Argentine railroad network. So, my parents met there and that’s how I came to be born and raised in Argentina. I grew up with a bilingual background: English and Spanish. I went to a bilingual school that followed the full British syllabus through A-level, as well as followed the full Spanish baccalaureate.

So, which side were you on in the Falklands War?
[Laughs] Very good question! It is difficult, because I actually carry both passports, because I’m both Argentine and British. I also carry a Swiss passport now, too. It wasn’t a question of being on anybody’s side. It was such a ridiculous war - a typical case of each side dramatically misreading and underestimating the opponent’s intentions.

How do you relate all that to how you ended up?
Well, it’s a bit more than just my cultural background and upbringing. I also had a diverse educational background. First, I studied engineering in Argentina. (I also met my wife, Anne Marie, who comes from a similar diverse background as me: she was born in Sweden, her parents are Swiss and she was brought up in Argentina.) After working a few years in Argentina, I went to Switzerland and earned my MBA at IMD in 1975. So, I had an engineering education and a couple years’ experience in industry in Argentina, and then the business administration background, which was a great complement.

Right after my graduation from IMD, I started at McKinsey & Co. For me, that opened up a completely new world: the world of management consulting. So, then I had consulting experience and industrial experience. I think all of that gave me – I don’t want to say a broader background, but certainly a more diverse background than most people.
My parents were immigrants, they were travelers: I became a traveler, and my wife, too. We weren’t afraid of moving and settling down in different countries. We weren’t afraid of taking on new challenges. I think there was a lot in my background – having two, now three languages [French], having an engineering and a business training, being the son of immigrants, married to a woman who is the daughter of immigrants – all that certainly contributed to my pursuing careers very different from those of my contemporary peers.

You sound like the perfect MBA profile for IESE! Of course, that’s now, whereas you were doing this before the age of globalization and before international profiles like yours were becoming more the norm in business today. Were you aware that you were quite unique in being so international?
No, I wasn’t aware of it at the time. For example, I spent eight years in McKinsey, and ended up living in four or five countries, but I didn’t plan that when I joined. What I was aware of was being open to new ideas and pursuing them. It wasn’t until much later in life that I realized that having different cultural backgrounds, languages and transferable experiences contributed to developing a broad career in business. After joining Tetra Pak, I came to realize that the way of thinking and the way of structuring and analyzing problems, threats and opportunities that McKinsey gave me, were completely applicable as a line executive in Tetra Pak. There, I started to understand that I was a little bit different, because most Tetra Pak people had grown from within the company and didn’t have that same sort of background. All that helped me develop my own unique leadership style.

You spoke at the 43rd IESE Global Alumni Reunion in Barcelona two years ago, and one thing that you said was, there’s no lack of capable, qualified executives out there, but there is a lack of people with good ideas; there is a lack of imagination in leadership today. You gave an example from Tetra Pak, which I wondered if you could elaborate on further, about how you re-imagined your own approach to the market, and how leaders need to be constantly thinking of new ways to change the paradigm.
During the ‘90s, although Tetra Pak was growing, we were growing slowly percent-wise. We realized that something had to be done, but we didn’t know what. So, we empowered a number of working groups throughout the company. We said we wanted to revitalize not only the growth but the growth mindset: the belief that, even though we’re big, even though we have a huge share of the market, there is still more room for us to grow. And that actually has been borne out, because we changed the slope of our growth curve over the last five years.

Somebody coined the phrase – it certainly wasn’t me, but I wish it had been – “Increase your market share by decreasing your market share.” Or words to that effect. Essentially, we have an 80 percent share of the market for aseptic packaging in cartons, but the last thing we wanted to do was take that remaining 20 percent – it would have been enormously costly, and then if we did take out all other competitors, we would have been the target of anti-trust legislation, and so on. It would have been the wrong way for us to go. Instead, by changing our growth mindset, we felt that the better way to go would be to see what other applications could be taken by cartons. And then, when we suddenly considered the entire liquid food market in the world – in other words, everything that could be drunk, including water – rather than just the market for carton packaging, our share of the liquid food market went down to only 1 percent and thereby opened up new market possibilities to us. This evolved through empowering working groups, which gave us a tremendous number of ideas like this.

We also employed Bain & Co. and they convinced us that in our core business, we still had enormous growth and competitiveness left. Many companies have come to our stage – they see a flattening of the curve – and they decide the only solution is to diversify (in our case: move into plastics or cans, for example). But if companies look again at their growth, they will usually find they still have tremendous potential left in their core business. Bain convinced us of this, and they were right. I recognize their contributions, even though I had a background in McKinsey.

What have been the biggest new growth areas for Tetra Pak in the last five years?
There are different ways of looking at it. One is geographic. In 1999 and 2000, we made enormous investments up-front in China and India. We had a previous presence in those countries, but we decided to put in an organizational structure that our local people felt was necessary to access the customer base that we required. We put that structure in before having the business. We committed to customers there that we would have local manufacturing. In other parts of the world, new categories also saw important expansions. We have improved our market share in higher value-added products like juices and still drinks in many countries. We’ve entered the health sector in a big way - for example, with Soya-based drinks.

What about wine and olive oil?
In wine and olive oil, we also have an important presence. In certain countries, like Argentina and Chile, we have a strong market share in wine. But we are still small players in wine worldwide. Over time, that could change.

In seeking to make inroads into new market categories like these, doesn’t there also have to be some kind of “education” - of getting people used to the idea of, say, wine in a box? How did you manage, for example, to convert South American consumers from buying milk in a pouch to buying milk in a Tetra Pak carton?
You need to work hard and also be lucky! In the case of South America, we spent a lot of money on advertising, and we also made financing available for our clients. Then, we got lucky, because at the beginning of the ‘90s, the economies of South America began to take off, so people had greater purchasing power. We happened to make a huge push and offer an upscale consumer product at the same time that people started having the income to buy it.

But you’re quite right: it does take a shift in habit, and it’s no mystery that in countries where we have a big presence in the milk market with cartons, it is easier to move it to other sectors of food. Look at Spain: big milk market, and we also have a good presence in wine and juice and soup in cartons. Argentina and Chile, the same thing. It’s easier to make that transition to another product if you already have the habit of drinking out of a carton.

What are the changes of habit you are facing in China and India?
In India, it’s still happening. We’re just at the bottom of the growth curve. We think it’s starting to take off. In China, it’s again an element of what I said before: putting commitment and money up-front, and being lucky with the economic development. In China, we were helped by the government coming out very strongly and deciding that if their young population drank more milk, they would have fewer health problems to deal with as a country. They made a long-term plan in which they would triple the per capita consumption of milk in 12 years, and they offered incentives to the milk-producing areas in the north of the country. As the milk was produced in the north and consumed in the southern coastal areas of China, they needed a technology to take milk there without spoiling. Obviously, our technology was excellent for that challenge. And we were there. We were there with our organization, our capital, our local manufacturing. Like always, it was a confluence of several events; and of seizing the day.

Reflecting back on your five years as CEO of Tetra Pak, what are the things you are most proud of having achieved, and conversely, what do you wish you’d known then that you know now?
The most important strategic achievement was focusing more effort on our core technologies and competencies. We achieved that through a change of mindset, by empowering the organization and encouraging entrepreneurship again. We clarified our strategy and the direction we were going. We developed global processes, cutting across organizational boundaries. We were able to grow 30 percent in volume, yet not increase our manpower significantly.

If I had to reflect on things I wish I knew back then that I know now: one is complexity. I think as a CEO, you don’t always appreciate that what you put in motion has a cascading effect that provokes a lot of change and pressure on the organization. You have to be careful about what you demand and what you ask for, and what initiatives you start up. From your chair and from senior management, it may seem that each initiative makes sense on its own, but as they cascade down and involve dozens of people, you can get initiative fatigue setting in, and then you have to cut back, to let the organization breathe a bit.

There’s another side to complexity, which I think gets less attention and about which I wish I had been wiser back then: complexity is not entirely bad. You should simplify things, but not make them so simple that they become superficial. It’s a question of striking a balance. Learning to live with complexity, with ambiguity, with things that aren’t totally clear, is part of a senior leader’s bag of tools that he or she should be able to do. Sometimes we think we’ve made things too complex, so we go back and streamline. But the truth is never simple. To lead a company, it’s very rare that you have individual objectives that aren’t in conflict with each other. You have to learn to deal with complexity and ambiguity.
That lesson doesn’t only apply to business. You see the same thing happening everywhere: dumbing down trends in the media, lack of nuance in political discourse...

Absolutely. And I see it as a senior leader’s duty to be willing to embrace ambiguity. When you have conflicting objectives, instead of taking the easy way out and saying, “If I do this, then unfortunately I can’t do that,” in many cases you have to be able to find the way to solve both of them.

Now that you’re retired, you’re devoting more time helping colleges and universities to bridge the gap between academic needs and business realities. Can you tell us a bit more about that?
As well as being on the International Advisory Board of IESE, I’m a member of the Executive Committee of the Foundation Board of IMD in Lausanne, Switzerland; the Dean’s Council at Harvard University’s John F. Kennedy School of Government; the Dean’s Advisory Board of the Goizueta Business School at Emory University in the U.S.; Emory University’s International Advisory Board in the U.K.; and the Board of Overseers of Smolny College in St. Petersburg, Russia. I also fund half a dozen “Shreiber Scholarships” in Russia and Argentina. These are my major engagements.

I often have conversations with Jordi [Canals]. I see him three or four times a year. In these informal chats, we discuss which initiatives are working, what could be done differently. It’s my way of contributing.

What are one or two things that you think colleges and universities are doing right, or wrong, in bridging the gap between academic needs and business realities?
IESE is doing a lot of things right. I think bringing people from the real world of industry into the classroom is a really great thing. And I don’t say that because I’m here at IESE for the Global Leadership Speaker Series! It could be anybody from the world of politics, entrepreneurs, NGOs, you name it. The main thing is about bringing insights from the real world. I would encourage that sort of thing to continue. At IESE, it’s a given.

It’s a huge competitive world out there, and the main challenges for colleges and universities are continuing to be global and attract a student body, and not compromising on the quality of the faculty. Of all the different schools I’m involved with, it seems that if there is one common theme, it’s the search, or the fight, for good faculty. You wouldn’t believe the struggle it is to incorporate five or six first-class faculty per year: to find them, select them, appoint them.

From your vantage point as a member of IESE’s International Advisory Board over the past three years, what do you think makes IESE different or unique?
Each school has its own character and personality. There are several things that make IESE special. One is that it’s not too large a school. You still have very much a personal touch - the fact that I can come and sit half an hour with the Dean or call him up or write him an e-mail and have him answer quickly, even over a weekend! That sort of interaction that you sense with the students and the staff is very, very special. The internationality: a very high percentage of MBA students are non-Spanish or come from abroad, compared to the U.S. where that is the other way around. Of course, this is generally true of other European schools, but there are very few schools at the level of IESE that are so international. Jordi stresses a lot of entrepreneurship and dynamism: you sense that in the school. And you have a beautiful campus, both here in Barcelona and Madrid. There are a lot of special attractions about IESE.

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