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I interviewed Nicolas, the CEO of Sucafina<\/a>, one of the world\u2019s leading coffee trading and roasting companies, for my book on coffee. The interview focused on the coffee business, and we didn\u2019t discuss leadership and the role of a CEO. I contacted Nicolas for this book, and he agreed to contribute. We met at his offices in Geneva, where the building was being renovated, and I ended up on the wrong floor. We eventually found each other and chatted in the company\u2019s kitchen. I asked him how he defined leadership.<\/p>\n \u201cI define leadership as being able to do three things simultaneously,\u201d he answered. \u201cThe first is to inspire people. The second is to manage people. The third is to contribute to the bottom line of the company. Vision is also crucial. A leader must define a clear vision and ensure everybody sticks to it.<\/p>\n \u201cCulture, values, and vision make a company, but I would also add purpose. Our purpose at Sucafina is to create opportunities to improve lives. We deal with hundreds of thousands of growers worldwide; we can help improve their lives. It is what links everyone.\u201d<\/p>\n While interviewing people for this book, I often stumbled over the expression, \u2018Culture eats strategy for breakfast.\u2019 I was initially confused by what it meant and then sceptical about whether it was true.<\/p>\n \u201cCulture must be in people\u2019s DNA,\u201d Nicolas told me. \u201cAt Sucafina, we hire for values and train for skills. If you hire people who share the same values as you and buy into your culture, you can train them to be the best risk manager, IT person, HR person, or whatever. It\u2019s difficult if you don\u2019t have a commonality in the DNA of the culture and the values.\u201d<\/p>\n Sucafina employs 42 nationalities in 49 locations in 36 countries. I was impressed that a CEO could impose, develop, or nourish a common culture across diverse cultures.<\/p>\n \u201cTo make a good cup of coffee,\u201d he explained, \u201cYou need a blend of different origins, often from various continents. We are lucky at Sucafina to have this diversity; it is one of our strengths.<\/p>\n \u201cWe give everyone the freedom to speak to everyone. By sharing best practices, we learn from one another and improve. That\u2019s one crucial thing. Second, we try to adapt to the local communities, mindset, and culture. We are a global company that acts locally. We try to empower local teams while maintaining a common message at the corporate level.\u201d<\/p>\n \u201cHow would you define Sucafina\u2019s culture?\u201d I asked.<\/p>\n \u201cIn one sentence?\u201d he replied. \u201cI would say it\u2019s what you see is what you get.\u201d<\/p>\n Nicolas took over the responsibility for the company from his brother, who took it over from their father. He told me that his brother and father have a similar leadership style but are more hands-on than he is. He prefers a more delegating type of leadership, but what they do have in common is that they all walk the talk and lead by example.<\/p>\n I was interested in discussing the advantages a family firm might have in the trading world, but I was keen to talk further about leadership. Sucafina has the Sparks<\/a> program to teach leadership, but I wanted to ask how successful it is. At school, I remember some kids were natural leaders, whether in sports or arts, and others followed them. Before meeting Nicolas, I discussed the issue with a friend, the retired CEO of a pharma company. He firmly believed that leaders are born, not made. What did Nicolas think?<\/p>\n \u201cSome people are born leaders,\u201d he told me. \u201cOthers are groomed to become leaders. However, to become a leader, you must have the ingredients of your personality, upbringing, and self-confidence.<\/p>\n \u201cSucafina\u2019s Sparks program teaches leadership,\u201d he explained. \u201cIt is a three-year course. Each year, we have between one and ten participants. So, on average, let\u2019s call it six. As we have three years going on simultaneously, it\u2019s 18 people. Up to now, I guess over 50 people have graduated.<\/p>\n \u201cIt is expensive but well worth the investment. In our industry, grooming people from inside the company rather than headhunting them from the outside is essential. By doing so, they truly live the company\u2019s vision, purpose, and culture.\u201d<\/p>\n Sucafina\u2019s website highlights some of the women who have recently completed the Sparks programme. I was curious to learn what Sucafina was doing to promote gender equality.<\/p>\n \u201cHistorically,\u201d Nicolas told me, \u201cThere have always been more men than women working in our industry, especially on trading desks. I have not yet been able to understand why. On the other hand, there are often more women than men in execution and operations and different departments such as HR or Communications.<\/p>\n \u201cWe want a mix of men and women,\u201d he continued. \u201cBut we\u2019re a meritocracy-based company. I do not want quotas for men or women. I want the most apt person to get the job. But yes, we want to promote women because we believe there are a lot of amazingly talented ladies out there who can grow and take on more responsibilities.<\/p>\n \u201cFor example, in East Africa, if we want something to happen on the ground with local communities, we empower women, and it\u2019s often a big success. When we empower men, I cannot say the same thing. So, we want to empower more women.\u201d<\/p>\n I asked, \u201cAre there specific leadership challenges in trading companies compared to service, manufacturing, or industrial companies?\u201d<\/p>\n \u201cHumility as a leader of a commodity trading company is crucial,\u201d he answered. \u201cThat\u2019s one key difference. The second one is that in a commodity trading company, you start afresh each financial year and have your overheads to cover. Trading companies don\u2019t have a recurrent built-in revenue to cover expenses, which you often find in a service industry like banking.\u201d<\/p>\n Some trading companies have bought industrial assets to even out volatile earnings. I asked Nicolas if he had done the same.<\/p>\n \u201cTo reply to your question,\u201d he replied, \u201cI\u2019ll go to our company vision, which is to be the world’s leading sustainable farm-to-roaster coffee company. We want to start at the farm, but we\u2019re not farmers. We\u2019re happy to be roasters but not brand owners.<\/p>\n \u201cAbout ten years ago, we acquired Beyers Coffee<\/a>, the largest roaster in Belgium. We also have an instant coffee business. Bayers and our instant coffee business are strategic as we can vertically integrate the supply chain. We will not be brand owners; otherwise, we will have conflicts of interest.<\/p>\n \u201cThese industrial assets also give us more predictability in our revenue. They indirectly help us by levelling our revenue and having a recurrent built-in margin.\u201d<\/p>\n \u201cWhich is better, growth through acquisitions or internal growth?\u201d I asked.<\/p>\n \u201cInitially, I would say organic growth, but sometimes opportunities arise when you don\u2019t expect them, and that\u2019s where you need to acquire. Culture is critical when you acquire. You need to make sure the company you acquire fits the culture. It\u2019s culture more than anything else.\u201d<\/p>\n I quickly became overwhelmed when running our little analytical company and had to impose a structure to limit the number of people who reported to me directly. I wondered how many of Sucafina\u2019s 1,400 employees reported directly to Nicolas.<\/p>\n \u201cEight,\u201d he replied. \u201cWe use the acronym FIRST. F stands for finance, I stands for information systems technology, R stands for risk, S stands for staff and human resource, and T stands for trading and execution. So those five heads report to me, plus I have three further direct reports.<\/p>\n \u201cSome of our managers only have four direct reports, but the average is about eight. It varies between five and ten, depending on the interaction between the manager and the employee, the level, and his responsibility.\u201d<\/p>\n \u201cHow involved are you in the day-to-day operations and trading?\u201d I asked.<\/p>\n \u201cI\u2019m involved in the company’s day-to-day operations, but it can operate quasi-normally without me. I\u2019m aware of the trading positions we hold and the big-picture decisions.\u201d<\/p>\n \u201cIf you decided to go and sail around the world for a year, would the company still work as well?\u201d I asked.<\/p>\n \u201cI would say for a couple of months,\u201d he answered. \u201cBut not a year.\u201d<\/p>\n I now wanted to return to ownership and whether family companies have an advantage over publicly quoted companies in trading.<\/p>\n \u201cWhether you are family-owned, management-owned, or even private equity-owned,\u201d he said, \u201cI believe that commodity trading companies should not be publicly quoted. Why? Because of the unpredictability of the financial results. Share price volatility is not good.<\/p>\n \u201cI\u2019m not in favour of publicly listed trading companies unless you are an industrialist and have trading as your procurement arm, which enhances or not your profitability. Family businesses think and operate long-term. Commodity trading companies should have the management and the family as shareholders.\u201d<\/p>\n Serge Varsano has instituted a company structure that limits his decision-making power. I wondered whether Nicolas had something similar.<\/p>\n \u201cI have a board of directors, the majority of which are independent,\u201d he said. \u201cThey empower me but impose certain limits in VAR, drawdown, counterparty, forex, etc. I navigate within these limits. I believe we\u2019re well structured in terms of corporate governance for a company of our size.<\/p>\n \u201cI\u2019m here to make money but also to have fun. I don\u2019t need to give a return to my shareholders of 30-50% a year. They\u2019re comfortable allowing me to use the profits to grow the business.\u201d<\/p>\n Serge Varsano also mentioned the importance of having fun in business. It made me wonder if I had had fun running my little company. I enjoyed the challenge, but was it fun? I am not sure.<\/p>\n \u201cHow do you inspire innovation as the company grows?\u201d I asked.<\/p>\n \u201cInnovation must be bottom-up as well as top-down,\u201d he replied. When people have ideas, we must listen to them, assess whether they are feasible, and not be afraid of trying and failing fast. If you fail fast in innovation, you can fall back on your feet and re-innovate. If you don\u2019t learn from your failure\u2014and if you don\u2019t fail fast\u2014innovation can be a problem.\u201d<\/p>\n I had to think about his answer for a while. It had never occurred to me that innovation could be a problem, but then I thought about the times when companies had introduced new IT systems only to see them fail.<\/p>\n \u201cHow involved do you get in recruitment?\u201d I asked.<\/p>\n \u201cI don\u2019t see all candidates,\u201d he replied, \u201cBut I often participate in the last round of interviews with key people or departments needing my involvement. I enjoy interviewing people because, as I said before, we hire for values and train for skills. So, through these interviews, I can understand whether a candidate shares our values.<\/p>\n \u201cI always ask a candidate to share with me one experience that happened in their life from the age of five to 20 years old that contributed to the person they are today. I want something profound and sincere, not their exam results. It allows me to understand the person behind the CV.<\/p>\n \u201cSometimes, candidates reciprocate the question to me. I answer that at the age of seven, my parents put me in a boarding school in Switzerland without me knowing that I would go to a boarding school. I do not remember my parents telling me I was going. I suppose they did, but they didn\u2019t explain the meaning of boarding school. You can imagine the trauma.<\/p>\n \u201cIt taught me how to survive in very unusual circumstances. On the other hand, it did not teach me to ask for help. It did not teach me to communicate. So, I often do things by myself. I\u2019ve learned in the last decades how to work more with teams.<\/p>\n \u201cThe fantastic thing is that the kids I met at that school – I\u2019m now 54 – are like brothers to me today. I can see them on the other side of the planet, and we can sit and have a meal, and it\u2019s as if we haven\u2019t seen each other for 20 minutes.\u201d<\/p>\n \u201cLast question,\u201d I said. \u201cWhat advice would you give someone taking up a leadership position for the first time?<\/p>\n \u201cOne: Listen and listen. Two: Lead by example. You cannot expect your people to do something you are unwilling to do. Three: Don\u2019t be an asshole. We have an official \u201cno-asshole\u201d rule at Sucafina. It is independent of how much you contribute to the P&L or how great you are.\u201d<\/p>\n I told Nicolas I had recently read Elon Musk\u2019s biography and thought he was in the third category.<\/p>\n \u201cElon Musk is an exception,\u201d Nicolas said. \u201cI have just finished his biography. Working with him must be difficult and unpleasant, but he is one of the smartest guys on the planet. I give him the credit for being how he is.\u201d<\/p>\n Dave Behrends, Sucafina\u2019s head of trading, also recently read the biography. In a post on LinkedIn, he argued that Elon Musk breaks his four rules of management.<\/p>\n The first is \u2018people are your best asset\u2019.\u00a0 Elon demonstrates that he views people as a tool. They start sharp but get dull over time, and you must ultimately replace them.<\/p>\n The second is \u2018creating healthy work\/life balance environments helps people thrive\u2019. Musk orchestrates \u201csurge events\u201d that ask for the impossible of staff. It requires them to go from \u2018always on\u2019 to working nights, weekends, birthdays, anniversaries, and holidays with complete disregard for the strain it puts on people\u2019s personal lives.<\/p>\n The third is \u2018teams that work well together succeed together\u2019. Elon has an \u2018algorithm\u2019 which dictates that you must challenge every rule or process. He discourages camaraderie as it limits people\u2019s desire to challenge each other critically.<\/p>\n The fourth is \u2018hire people better than yourself, empower them, and trust them to get you where you want to go\u2019. Musk is highly opinionated. His decision-making, which often contradicts his team of experts’ opinions, is stunning. He fires people who challenge or disagree with him too much.<\/p>\n I discussed Dave\u2019s post with a friend, a professor at a local business school, but he disagreed with Dave\u2019s analysis. He told me that his four management rules might work in trading but don\u2019t work in manufacturing, especially not in an innovative area such as space travel or electric cars. \u201cYou have to break stuff to succeed,\u201d he told me.<\/p>\n \u201cI’m not sure I don’t agree with your business school friend,\u201d Nicolas told me. \u201cI think it’s more about the ability of being one out of 5 billion and reinventing the industry you are in. Elon Musk has wholly reinvented the ecosystem through both Tesla and SpaceEx. To reinvent an ecosystem is something very bold. It requires out-of-the-box thinking, and you must be just one of a kind.<\/p>\n \u201cSome traders are mercenaries who make money, take part of their money, and then start with the next page. When they lose money, they change companies. You could argue that certain commodity trading companies use people as a tool to generate money. It is what hedge funds do.<\/p>\n \u201cAnd remember, Elon has a loyal and devoted workforce who love working for him. I would love to work for him for a couple of years,\u201d he continued. \u201cI would learn so much. Elon Musk is one of those people out there who have the courage and who can make the impossible possible. It’s all about leadership and the ability to go the extra mile and working very hard.\u201d<\/p>\n \u201cElon Musk is the exception where the no-asshole rule does not apply. But I’m happy that Dave Behrends and I are aligned on this. It was not planned.\u201d<\/p>\n \u00a9 Commodity Conversations\u00ae2024<\/p>\n This is an\u00a0excerpt from my new book,\u00a0Commodity Professionals\u2014The People Behind the Trade, <\/strong><\/span>now available on Amazon<\/a>.<\/p>\n I interviewed Nicolas, the CEO of Sucafina, one of the world\u2019s leading coffee trading and roasting companies, for my book on coffee. The interview focused on the coffee business, and we didn\u2019t discuss leadership and the role of a CEO. I contacted Nicolas for this book, and he agreed to contribute. We met at his … <\/p>\n![\"\"](\"https:\/\/i0.wp.com\/commodityconversations.com\/wordpress2\/wp-content\/uploads\/2024\/08\/PROOF_JK_001.jpeg?resize=212%2C300&ssl=1\")
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