The sustainability transition is accelerating around the globe. Governments and large companies have set net-zero targets, driving sustainability-oriented innovations not only within companies, but throughout supply chains and industries. Companies will have to adopt, either to comply with requirements from regulators and customers, or because of the enormous new growth opportunity that a future of sustainable production and consumption presents. In our ‘Learning from Leaders’ series of interviews, we speak to some of the most pioneering leaders around the world, to learn how they are preparing their organizations to capture the opportunities the sustainability transition brings.  

Yara: Equipping its organization for data-driven, sustainable reinvention of the food system

Insights from a recent interview with Marisa Soares, VP Farming Solutions Asia & Africa at Yara International With revenues of €23 billion in 2021, 17,000 employees and operations in over 60 countries, Yara International is one of the largest fertilizer and agro-solutions companies in the world. Yara grows knowledge to build a nature-positive food future, responsibly feeding the world while protecting the planet. How is a global pioneer like Yara driving sustainable innovation in emerging markets like SE Asia, to find new areas of value creation as the world transitions to more sustainable models of production and consumption?

• Overcoming the ‘old’ mindset – One of the biggest barriers is mindset, realizing that sustainability is a strategic imperative and that it is about long-term value creation. That requires a cultural transformation. In Asia, corporate culture is often quite hierarchical and the mindset quite change-averse in the sense of “why change something that’s working?” Creating the understanding and the sense of urgency that it’s working today, but it’s not sustainable into the future, we need to look at different approaches where the business can grow sustainably and have an impact at the same time. Europe is ahead because government and legislation have created that sense of urgency for change.
• Going beyond the short-term business case – We’re only seeing the very beginning of that regulatory push in SE Asia, so the company must leverage other ways to convince partners and markets. Sometimes it is hard to show a short-term business case. Like innovation, which is also often seen as a cost, it is not always clear from the start what the concrete outcomes or business case will be.

How does Yara encourage and integrate transformative innovation in a change averse environment?

• Cocoon innovation, but link to core business – Yara has purposely structured its ‘sustainable farming solutions’ vertical separate from the organization with the mandate to change and innovate and test and learn, helping de-risk the core business. Investments in sustainability close to the core business are more easily understood and accepted by the organization. But investments in digital innovation, connectivity, new business models are not always easy to quantify. They require a different, test-and-learn approach. Yara has used the approach of doing small pilots to encourage ‘seeing is believing’ when dealing with conservative, risk averse teams. Now, three years in, there is hunger in the organization to incorporate these innovations a lot more into the core business.
• Clear end-game and related KPIs – Key success factors for integration are allowing blue-sky innovation, but having very clear guidelines on what success looks like and linking them intrinsically to the core business, leveraging the core business’ competitive edge. For Yara, success is being able to connect with the farmer, but getting as much information about the farmer and field, because that’s how Yara can bring its knowledge and sustainability to the full and create real impact for the farmer. The biggest levers in changing the mindset have been in setting KPIs that are consistent with the new narrative of what is being measured and what is important, so in addition to the traditional ‘bottom line’ business KPIs, Yara country managers now also have KPIs around sustainability, such as, regenerative agriculture, new business models, and even engagement targets for their new digital solutions, which for them was not the case 12 – 18 months ago.
• Build sustainability into the innovation function – Yara uses 3 value buckets to evaluate and prioritize its innovation efforts: Carbon footprint, regenerative agriculture and social impact, while always seeking data generation and connectivity as enablers of their value creation. As an example, because rural retailers are often very fragmented, consisting small to medium enterprises with no formal education when it comes to running a small business, and often economically at risk, Yara started a digital academy for these retailers to be more prosperous and to help them enable the communities to become more sustainable.

What organisational capabilities enable and accelerate the transformation?

• Facilitate agile culture – To facilitate the cultural change in emerging markets, Yara invested significantly in leadership training and development focused on understanding the opportunities of new business models and from a people perspective moving away from very hierarchical structures and leadership styles to more open communication and feedback. The company also made changes to its management processes, f.e. in the way new initiatives were managed, from regimented, structured decision processes to frameworks like OKR (objectives and key results) that drive cultural change and allow more agility for the ‘test and learn’ approach to succeed.
• Diversity and collaboration enable innovation – To achieve agile innovation, one of the critical characteristics is that you need a very diverse organization to enable that. Diverse teams are better at generating new ideas and new processes. And external factors, such as government willingness to collaborate, need to be conductive as well to achieve speed of change. Change, even when it makes sense in the long term, will have a cost in the value chain in the short term. A big challenge is finding how business and government partners can share that cost or at least create a conductive environment. The road is long in Asia, but the time is short. But we’ve seen from a cultural perspective that when the stars align and a decision is made, there is a definite concerted drive to change and to deliver. We hope to see some significant progress in the next five years.