Old Hand at New Tricks
14 April 2008 Richard Vincent
Every company accepts the importance of innovation in feeding future growth. However, only a few recognise that innovation depends on the strength of the processes that generate and explore new ideas. Chief Executive Officer reports.
Fostering innovation is not simply a human resources issue. Bringing in bright, talented people is vital, of course, but all high-potential employees need the right environment and encouragement to deliver on their potential and become effective business leaders.
Unearthing skills and creativity is the platform for innovation, but it is when these skills are polished that an organisation finds the people and ideas to lead it forward, and this is as true for large, world-class companies as it is for SMEs. This truth has emerged from the experience of organisations that build their entire business model on innovation. The success of an enterprise such as 3M, for example – which deserves its iconic status as an innovative company – stems from its efforts to build an innovative culture. While well-established companies cannot take the same approach, they can learn much from the likes of 3M.
"Every organisation needs innovation to survive," says Richard Vincent, head of training at Nestlé USA’s Nestlé University. "You need leaders who can think creatively, although effective management is just as important."
Nestlé was founded in 1866, producing food for infants. It has since grown to encompass world-famous food and beverage brands: Nescafé, KitKat, Carnation, Nesquik, Buitoni. As a global company active in dynamic consumer markets, it recognises the value of innovation in defining strategy and has been building a culture where new ideas can blossom.
A key element of this strategy is Nestlé University, which serves to engage and encourage employees in developing the ideas that might define the company’s business in the future, while offering them the opportunity to develop both professionally and personally.
Its aim is to support a performance-based culture by offering a variety of training programmes defined by the company’s strategic vision. The curriculum includes management development, functional development, executive development and e-learning.
"You need to be able to move from innovation to reality," says Vincent. "You need to be able execute on your bright ideas. It is hard not to think of innovation from a very disciplined, narrow point of view. Here, we find that you need more than just new ideas to take the company forward. You need three crucial ingredients to make a fire: fuel and ignition, and oxygen to feed the flame."
For fuel a company needs creative individuals who can bring forward new ideas. The ignition is provided by the execution excellence a company can bring to bear on these ideas. The oxygen is the ongoing investment in people and training that keep the innovation pipeline flowing.
"You can’t drop any of those elements," says Vincent. "We get paid for results, and we need to execute on our innovative ideas."
Nestlé University has become a key source of innovative ideas, benefiting from development and investment within Nestlé and the input of external experts, including leading business schools. For Vincent, the university is the membrane that separates internal and external learning but also filters the feedback between these two arenas to find new business opportunities.
Development programmes must adapt as markets change and new business models emerge. Standing still is not an option in highly dynamic markets, and Nestlé’s interaction with external partners is key to ensuring that its executive training is geared towards the real needs of its business environment.
"That is the bane and the bliss of my job," says Vincent. "Everything is changing faster all the time, and we are trying to stay on the front edge. More organisations are seeing the need for adaptive capacity, and they will find that having healthy relationships with business schools keeps them in touch with best practices.
"That said, the old model of just mapping best practices won’t help you map the future. You need to keep an external perspective and check that your company is mapping uncharted territory in partnership with business schools. Everyone can constantly learn, and this is what takes a company into new territory."
The university provides the structure for developing high-potential individuals and supporting their innovative thinking. It offers a full range of development programmes, from basic orientation up to the leader development curriculum, where tomorrow’s leaders can develop and explore their ideas. "Overcoming problems through innovation requires commitment. You need to create a system that drives ideas forward and that can benchmark your performance against other companies," says Vincent.
With its university, Nestlé USA feels it has gone a long way towards emulating the kind of culture that companies such as 3M are known for, where innovation can thrive and clear strategy gives coherence to creative thinking.
"We are starting from a different base and trying to improve our innovation processes. That is why we have created an intense immersion experience, where hand-picked high-potential people can pitch and develop their creative ideas," says Vincent.
The immersion experience Vincent alludes to is a process that enables Nestlé to bring forward its high-potential individuals by giving them the opportunity to shine in a challenging situation. It also drives promising ideas forward for the benefit of the company through investment and exploration.
Candidates identified as potential innovators are invited to spend five days in an intense classroom environment, where they develop new ideas. They pitch their concepts to Nestlé’s venture capital board, on which sit senior executives, including chairman and CEO Brad Alford. The capital board then chooses which ideas it will back.
The chosen ideas become ‘explorer’ projects, where the innovators are given time, space and money to develop their concepts and make them commercial realities.
"We go to our own secret location. Ideas receive funding so that their originators can go into ‘the garage’ and develop their entrepreneurial vision. It is an excellent management development experience. We don’t always get the result we expect, but we are always mapping new territory," says Vincent.
This process shows that Nestlé is not one of the many companies that find innovation easy to talk about, but difficult to deliver. On the contrary, it demonstrates the importance the company places on getting innovation into the hearts and minds of its employees. It recognises that this is the key to success.
"There has been an epic change in the global market and a lot more now depends on the adaptive capacity of organisations and individuals," says Vincent. "There are very few organisations that are 140 years old, as Nestlé is, and very few offer the entrepreneurial experience and idea ownership that we do. We know we always need to develop our high-potential employees.
"The immersion and exploration experiences focus on the innovation process a key source of benefit to the company. We need to create leaders, and they need to learn in a way that fits the company’s strategy." Vincent understands, however, that Nestlé's approach to innovation must continuously adapt. "It is key to remember the adaptive, flexible model. We don’t regard the immersion experience as the be-all and end-all," he says.
Nestlé has shown that innovation is as important in established companies as it is in start-ups and that the process of fostering new ideas needs the backing of management at the very highest level.