Nestle Nutritional Profiling System - Case Study Example

Organization Innovation University’s Name: Submitted by Name: Tutor: Date: Introduction The success of any organization largely depends on its innovative initiatives, which also give it a competitive advantage in the business environment. The food and beverage industry is currently facing a number of challenges that requires significant innovation to overcome (The Economist, 2012). The main challenge is the rapidly rising obesity rate across the world. Fast foods are very profitable, but the players in the industry are concerned of making people fatter. Therefore, the obesity concerns and the need to produce healthy food are making food firms to invest a lot of money to come with innovative ways of solving the problems. Nutritional profiling is the new technology the industry players are using to solve the obesity and health issues. Paper looks at the innovation in food and drink industry by specifically Nestle Nutritional Profiling System (NNPS). It looks at the Nestle displays innovation, innovative lessons, and the impacts of the NNSP. In addition, it analyzes the adoption of innovation by other players in the industry. Nestle was found in 1866 by Henri Nestle and it is rated as the largest company in the food and beverages industry in the world (Nestle, 2015). Company operates in almost all nations worldwide and it employs about 250,000 employees in 70 countries. The firm offers a lot of products that include coffee, chocolate, frozen products, cereals, and many other food products. Currently, the company is expanding its products to even include pet foods and cosmetics. The success of Nestles is associated with its effective product innovations and renovations, which have made it to dominate the industry. Lately, the company has come up with a new and unique innovation known as Nestle Nutritional Profiling System, which is the focus of this paper. Nestle uses open innovation (OI) where it utilizes both internal resources and external assets to enhance its technology, which it uses to produce products that satisfy consumer needs. Nestle creates its innovation through partnership. In addition, it also uses new business models like micro-MBA model to train its workers to be more creative. The company has employed about 5,000 employees in its 24 research and development (R&D) centers, and additional 250 application groups that has made it the most creative firm in the food and beverages industry (Innovisio, 2013). Therefore, Nestle innovation process involves the application of OI by utilizing modern technologies and expertise of various researchers across the world to produce quality products that give it competitive advantage in the market. Nestle Nutritional Profiling System (NNPS) Nestle launched its new technology, NNPS, on 7th February, 2016 in order to help it reduce salt, sugar, and fat level in its food products. The innovation is also aimed at enhancing other health nutrients in its products (Drewnowski and Fulgoni, 2008). NNPS has the potential of dividing food into 32 categories and gives their suitable nutrient targets. In addition, it limits nutrient level each category to be in line with the international and national dietary standards and guidelines. NNPS has the ability to reduce salt by 22% and sugar by 31% (Jessri, Nishi and L’Abbé, 2015). Besides, it can significantly reduce saturated fatty acids in Nestle food products (Crawford, 2016). Consequently, the innovation is giving Nestle competitive advantage in the food and beverage industry because it produces foods that meet the current demand. Even though other players in the industry have, NNPS is different because it has some unique features. First, it can consider the role of food in general diets, as it is able to determine food’s nutritional profile according to the amount a consumer is likely to consume (Nestle, 2016). The innovation is also unique because it determines nutrients that consumers should be motivated to take (Nieberg, 2016). It can come up with the ideal nutrients for every food. In addition, the technology has no non-compensatory algorithm, which makes it hard for the unhealthy foods to be recategorized. Finally, NNPS is unique as it because its values are viewed based on consumer age that are categorized into those aged 4-8, 9-11, and buyers who are older than 12 years old. Therefore, NNPS is consumer-based, as it is designed to take care of the interests and needs of different consumers in the market. Lessons learned One of the main lessons that have been learned from the new innovation is that the modern consumers still value taste despite a reduction of salt, sugar, and fat content in the food. Therefore, despite the fact that NNPS helps Nestle to determine the food to reformulate to enhance its health standards, the company still has to weigh the recommendations of the system against time. Studies have found that consumers are not likely to consume foods that do not taste good (Dikmen et al., 2015). Consequently, according to innovation management theory, Nestle should apply incremental innovation to avoid cannibalization of its existing products. Radical innovation can make the company to lose some of its customers who may not welcome totally new products. Consumers are more likely to tolerate gradual reformulation of food products than the abrupt changes that can interfere with the taste. Therefore, NNPS significantly reduce salt, sugar, and fat content in various food categories, but it cannot come up with the right taste for various products. It is not appropriate to inform customers of significant changes in nutrient content in foods because they will assume that the changes negatively affect the taste foods. Nestle still has a challenge of matching sugar and fat reduction with appropriate taste required by customers. In addition, despite the need to produce healthy food, the hands of companies in the food and beverages industry are tied due to unchanging consumer demand, especially among children and young people. A research that was carried by Yale University found that children are more likely to consume sugary food than healthy and tasteless food (Sacks et al., 2011). As a result, due to the need to make profits, many players in the food and beverages industry are less likely to use nutritional profiling system, as they want to attract many young consumers. Consequently, there is a conflict of interest in implanting the innovation in a business. Using the new technology in instances where consumers expect sweet taste, therefore, is a challenging to nestle and other companies in the industry (Gerrior, 2010). According to change theory, consumers are likely to resist abrupt changes that are brought by the new technology, especially if the changes compromise some of the qualities that they adore in a product like taste. Many people crave for sugary product and they avoid it when the sugar level is reduced. Another lesson that relates with the first one is that Nestle needs to evaluate how changes brought by NNPS affect consumers’ health results. The innovation only focuses on food reformulation without showing the impact on consumer health (Olstad et al., 2015). Therefore, there is need to improve the system to detect how the changes in food affect the health various consumers in the market. The improved system will also help the company and local and international regulation bodies to understand the impact of reformulation on the health of people. The final lesson learned is the need to have trained employees to successfully implement the innovation. A significant number of managers in food and beverages industry accept that about 95% of companies have problem working with the new technology when they are first introduced. Studies have shown that there is a positive relationship between employee training and successful implementation of nutritional profiling system (Hall and Khan, 2003). Componential theory of creativity asserts that employee training is important because it helps in building creativity-relevant skills and it motivates workers to come up with new ideas (Karlsson, 2013). Therefore, companies should train employees when they want to introduce new system that may require addition or extra skills. Lessons and Success of Nestle The lessons from the implementation of NNPS have given Nestle a competitive advantage against its main rivals such as Cadbury, Uniliver, Hershey, and Walmart (Notta and Vlachvei, 2011). Currently, the company is not only focusing in producing healthy foods, but it also look at the desires of the target consumers. Apart from reducing sugar, salt, and fat content of its various products through the use of NNPS, it also maintains their taste, especially on the products targeting children who still value taste. It achieves this through its business slogan known as “Good Food, Good Life” (Varanavičius and Bradauskas, 2013). Therefore, it is producing quality healthy food for the aged consumers who are more concerned about obesity and other food-related diseases while at the same time considering the interest of children, which give it a competitive advantage in the industry. Nestle is also the global leading company in the food and beverage industry due to its heavy investment in the development of human capacity. Continuous learning is the integral culture of Nestle. The implementation of NNPS has also made the company to invest more in training its staff on how to use the modern technology to enhance their performance and productivity. Unlike Cadbury, Nestle believe in the power of people than the system, which has made it perform better than the latter the international market. Difficulties of Adopting Nestle Success Factor by Other Companies The main reason why other companies may find it hard to adopt some of the successful factors of Nestles is the high cost of inventing and adopting new innovations. It is expensive to come up with innovations because they need a lot of investment in research and development activities (Copeland and Shapiro, 2010). Conflict of interest many also make some companies, as some companies know that fast food are profitable and would not like to invest in initiatives that can interfere with their profitability. Therefore, the new system can face resistance, especially from shareholders. Therefore, resistance to change may be another difficulty. In addition, different corporate culture can prevent some companies in the industry from adopting some of the success factors enjoyed by Nestle when it came up with NNPS. However, the above difficulties can be overcome through investing in research and development, especially by utilizing the knowledge and expertise of internal employees. Encouraging creativity and innovation can reduce the cost of innovation. In addition, companies should nutritional profiling system as a way of meeting their social responsibility to the society and their consumers. In addition, companies should create a culture that encourage innovation and creativity, which will encourage employees to come up with new ideas. Summary Nestle is the leading company due to its organization innovation, which has made it to gain competitive advantage. NNPS is the latest innovation that helps the company to reduce sugar, salt, and fat level in the food products produced by Nestle. However, the company still faces some challenges like maintaining cost and training employees to master new technologies. But still some companies in the industry find it hard to adopt the success factor of Nestle due to high cost of innovation, conflict of interest, and different corporate cultures. The difficulties can be reduced through investment in research and development, encouraging corporate social responsibility, and cultivating appropriate corporate culture. Reference List Copeland, A.M. and Shapiro, A.H., 2010. 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Creating Successful Innovation Partneships: Nestle Case. Retrieved from http://innovisio.blogspot.co.ke/2013/11/creating-successful-innovation.html Jessri, M., Nishi, S.K. and L’Abbé, M.R., 2015. Assessing the Nutritional Quality of Diets of Canadian Adults Using the 2014 Health Canada Surveillance Tool Tier System. Nutrients, 7(12), pp.10447-10468. Karlsson, J., 2013. The role of HRM in innovation processes-Nurturing or constraining creativity. Nestle, 2015. An Overview of Nestle. Retrieved from http://www.nestle.com/ Nestle, 2016. The Nestle Nutritional Profiling System. Retrieved from http://www.nestle.com/asset- library/documents/library/documents/nutrition_health_wellness/nestle-nutritional- profiling-system.pdf Nieberg, O., 2016. Nestle Nutritional Experts Talk Difficult Tasks of Cutting Sugar on Confectionery. Retrieved from http://www.confectionerynews.com/Manufacturers/Nestle-says-cutting-sugar-in- confectionery-a-difficult-task Notta, O.U.R.A.N.I.A. and Vlachvei, A.S.P.A.S.I.A., 2011. Competitiveness in food and beverage manufacturing industries. In International Conference on Applied Economics– ICOAE 2011: Proceedings ICOAE 2011 (pp. 437-442). Olstad, D.L., Poirier, K., Naylor, P.J., Shearer, C. and Kirk, S.F., 2015. Policy outcomes of applying different nutrient profiling systems in recreational sports settings: the case for national harmonization in Canada. Public health nutrition, 18(12), pp.2251-2262. Sacks, G., Rayner, M., Stockley, L., Scarborough, P., Snowdon, W. and Swinburn, B., 2011. Applications of nutrient profiling: potential role in diet-related chronic disease prevention and the feasibility of a core nutrient-profiling system. European journal of clinical nutrition, 65(3), pp.298-306. The Economist., 5th Dec, 2012. Food for Thought. 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