Resource from EU Business School
Nestlé is the world’s largest food and beverage company. Its chairman and former CEO, Paul Bulcke, was an inspiring guest at EU who shared his career story, offered advice and explained Nestlé’s vision and approach captivating an audience of EU students, alumni and guests at the final Learning From Leaders conference of 2020.
Here, we have distilled pertinent insights from Paul’s conversation with Peter Vanham, author of “Before I Was CEO”.
Crisis Management at a Global Giant
Nestlé has over 2,000 brands and is present in 187 countries, so weathering the coronavirus crisis could seem an insurmountable challenge. However, over the past year, the company has managed to maintain more than 90% of its productivity. Paul Bulcke pinpointed some defining factors that shaped Nestlé’s response to the crisis.
Nestlé’s company structure provided an advantage while other global corporations faced significant supply chain disruptions: “We have relatively short supply chains as we are very decentralized. That is linked with our strategic conviction that freshness of produce is linked with raw materials that you produce and sell close to where the consumer is. And that has proven to be a very resilient system.” Thus, while Nestlé’s decentralized structure has been criticized as an impediment to growth, it has served the company incredibly well this past year. Nestlé was also fortunate that the global packaged food industry was not negatively impacted in the way that so many others, such as travel and hospitality, have been.
Aside from these advantages, a rapidly implemented and carefully defined approach enabled the company to adapt quickly to the new challenges to maintain high levels of productivity. The following three principles defined how the company responded:
Safety first. Nestlé’s first actions were to secure the safety of its people. It reduced company travel, lowered physical presence wherever possible and leveled up hygiene measures in its factories.
Maintaining activity. With Nestlé’s decentralized operations, regional teams around the world had the autonomy they needed to adapt to the local situation ensuring that they could continue to supply food to their communities.
Solidarity with the local community. This is a core value at Nestlé, which worked to support the survival of the community by accelerating payments and extending credit, among other measures.
While the measures Nestlé had in place are specific to their business, the structure they used to shape their approach could be applied across any industry as an effective blueprint for crisis management.
Global Presence and a Long-Term Approach
Nestlé is more familiar with crisis management than many. It maintains a presence in several war-torn and politically turbulent countries. Other companies have withdrawn, but not Nestlé, which still operates five factories in Venezuela, for example, and remains present in Syria and Zimbabwe. Paul explained: “The lives of the people and families depend on our presence. Employing them and giving them hope for tomorrow, enabling them to send their children to school, supporting thriving local communities is key for us.”
The combination of a values’-driven approach with well-defined criteria govern Nestlé’s presence in a country. These include:
Safety of people.
Ownership of intellectual property and assets.
Ability to achieve the quality of working conditions and products that enable the company to live up to its own standards.
Paul explained this approach as stubbornness mixed with conviction. “Typical,” he said of the Swiss character. “It is simple to formulate; it is harder to live up to. But that’s what we have to do,” he stated. “We are a strong believer in our strategic direction, our purpose, and we always have the long-term in mind. We see through the troubles of the short-term.”
High Trees Catch More Wind
Nestlé is no stranger to controversy. One of the perceptive questions asked by EU students picked up on an aphorism used by Paul Bulcke in relation to the criticism the company receives: high trees catch more wind.
Paul explained that, as a sizable company with a presence all over the world, Nestlé is exposed to considerable scrutiny. While there is a general awareness of the challenges facing our planet, particularly regarding climate change and plastic packaging, most people do not have a nuanced understanding of the difficulties implicit in transitioning to a way of operating that can help to mitigate, and even solve, these problems.
It’s very easy to recognize the correlation between a company that sells bottled water and increased plastic waste around the world, but much more complex to grasp the improvements that are being made – such as a lighter weight bottle which causes less waste – and the unfortunate truth that there are communities that rely on bottled water for a safe drinking supply. For this reason, companies like Nestlé are exposed to criticism from all corners of global society. It is necessary to understand the measures the company is taking, and the ambitious goals it has in place to reduce its negative impact on our planet.
“We do quite a lot of work and we take our responsibility seriously,” Paul said, “The key is to communicate, be transparent, be humble – we cannot do it all in one day.”
As an example, Paul spoke about the complex problem of child labor in the production of cocoa. This is an issue that Nestlé has been monitoring for the past 10 years at the plantations in Ghana and the Ivory Coast that the company indirectly works with. Out of 18,000 children they identified as performing work that could be considered dangerous, they have worked with local authorities and NGOs to remove 10,000. The challenge remains to change the local culture that perpetuates child labor as a way of life. “This should not be used as an argument not to get those 8,000 children out”, Paul explained, “But we have to be understanding and work with them to make this change”. “It´s a tough journey, but a rewarding one.”
The company stays in these countries because they want to support change on the frontline. Paul explained: “It is only by being there, being visible, by doing things that you may be criticized, but that’s not a reason why you shouldn’t do things.”
Strategy to Build a Better Future
Nestlé has extensive plans in place to address global challenges facing society today. Perhaps the most ambitious is to be carbon neutral by 2050 in line with the U.N.’s Sustainable Development Goals (SDGs). This ambition was announced in 2019. In the year that followed, the company worked on putting together a plan for how they will achieve this – a plan that was revealed in December 2020.
It is a comprehensive roadmap that includes significant financial investment and goes beyond Nestle’s own walls, which is where most of the company’s total greenhouse gas emissions occur. Thus, the company’s approach looks across the entire supply chain, not only in factories but also upstream to suppliers such as farmers, and “downstream” towards supermarkets and consumers. Paul acknowledged that this is important from a brand point of view as well as in terms of maintaining company values and contributing positively to the world: “That is also what, over time, consumers are going to value”. Which is why Nestlé has started other initiatives, such as increasing its portfolio of vegetarian protein products to support a transition to a reduced-meat lifestyle.
Paul emphasized that Nestlé’s approach is centered around action, measurements and reports: “This is not greenwashing; this is not PR; this is 300,000 people at Nestlé committing to this”. The company’s policy is to align their objectives with quality of life for their consumers: “Our commitment is to maintain safe, healthy, quality food brought to the consumer in a very efficient way.” Paul also emphasized that values are central to Nestlé’s approach: “What we do is by conviction, not by convenience.”
The Key to a Fulfilling Career
Long-term thinking and optimism seem to characterize both the philosophy at Nestlé and Paul Bulcke’s personal approach to life and work. Given Paul has been working with the company for more than 40 years, it is perhaps unsurprising to find such a close accordance in values between the two. And in fact, Paul explained that this is the reason he has been able to stay with Nestlé for so many years: “I could live my own principles at the company because they are the same as mine,” he stated.
Paul provided invaluable advice for anyone building their career: “You have to be able to be yourself, and if you cannot be yourself because the values are not there, then you have to move on. However, if you only move on to keep stepping up, then you are going to be anxious permanently. That is not a very good quality of life.”
Knowing when to find a new job and how to identify the right opportunities are key to a fulfilling career. As other respected leaders have informed audiences at EU’s Learning From Leaders conferences, working for a company which shares your values is essential. But Paul also added, “You have to watch out not to be too intense in your career mindset and enjoy the journey.”
Characteristics of a Great Leader
As the former CEO and current chair of Nestlé, Paul Bulcke has our trust when it comes to leadership advice. Throughout his conversation with Peter Vanham, Paul shared advice to support the audience of students, alumni and guests in their career aspirations.
“There is no single type of leadership,” Paul said. “How someone leads will be personal to them. It will be shaped by the company and by the role they are in.” However, there are common factors which all leaders and aspiring leaders can apply to improve their leadership.
It is important to maintain a “dimension of contextual thinking,” he said. “Don’t think you have all the answers – you don’t need all the answers. You just need to have trust in the people around you.” Building a capable team that you can trust is essential to being able to lead effectively.
You have to have detachment; “you have to be able to observe yourself,” Paul advised. Taking the time to step back and assess your own actions, opportunities and challenges will enable you to grow into an effective and reflective leader, and to continually develop your own capabilities.
Attitude is also key to being a great leader: “Don’t be bossy. Leadership is not a position; leadership is dynamics, it’s action, it’s motivation and it’s energy”. What’s more, “a good leader is someone who can inspire somebody or a community and inspire means purpose. We don’t have all the answers, but we inspire.” Having a purpose and vision that can energize those around you is an essential aspect of leadership.
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