<KOD KURSUS>

OUM BUSSINESS SCHOOL

SEMESTER 4/ year 2017

MPU3223

ENTREPRENEURSHIP

MATRICULATION NUMBER : 920510055012001

IDENTITY CARD NUMBER : 920510055012
PHONE NUMBER : 016-6983026
E-MAIL ID : sivabalanmaithily@yahoo.com

E-TUTOR NAME : En.Irwan Bin Mustapa

LEARNING CENTRE : Negeri Sembilan

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Nestle Introduction

The vast Nestlé Group started humbly with the vision of one Swiss chemist, Henri
Nestlé. At a time when there was high infant mortality in Europe due to malnutrition, this
dedicated man began experimenting with nutritious food supplements to overcome the
problem. In 1867, he was approached to help an ailing premature infant who was unable
to accept his mother's milk or any of the conventional substitutes. The infant began to
take the milk food supplement he had developed, and a life was saved. The product,
called Farine Lactée. Nestlé, was soon marketed throughout much of Europe Henri
Nestlé adopted his own coat of arms as a trademark in 1867. Translated from German,
Nestlé means little nest and the now-famous symbol is universally understood to
represent nurturing and caring, security, nourishment and family bonding. These
attributes are still the guiding legacy for the company Henri Nestlé founded as it fulfills
its commitment to 'Good Food, Good Life and a new brand name began to take on life. In
1905, the Nestlé Company merged with the Anglo-Swiss Condensed Milk Company, the
first condensed milk factory which opened in Switzerland in 1866. Nestlé entered into the
milk chocolate business in 1904 when Peter & Kohler Swiss General Chocolate
Company produced milk chocolate under the Nestlé trademark. The chocolate company
later joined the Nestlé Group in 1929.

While the original business was based on milk and dietetic foods for children, the new
Nestlé grew and diversified its range of products, through acquisitions and mergers with
the better known brands of the time. For example: The manufacturing of LACTOGEN
began in 1921, and in the same year, a beverage containing wheat flour was marketed
under the brand name MILO. In 1938, NESCAFÉ, the world's first instant coffee was
introduced. Then, in 1947, the MAGGI Company, manufacturer of soups and bouillon
invented by Julius Maggi merged with Nestlé. Nestlé continued to expand through the
years with some major acquisitions. Today, the Nestlé Company still adheres to its
founder's beliefs and principles and is, therefore, very much people-oriented, and
committed to understanding its consumers' needs throughout the world in order to
provide the best products for their lives. As the leading Food, Nutrition, Health and

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Wellness Company, Nestlé is the provider of the best food for whatever time of day and
for whatever time of your life. Nestlé has grown to become the world's largest food
company offering more than 8,500 brands and 10,000 products. With its headquarters in
Vevey, Switzerland, Nestlé has more than 456 factories spread over 80 countries, and
employs more than 283,000 people.

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The sources of innovation obtained by the Nestle

Open Innovation (OI) is really a term promoted by Henry Chesbrough and looked as
paradigm that assumes firms can and will use external ideas and also internal ideas, and
external and internal paths to advertise, as the firms look to advance their technology
Chesbrough (2003). OI is founded on the reality that, in quantity of widely distributed
knowledge, companies simply can't afford to rely entirely automatically research, and
thus should rely also on outside sources and buy or license processes or inventions (e.g.,
patents). Additionally, idle internal inventions should be offered externally through a
spectrum of possibilities like licensing, joint venture, spin-offs, etc. On the other hand,
closed innovation which was standard generally in most food companies before refers to
processes that limit using internal knowledge within a company to make little if any
usage of external knowledge. Open innovation is the deceptively simple idea that
companies integrate external ideas and capabilities into their internal innovation strategy.
At its most robust, open innovation implies a high degree of intellectual and
technological openness, wherein ideas, advances and innovations move across
organizations. The central tenet is that in today’s world of unprecedented technological
and intellectual growth, cloistered companies can’t compete.

Nestle procedure for OI is to unite internal resources with external assets. Worldwide,
item ploys approximately 5,000 people in 24 R&D centers and over 250 application
groups, with a total R&D spending of CHF 1.88 billion (Swiss Francs) in 2007. Nestle
applies OI by tapping into technologies and expertise greater than a million researchers
worldwide, including science universities, capital raising, strategic suppliers, and
government laboratories. Nestle definitive goal is to co-create innovation and price
through partnerships. Other businesses also focusing on OI include Kraft Foods Kuhn
(2008) and General Mills Erickson (2008). In spite of widespread adoption of cross-
boundary innovation management inside the food industry, empirical evidence of food
companies starting OI strategies remains scarce. Innovation Partnerships collaboration
has been a key piston from the engine which is driving economic growth in the new

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millennium. Innovation in it, institutions, and strategic reorientation of technological
change has opened opportunity, and competition has put strong imperatives in play for
collaborative innovation (Weaver, 2008). While OI, firms increasingly acquire
technologies from external sources.
The transition to OI is not an easy task. This information, however, ought to be the most
important reasons for the requirement for change, especially with regards to the origin
and origin of innovation. Complacency stifles innovation. Nevertheless ,it took some
work by dedicated and commit individuals to change the company’s way of innovation.
Nestles new innovation strategy concentrates on conducting business featuring its
partners. This is termed Innovation Partnerships, and it drives your journey toward what
already is described in more detail elsewhere as OI and Open Business Chesbrough
(2006).

The Innovation Partnership paradigm expands the OI definition, namely, a different way
to collaborate in most regions of discovery and development with external partners who
are able to bring competence, commitment, and speed towards the relationship.
Furthermore, it's increasingly important that organizations implement what in politics
will be called reaching across the aisle and interact in partnerships between different
internal competency groups. Nestle, as an example, draws upon assistance from its many
geographically and functionally dispersed competencies. Partnerships minimize risk to an
organization. By way of example, at the beginning of any co-development, no investment
is needed aside from the current expert resources. It really is well understood that existing
resources are not free too and that many internal branches associated with a given
organization compete for such resources.
Sharing Is Winning Business model innovation is vital to sustaining OI. External
technology partnerships allow Open Business Models to perform more (Chesbrough and
Schwartz, 2007). Hence, the company climate is centered on collaboration and
reciprocation. To thrive and thrive in today’s global realm of innovation, companies must
seek alliances. Partnerships are manufactured in order to solve a problem, fill a space, or
get an answer more efficiently and more quickly (i.e., time for you to market).

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Effectiveness and speed are the operative and overriding principles of the innovation
partnership. At Nestle, a simple motto for this type of partnership is called Sharing Is
Winning. This slogan really describes the spirit associated with a partnership. It does not
suggest a naive approach that either in the partners is quitting any proprietary territory,
but alternatively it expresses the deep respect that partners have for each other because
they access a development.
Trust, Goodwill, and Value Partnerships evolve through three essential stages which is
trust, goodwill, and value . Oahu is the value creation towards the end this is the ultimate
goal of any partnership. Without such value creation, the entire concept remains hollow
and gives no real merit to both innovation partners. Organizations should apply a
disciplined approach to the innovation process. It is worth reemphasizing it does not
matter what are the nature with the innovation process, well-understood project
management software tasks and ideal management are essential to continuing success.
Without such project management software, which includes clear briefs and good
knowledge of the goals and expectations, many projects are doomed to fail whether these
are run internally or even in a partnership model. Trust, sharing, and agreements are an
important part of INP.

A crucial element in any type of collaboration is first understanding then further defining
the requirements the partners involved. The partner who initiates the connection caused
by a need must know which specific competencies and innovative solutions are being
offered, and the way these competencies and solutions would really assist the innovation.
As an example, Nestle for its upstream partnerships only has compiled its future needs
and requirements for all those its businesses and individual sections and shares these
records using its innovation partners.

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The barriers faced by the management of Nestle
Organizations that are utilizing INP, and those that will join the train which includes
already left the station, must figure out how to respect an innovation partner in a different
fashion. As an example, some time when suppliers were kept away on account of
competitive and pricing reasons is gone. The newest paradigm requires sharing the result
of an innovation partnership, thus reaching beyond the archaic definition of a supplier or
contractor. This strategy is setting a certain tone to get a very different relationship by
having an innovation partner (that could sometimes even be a competitor).
Close exposure to the customer is paramount for almost any R&D organization, in order
that it can decipher the collected data and transfer it to usable and valuable information
Watzke and Saguy( 2001). The consumer could be the boss Lafley and Charan,( 2008)
and is also driving R&D and success in the marketplace Saguy and Moskowitz (1999).
For instance, inside a recent article within the Economist concentrating on innovation in
the usa, the extraordinary willingness of American consumers to try something totally
new was categorized as being a vital counterpart of the country’s entrepreneurial business
culture. You should note, however, that this INP must look into other clients returning to
creating value. They include the R&D organizations and the business units from the
partnerships, to count just a few. This isn't always as elementary as it may sound as it
requires close alignments and careful coordination. Whether the partnership is upstream
or downstream, the main principles are similar: Compile requirements and needs in one
group together with the competencies and solutions in the other.
Innovation may have many faces which enable it to are derived from many sources. You
can find, however, several ground principles. The multiplicity of principles is a common
pattern if the origin and the generation of innovation are defined. The foundation of any
innovation really lies with the fracture lines of multiple disciplines. Its always about
bringing unity to diversity and bringing people of several different backgrounds and
disciplines together. Maintaining an innovation process flow, however, requires a
paradigm shift to beat actual and imaginary hurdles and barriers (Watzke and Saguy,
2001).

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The planet where this multiplicity best thrives should balance the degrees of freedom
with disciplined and focused spirit. In the event you take a look at sports where motif its
not all records were achieved during fierce competition, it is not surprising make fish an
overabundance of resources is counterproductive to real innovation. In these situations,
solutions are normally enabled too easily. In fact often nothing really new and
extraordinary will come from this kind of environment. Lastly, it may be said that true
innovation is in fact generated inside a spirit of deep comprehension of peoples needs,
dreams, desires, and hopes.

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Ways to inculcate innovative culture among the Nestle employees

Understand the differing types of innovation that you just looking to foster. One of the
primary problems with new innovation efforts is because often don’t encourage
employees to think beyond the creation of new products. This means that employees with
non-customer-facing roles are either neglected or made to brainstorm awesome ideas
notwithstanding too little understanding of customer needs. Inspite of the product-centric
view which gets transferred to employees, business strategies have a tendency to align
with a need for bottom-up innovation across several domains particularly 4P’s: profit
models, processes, products, and policies. By highlighting the several arenas in which
employees can be involved with innovation, companies will help employees add value in
places that they've got deep knowledge and a want to join up. The management should
give a proper explanation and training session on what is Open innovation and its benefit
for the organization to the employees so that they can adapt to the environment .

Give employees the various tools they have to make their case. Every ideas aren’t getting
any traction in the event the value they bring about for the organization isn’t made clear.
And that’s often where companies flunk. They spend money on innovation programs to
herald new ideas, however they don’t give individuals the various tools or frameworks to
demonstrate why those ideas are worthwhile.. Personnel are taught not how to generate
new ideas, but instead how to handle the excellent ideas they think of, from knowing who
should hear the concept as to the see your face should be hearing. Nestle employees
should be given the resources to generate business pitches that highlight the price of
their ideas and demonstrate why Nestle is uniquely positioned to try the solutions.

Empower champions to push back against bouncers. Big businesses have large employee
bases with clear reporting lines. While this structure provides a number of benefits, it can
also be a roadblock when it comes to creating a culture of innovation. While a company
may preach the benefits of innovation, middle managers are still tasked with ensuring
optimal performance in the business’s core activities. They have little desire or capacity
to jeopardize core initiatives for unproven innovation efforts. Employees often get an

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early “no” from their direct supervisors, return to their day jobs, and put innovation out of
their minds again.Nestle should make sure innovation champions can help employees
find friendly spaces to test their new ideas, while also providing a level of protection
against managers who are charged with focusing on the core.

Redefine metrics and incentives. New ventures often struggle since they're judged by the
same metrics used to evaluate activities that the business has tried for several years. New
initiatives can’t compete in the same level, and they are generally killed off before they’re
given the opportunity to prove themselves. Performance metrics often experience
precisely the same problem. While employees are told to become innovative, their
performance goals and compensation packages don’t produce the incentives to take
action. Hence ,Nestle should appericate their employees by giving rewards in terms of
salary increment and tour packages for employees who is innovative and increase the
production of products through their ideas contribution. This type of reward will motivate
and broden their mind to be innovative.

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Conclusion
Being passionate and having a sense of urgent necessity making innovation a visionary
and strategic and a systemic lever to effect business breakthroughs, changes,
competitiveness, growth and value enables organizations to prosper and flourish in the
age of disruption. These organizations will use innovation as the disruptive change
mechanism to outperform their competitors, and create new markets by creating
improved customers’ experiences.by creating products and services that people value and
cherish, by effectively using technology, by spanning generational and maximizing
demographic diversity and by creating collaborative, creative and courageous work
environments. This is the new age of innovative entrepreneurs who envision and co-
create new, audacious and abundant blue oceans who know how to be different, think and
act differently to make the difference they want to make in the world in ways that people
value and cherish.

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References

Chesbrough, H. 2003. Open innovation, the New Imperative for Creating and Profiting
from

Technology. Harvard Business School Press. Boston, MA.

Chesbrough, H. 2006. Open Business Models, How to Thrive in the New Innovation
Landscape. Harvard Business School Press. Boston, MA.

Chesbrough, H. and Schwartz, K. 2007. Innovating business models with co-

development partnerships. Res.-Technol. Mgmt. 50: 55-59.

Kuhn, M.E. 2008. Driving growth through open innovation. Food Technol. 62(6): 76-82.

Lafley, A.G. and Charan, R. 2008. The Game Changer. Crown Business. New York, NY.

Saguy, I. S. and Moskowitz, H.R. 1999. Integrating the consumer into new product
development. Food Technol. 53(8): 68-73.

Sarkar, S. and Costa, A.I.A. 2008. Dynamics of open innovation in the food industry.
Trends in Food Sci. & Tech. 19: 574-580.

Watzke, H.J. and Saguy, I.S. 2001. Innovating R&D Innovation. Food Technol. 55(5):
174-188.

Weaver, R.D. 2008. Collaborative pull innovation: Origins and adoption in the new
economy.Agribusiness 24: 388-402.

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