Gerardo Mazzeo, global innovation director at Nestlé, believes FMCGs have no choice other than to embrace open innovation. Successful, established brands can either partner with the hottest startups with the most talented staff or find they have new, more agile competitors.
We caught up with Mazzeo at the recent Festival of Marketing in London to talk about the company’s latest open innovation platform, HENRi, which just might help save the world from the blight of non-biodegradable plastic bottles.
Before moving on to his experience of working with startups and tips for those following in Nestlé’s footsteps, we started by asking why the company is so heavily geared towards open innovation for its future growth plans and how its new platform fits in with this strategy.
Mazzeo: HENRi means taking a new approach for us. It’s us setting challenges and asking the brightest, most exciting startups to put themselves forward as a partner that can help us find the solution to a problem we believe will make people’s lives better.
We already have a very successful programme in Silicon Valley that goes and scouts out the best ideas, the brightest talent, and the hot startups.
The other obvious new direction for us is that, if we’re running a request through HENRi, it’s a funded pilot. A team within Nestlé will get their request, and that means it’s already got $50,000 behind it—there’s no delay while we seek the money.
We’ve also got the NDA (Non-Disclosure Agreement) down to just two sheets of paper so we can start to act and think more like a startup. It shows how agile we’ve become as an organisation. In fact, HENRi was set up in just 150 days in July last year to celebrate our 150th anniversary.
CMO.com: What will success look like for HENRi? What kind of problems are you hoping to solve?
Mazzeo: We only set it up last summer, in an incredibly fast 150 days, to celebrate the 150th anniversary of the company. So we’ve not got a completed project yet.
However, there are several projects that stand out. The one that potentially has the widest-ranging implication for the planet is a project to find a complementary alternative to plastic bottles. We’ve started working with a startup that can mimic the look and performance of plastic from a biodegradable material. We’re testing the bottles for how well they stand up to be transported, and, if they do well, we could see the first consumer trials in early 2018.
Another project I’m really excited by is diagnosing micro-nutrient deficiencies. We don’t have the problem in the west so much, but, in much of the developing world, there are huge problems. We’re working with a startup which has developed a non-invasive test. If a person has a micro-nutrient deficiency, they can be given supplements to, hopefully, return them to health. It’s such a simple tool, but it has the potential to make a huge change for millions of people.
CMO.com: These sound like interesting projects, but why work with startups when you have tens of thousands of your own staff? What is the greatest appeal of startups for you?
Mazzeo: To be honest, we really have no choice. Startups could be our big competitors of tomorrow, or they could be the people we get into bed with to help us solve problems and deliver our company’s mission to make people’s lives better.
What would you rather have, a competitor or a partner?
There’s a good example in Asia where we were far and away the market leader in coffee sachets that give you a wonderful drink in moments. Startups saw this and started to enter the market. It took them a while, they didn’t get it right at first, but they improved. It’s a reminder of the power of startups to disrupt.
CMO.com: If open innovation is helping you to work externally with new partners, what are you doing to drive digital transformation from within? Is this an important part of Nestlé’s growth strategy?
Mazzeo: Digital transformation runs through Nestlé’s core throughout the world, and, if it’s characterised by any one project, it would have to be the Digital Acceleration Teams. We have our main unit in our Swiss headquarters, and then in 23 other locations around the globe.
It’s, essentially, where we train up our digital apostles who come in from all disciplines from Nestlé around the world. It’s not just by chance that they’re positioned above the main executive floor in our headquarters. It means they’re just a flight of stairs away from our top executives, showing them what digital transformation looks like.
When you walk in to the main room in Switzerland, and the smaller units around the world, it’s like walking in to the film “Minority Report.” There are screens everywhere, where people are listening in to what trends people are openly discussing in social.
The programme has helped Nestlé transform to listening into social and using digital tools to improve customer service. That’s why it couldn’t just be in Switzerland, the initiative had to be repeated across the globe.
CMO.com: What have you learnt from startups? What tip or observation would you pass on to other executives considering partnering with bright sparks from outside their own organisation?
Mazzeo: The thing we learn from startups is to embrace the passion and excitement of people who have the agility to integrate into a company the size of ours. That’s always very inspirational to see how quickly they fit in and inspire and motivate the people around them.
The main thing I’ve picked up on is that startups, and that I would pass on, are very fair-minded. They’re staffed by very bright, enthusiastic people who can take “no” for an answer. In fact, they like a “no” nearly as much as they like a “yes.” The main thing they hate is a “maybe,” or any other form of prevarication.