Nestle and Organizational Change Nestle

Nestle and Organizational Change

Nestle is the largest consumer packaged goods company in the world, headquartered in Vevey, Switzerland. The company is over 100 years od, posted revenues of almost $110 billion in 2009, and employes almost 300,000 people. Because Nestle is involved in so many products, the focus of its management style has been to redesign the "supply chain" management as well as a branding strategy that is characterized by a struct heirarchy of brands -- global, regional, and local. They also use technology to streamline their organization, and several decades back invested over $1 billion in a data project nicknames GLOBE (Global Business Excellence). This includes linking the companies e-mail systems, centralizing suppliers, and keeping a very tight rein of control over raw materials. This has also had the secondary effect of helping Nestle's suppliers streamling and cut costs as well.

Part 1 -- Waters, Marzano and McNulty (2005) developed a leadership paradigm that describes the necessary skills to impact achievement. An important component of this is the change paradigm. First-Order change is consistent with normative values, general agreement, and uses existing knowledge. Second -- Oder change occurs when it is not always obvious how things will improve, but requires new information and approaches to the problem set in order to be successful. Nestle's change was Second-Order because they diversified outside the food industry, changed managerial and sales tactics, and asked their employees to step out of the box and out of the Nestle culture. Second-order change is deciding to do something significantly or fundamentally different from what the company did before or the process of changing. Interestingly, for Nestle, this process was irreversible, it is impossible to turn back the clock and become something you were since the transformation often involves something completely different for the organization (Leadership and Institutional Change, 2010).

Part 2 -- Upper management at Nestle continues to emphasize that there is no such thing as a global consumer in the food and beverage industry. Instead, while the company may be global, the sourcing of raw materials global, the CEO said that the policy "is fundamental to our thinking…. That means that our products, our brands, and our commnications will always stay local in order to stay relevant to the local consumer" (Peter Brabeck-Letmathe, 2009). Unlike many American companies of the 1980s and 1990s, Nestle not only recognizes the importance of short-term performance, but stresses that it must be balanced against the long-term development of the company. For example, Nestle's experience in Chile could have resulted in closure because of the political system. Nestle stayed and prospered in the long run. Finally, Nestle's top management makes sure to visit as many Nestle employees as possible each year. This allows buy-in throughout the ranks for a local strategy at a global level (Brabeck-Letmathe and Bulcke, 2010). This certainly implies that change management is foremost in Brabeck-Letmathe's thinking, but it is change at an ordered pace -- never frenetic nor reactionary; but planned change.

Part 3 -- Because Nestle is such a prestegious and conservative company, the primary implications for change management revolve around cultural implications. Nestle was quite comfortable doing business its own way -- very European, in a sense, somewhat ethnocentric to the Continental geo-political sphere. Now, they faced challenges operating in the second and thrid world in which societies can be disparate, multi-lingual (not European langauges), a different view on doing business, and the reluctance towards change. However, by moving into the direction of a global business that saw globalism as an economic reality -- unncessary change was mitigated into strategic direction (See: Change Management Implications, 2002). Change is never easy, though, so it is likely that some in the management team embraced change, while others feared their authority and group dynamics would no longer be comfortable or workable for them. Still, as a group it is likely that the processes of globalization and emerging markets, coupled with the need to revitalize the EU portion of the operation and move into emerging markets changed the views of many in the change management paradigm.