Disruptive innovation in corporations: the way to succeed is to become a start-up again.
Can a corporation start a completely new category? Perhaps the only way to succeed is to embrace a start-up mentality and start as an independent, risk-taking business.
It was a sunny day of 1988 when Peter Brabeck-Letmathe, CEO of Nestle, was sitting in his office in Vevey with a view on the quiet surface of Geneva lake and snow-capped peaks of Chablais Alps. His thoughts however were far from calm as he contemplated the situation with this business unit created several years ago and still struggling to find its strategy and place within the organization. Its B2B business model apparently was a question mark, the issues with the quality of products delivered by the supplier were only piling up and its new unconventional head clearly didn’t fit in into the well-managed, polished culture of the corporation.
That’s probably how a Harvard Business School case would start. We don’t know whether this day actually took place. What we do know is that the B2B unit in question was called Nespresso and the rebel personality’s name heading the business was Jean-Paul Gaillard.
What happened next is well known and described in detail in a number of articles, cases and books. Jean-Paul Gaillard, hired from Philip Morris where he had just launched Marlboro clothing line, was able to completely change the business model, strategy, target consumers, established “Nespresso Club”, set up a new distribution system and a network of Nespresso boutiques and completely reviewed the communication approach, creating the company as we know it today.
While it’s hard to argue with all the analysis of Nespresso success, including the novel business model, distribution etc., in my view there is one thing without which the company would have never made it: it was a separate entity from the start. It also helped that Peter Brabeck and Camillo Pagano, then SVP in charge of strategic business divisions, protected and fenced Gaillard from the larger corporation, giving him space and freedom to take risks and to make his own decisions and mistakes.