The 5Cs of Innovation
Mr Suresh Narayanan, Chairman and Managing Director of Nestle India Ltd
According to Mr Suresh Narayanan, innovation is powered by the 5Cs, which in various ways have defined successful global brands. He was delivering the keynote address at the MMA-CavinKare ChinniKrishnan Innovation Awards.
One of the themes of the Chinnikrishnan Innovation Awards has been the very laudable dream that Chinnikrishnan had—Whatever the rich can enjoy, the common man should be able to afford. For this, he was willing to give up his steady job as a school teacher and go on a process of a wild goose chase, literally, in times which were very different. There were no accelerators, no startups, and no incubators. There was nothing.
He had the determination, the will, the passion, and the compassion to ensure that he delivered products in an affordable format and started what would be a journey of great valorisation of innovation in the consumer goods industry. He is not just the father of Mr. C K Ranganathan, but also the father of the sachet revolution in this country where everyone—Indian companies and foreign companies like mine—have all been inspired by that idea, taken it, and used it in our own space to do whatever we could do to make things more affordable for those who can’t afford it.
This theme has always been a bugbear, a passion, something that people said, ‘I cannot sleep without solving this problem.’ I represent a company, Nestle, which is also 160 years old, founded by Henri Nestle, who was himself an entrepreneur at a time when Switzerland was very poor. He was an immigrant from Germany to Switzerland and had tried his hands at various innovations and various businesses, including lighting up the then village and now town of Vevey in Switzerland on the banks of Lake Geneva. He had taken a contract for road construction and put his money in paraffin wax. Many of the businesses that he did failed. But the determination to be a good human and to do good for mankind never left him.
19th-century Switzerland was a poor country, though we can’t imagine that Switzerland can ever be a poor country. There was a huge infant mortality. A number of children died before they reached the age of five. Henri Nestle was a kind man. He wondered what he could do about it. He was a trained pharmacist. He put together a product consisting of wheat flour, milk, sugar, vitamins, minerals, and a few other things and gave it to a sick Warner, his neighbour’s son. Warner survived. Then he gave it to a few more children in the village where he was staying, and they all survived.
The head of the village called him and said, “Henri, you are a dead broke entrepreneur. You will not be able to continue giving this free stuff to all the kids. Start a business.” Hence, the Nestle empire was born. He gave his name to it and to its product so that every product that he sold would have his seal of quality and safety.
Cerelac, the First Product
He built partnerships, went into the ecosystem, got the best quality milk, the best quality wheat flour, and the best quality of everything. The original product was called Farine Lactée Nestle, which in French means wheat flour and milk. The product still exists today, and some of you might have given it to your children. It’s called Cerelac. It was the first product of this company in 1866.
You can see that—whether it was Mr. Chinnikrishnan in India or continents away, Henri Nestle—passion began with a dream to do good to mankind. None of them dreamt of being billionaires or becoming the most famous business person or entrepreneur in their times. They wanted to do good for humankind. My company, Nestle, started small. It is today the largest consumer goods product in the world, tipping the scales at almost $100 billion in sales. We never had family planning in innovation. We have more than 2000 brands globally. The challenge for me and my team is not what to launch but when to launch. It’s all the power of innovation.
The 5Cs of Innovation
What are the lessons that one can draw from this? If I were to crystallize five principles and call them the five Cs of innovation, they would be as follows:
Challenge of Innovation: The first C is the challenge of innovation. It is the marriage of impact and technology. Making an impact on the market and also using technology is the most important interface that one can look at in broad terms.
At Nestle, we use accelerators. We use the interface in our R&D centers, and we have one in India in Manesar, which is near Gurgaon that identifies brilliant ideas and sparks. For example, somebody may want to work with seaweed for packaging or look at a better way of recycling plastic or consider a better protein source or a cheaper protein source for children. These are the kinds of ideas that we incubate in our accelerators, and we ensure that they see the light of day. These are causes much bigger than what the company represents and yet it is an important question that needs to be answered.
The marriage between impact and technology can lead to innovation which is architectural, whereby you try and do something in order to stay in the market; or incremental, by which you make some improvement in the product facilities and capabilities and improve your market share; or radical, which means that there is a huge technological leap, but not necessarily a massive market following that.
But the most interesting form of innovation is the disruptive where both the impact and the technology are huge. The three awardees of the Chinnikrishnan Innovation Awards 2023 have come up with disruptive innovations. They are using the power of technology to solve problems that are acute. Imagine if 12 million glaucoma patients were one day able to get the benefit of screening. Forget the fact that they have better lives. Imagine the impact on the economic life of this country when we add 12 million people into the productive workforce if the blind, for instance, were to be incorporated into mainstream, using the innovation that has been awarded today.
It can make a huge difference to the environment. Think of the massive impact that can be had by recycling batteries and recovering 96% of what has gone into it. The youngsters’ thinking of making India self-reliant on essential minerals and materials is a very noble thought. These are disruptive innovations that both companies and the government must encourage as they can really spearhead the transformation of this country radically.
Context of Innovation: The second C is the context of innovation, which is consumer insight. It is as important as the ‘how,’ which is what you will do with the product. Mr. Chinnikrishnan had a simple consumer insight that if he made something affordable, people would be interested in buying it. Henri Nestle had the simple consumer insight that if children in a family survived, the family would be happy, and there would be greater productivity in the economy. All of this is insight-based. If I’m able to get a technology to make reading and listening to audio visuals easier for those who are sight-impaired, it can improve their quality of life and hopefully make them join the productive workforce.
Quite recently, Nestle did an experiment. More than an experiment, I look at it as a duty that corporates need to do. At our Sanand factory in Gujarat, which is a fairly large factory, 60% of the workforce are women. One of the things that we wanted to debunk is the theory that women in manufacturing don’t work. That is one of our best factories. We have now added a second dimension to it. A couple of months back, we have recruited 12 hearing-impaired people. They will be part of the production floor.
Look at the transformative behavior that happened. We all thought that they will be maladjusted and they’ll have a problem. In reality, the normal workers have started to learn sign language in order to communicate. Who says that you need PhD degrees to be wise, to be compassionate, and to be considerate? This can become a start towards a gentler and more respectful culture, which is what we need as human beings and which is what we need as society.
The best example I can think of is Thomas Alva Edison. He not only discovered the electric bulb but also figured out the filament, the vacuum that surrounds it, and a cheap way of manufacturing thousands of light bulbs. Today, we have moved on in terms of innovation. But look at the beauty in which “the who, the what, and the how?” was captured by Edison, who is considered one of the greatest innovators of all times. It is the power of putting together not just the insight but also the product and the delivery system. That is extremely important.
My advice to all the young innovators is to focus on the delivery systems. You have great ideas, great technologies, and have made the bridge extremely well. Now look at the impact. You should be able to reach out to thousands of people. Aravind Eye hospitals is one of the proudest institutions of our country. Quietly, firmly, and effectively, in a dedicated manner, they treat millions of people with cataracts in the cheapest manner that is possible. That is innovation in its purest form.
Cultivating Design Thinking: The third C is cultivating design thinking. In managing innovation, we think of the entrepreneur first. What is it that I can produce conveniently? What is it that I can market conveniently, and what will give me the highest margin? Instead, ask, what is important to the consumer? There are three characteristics that design thinking teaches us – Desirability, feasibility, and viability. Desirability addresses ‘Does the consumer love it?’ Feasibility talks about, ‘Can I make it?” Viability is, ‘Can this be sustained over a period of time?’ These are simple concepts. Design thinking today has become an essential element of most corporates. But what we make complex is the interpretation. When we call it by fancy names, people find it inaccessible.
Co-creating Solutions: The fourth C, which the corporates and small companies can look at is co-creating solutions with consumers, customers, and suppliers. No company is God unto itself. No organization is full of all the geniuses on the planet. Sometimes, the most powerful thoughts come from the humblest people.
In the last five, six years, we have launched more than 100 new products as a company, and some of the ideas have come from consumers and customers. They haven’t come from within the group that manages the company. You must have the power to be able to go beyond consumers, customers, and suppliers. I daresay even government institutions can participate in it.
Recently, we launched a product in Delhi as a test market. It is a millet porridge. It’s called A-plus millets. We process Bajra, which is one of the more plentiful millets in this country, but also one of the most difficult to process. We have developed a patented technology for it, in conjunction with the Indian Institute of Millet Research, Hyderabad and who are doing fantastic work in the area of millet cultivation, millet processing, and millet formation into products. Nestle may be a big company but we have our feet on the ground. We partnered with people who have decades of experience in millet and came up with this product.
Today we see the applications of this technology in Africa. It may not be the same masala millet because they will not like this particular product because of taste and local reasons. But the technologies are going to be applicable for Africa, which is a stressed part of the world in nutrition deficiencies. There is a larger purpose that can be achieved by co-creating solutions.
Culture of Innovation: The final and probably the most important C is creating a culture of innovation. We all like innovation. Unfortunately, to be commercially successful is very difficult. For example, in the food sector, less than 10% of innovations are successful. And yet, as organizations, we have to create the culture of innovation. It comes with a simple premise that should be read, like the scriptures, by the leadership of the organization. Failing to succeed will enable succeeding to succeed.
We have to live with failures in order to be successful. You don’t ride a bicycle the first time you ride it. We all know that as children, we fell and we see our children fall. But as Nelson Mandela said, it is not important that we fall. It is important that we dust ourselves and rise again. That is the most important part of being a human.
The Magic of CavinKare-MMA Awards
The Chinnikrishnan Innovation Awards process does three things. It recognizes that innovation is at the core of a society. Second, it has a democratic, meritocratic, and well-established analytical process of identifying who the best of the best are. And number three, it gives the platform for these best of the best to not only get recognized but to get the necessary funding and financing and the limelight to scale up their ideas. It is the same that is needed in corporates. It is the leadership that has to walk the talk.
At Nestle, in recent times, we are innovating at a pace more than three times what we have done ten years ago. Nothing has happened to the process. Nothing has happened in terms of the expectations. What has happened is that the ability to fail has increased. The leadership, starting from me, now says, “If something fails, I take the rap on my shoulder, and I take the responsibility for it. You go ahead and do what you think is important and relevant to the consumer.”
Innovation is truly a journey that encompasses a passion and a dream and perseverance. It elevates the spirit of the country, the organization, and the community. It tells us that there is something beyond what we all think is obvious and that it is possible to convert dreams into realities.
