Learn How Jonathan Harmon is Helping Nestlé Be Lean, Take Risks and Innovate
For a traditional large CPG company, entering a new market can take years of research, logistics, and top-down planning. This type of slow, methodical approach worked for decades.
But, this is a time of accelerating change, where market shifts and product life-cycles can often be measured in days and weeks rather than months and years. These days, waiting years to bring a product to market frequently means the difference between a massive success and an utter failure.
Jonathan Westleigh Harmon is a member of the Global Portfolio Strategy and Innovation Acceleration team at Nestlé and he sat down with us for an exclusive interview to explain everything from how Nestlé realized it needs to be leaner and more risk-tolerant, to how it built a specialized distribution arm to bring products to global markets more quickly, to how its new lean approach allows it to look at startups and insurgent brands as opportunities instead of threats.
Jonathan doesn’t have your typical corporate background. He got his start with a BA in Art History and Geography from UNC before pursuing a Master’s in Architecture at MIT and an MBA at Wharton.
After business school, he spent four years in the Boston Consulting Group’s Strategy practice. In 2015, he spent two years as Director of Customer Experience for Move Loot — a startup building an online furniture marketplace backed by investors including Y Combinator, Google Ventures, First Round Capital, and Index Ventures.
In 2016, he joined Nestlé to work on innovation topics based out of the global headquarters in Vevey, Switzerland.
How does having both corporate and startup experience affect your work?
Having experience from both sides of the equation gives me a lot of perspective. First, I can understand the constraints of a large company and appreciate why they’re there.
But at the same time, the startup experience pushes me to ask for more, and realize things can be done faster. And it also shapes my appetite and my approach to risk-taking — which is a crucial part of thinking about strategy at a large company like Nestlé.
Tell us about your role at Nestlé
I work on a series of projects supporting specific markets or supporting our central functions on innovation topics. I conduct research, write strategy memos, and work with teams in different markets to help them think about opportunities in their markets and how to approach them.
What do you read to keep you sharp for your job?
I make a conscious choice not to read a lot of business materials in my spare time.
I spend a lot of time reading general news: the New York Times, the New Yorker, the Economist, because I spend a lot of time reading reports at work and doing original analysis and what I fear most as an innovation person is losing track of what consumers care about — what they’re thinking about, what their hopes and dreams and worries are.
Those are things that are captured much more powerfully in general press than in management and specialist pieces.
How does Nestlé think about the competition from startups vs. large incumbents?
It differs from category to category. For example, there aren’t that many insurgent brands in pet foods so we won’t worry about them as much. Coffee on the other hand is incredibly fragmented — there are tons of them to think about.
Our goal at Nestlé is always is to be the first or second or largest player in any category that we’re in. In that sense we always do have our eyes on the other big companies in the space rather than the insurgents. This is because it can take a very long time for an insurgent to become a first or second player in a product category. So we’re not always that focused on them.
However, being the first player in a category that’s already hemorrhaging market-share to insurgents, you can’t be satisfied with that. So, in those types of categories we do think a lot about how we can respond to the threats or opportunities that insurgent brands and startups represent.
A key way we think about insurgent brands is this: they may threaten our position in a particular market, but they also show a way forward. They’ve unlocked something that we haven’t been able to: either because it’s too risky or because their creativity is enabling them to see a consumer’s needs from a new angle. So there’s an opportunity for us to understand what’s driving an attraction to those brands.
Tell us more about the acceleration of change
In the past, the primary way that Nestlé has stayed ahead of the competition is through internal innovation efforts. Basic research and experimentation driven by science has been at the core of Nestlé’s identity from the day it was founded 150 years ago.
That said, the pace of change is accelerating, and we’re encountering more and more that other solutions outside of “compete” — like partner, invest in, and acquire – are on the table more and more often simply because of that change.
What’s driving accelerating change?
There are a few mega-trends that are driving this acceleration of change:
- An unprecedented amount of capital is available, and it’s flowing freely, which allows young entrepreneurs to build more businesses.
- This in turn means that many more SMBs have ambitions that are beyond serving their own local markets and are looking for hockey stick growth.
- There’s increased appetite for risk among millennials. So, more of them are starting companies than in the past.
- There’s a reaction against the perceived monolithic nature of the CPG industry.
- There’s a desire for more specific, more customized, and more local brand experiences, and oftentimes that’s driven a lot of consumer interest and a lot of entrepreneurial interest in creating these experiences.
- No one’s happy consuming the same product worldwide, day to day, they’re looking for things that speak to them more individually.
How is Nestlé innovating to keep pace with change?
The biggest opportunity facing Nestlé is to be faster. And that’s something that we are fully committed to and grappling with.
And that’s a concern that I think every large company has. Moving as quickly as possible, testing and learning, putting products in the market under the right conditions and letting them trial. And not hunkering down and testing until it dies and the market’s moved on.
That said, it’s difficult to move quickly, the same way as a software startup would. We deal with people’s lives here. You have to find ways to move fast without compromising your core values.
We want to overthink things on the front-end less and push it out in as lean a way as possible while being very strategic about identifying the things that can’t change.
For example, I worked on a project to help us expand our baby food offerings in China. China is one of the biggest markets for infant nutrition products — so it was a huge opportunity for us.
Traditionally Nestlé wouldn’t think about getting things done quickly, testing, and iterating. Instead we’d be worried about things like building a factory, and sourcing the product, and how to do that from within the country that we’re entering. And this all becomes very time consuming, slow, and expensive.
But what Nestlé has built is this capability called Nestrade — which is a recently-launched distribution and logistics subsidiary. Nestrade handles all of the complex demand planning, shipping, and customs requirements to produce and ship small batches of product anywhere around the world.
So instead of having to go and build out this manufacturing capability in-country, or having to order a hundred tons of product from a factory in the US, Nestrade steps in and works with the factories we already have to produce small batch runs of the product from around the world and figures out how to ship it into the market we’re trying to enter.
So that allows us to get to market faster, more efficiently, and cheaply which lets us test new products more quickly.