The current business world is a very competitive one requiring unique innovations to survive and meet growth targets. The success story of Nespresso teaches us important lessons on innovation and management that many companies will want to look at. The innovation of a new product-coffee capsule started a series of more innovations that tackled challenges in a hostile environment and provided unique services which make its package very unique. It is very probable that Nespresso will continue achieving set targets since it has shown an ability to adapt to market conditions through a range of inventions. Since innovation is a way of providing a solution to a problem whatever it is, a company that has embraced this strategy is likely to overcome challenges that exist in business.
The need to invent a unique and different product that meets special customer needs is an important lesson on innovation that we can learn from the Nespreso story. Nespreso introduced a new concept into the coffee market by patenting a capsule that contained ground fresh coffee. The company had done research on customers taste’s putting it in a position to develop a range of this product that satisfied different taste’s of its customers. The company offered something different from conventional coffee where customers used to measure varying quantities of coffee powder while making coffee. This preserved a distinct taste that met customer needs. Moreover, the coffee making machine that came along with the capsule provided a new method of making coffee with ease, speed and comfort.
This invention met several bottlenecks before it was fully introduced to the market. For example, the capsules did have varying concentrations besides going stale within a short time frame. This needed improvements which were undertaken by Nespreso Company. It is therefore important to continuously work on a new product so that it meets its demands and expected quality as much as possible. Customers should always be the primary motivation of any invention. Any invention should therefore meet customer needs to surpass competitors. Improvement of services that come with the product, marketing and other areas is equally if not more important for the innovation to succeed.
Apart from the challenges mentioned above there were other problems that had to be overcome. These were not just problems focusing on the product but problems with the market, company management among others that had to be overcome. From this experience, we can see that for any innovation to survive there must be a group of influential persons who believe in the innovation against obvious odds. The management needs not just to encourage an innovation but more importantly it needs to believe in an innovation and implement strategic decisions that would provide all the needed support. This support needs to be creative too. In this regard, it was important to establish an affiliate and an independent company to develop the product fully. The need to bring new thinking into the project when it was showing dismal signs is another creative decision that helped salvage the project.
An important approach taken by the company was to market and tailor their new invention towards a specific niche of people. Targeting a specific niche has several advantages. It simplifies market research enabling one to make informed decisions. Besides, a culture and behavior dominant in a specific class can be exploited to provide a unique product that meets its needs. Moreover, effective market methods targeting the specific class can be exploited. Targeting high class homes was therefore important as it enabled the company to concentrate its energy on a specific area increasing the chances for success.
Innovation of unique services that come along with a physical product is very important for an innovation to succeed. Nespresso saw this opportunity and took full advantage of it. Implementation of a training program for machine demonstrators for example went a long way in convincing more people to buy the capsule machine. A unique method of marketing through club members whose needs were quickly addressed through timely delivery (within three working days), follow ups and efficient after sales service was a unique package that met customer service demands. This marketing method increased sales significantly although it could be considered as a method that could not reach a larger market in a short period of time since it relied on word of mouth to reach new customers..
A creative and innovative workforce that can come up with and gauge new ideas is necessary for an invention to be born and succeed. Nespresso had people who came up with new ideas on things. Lang is one person whose ideas helped salvage this innovation. For example, he shifted concentration from office to home users. Without these ideas, the capsule coffee product would obviously have failed in the market.
The management has a responsibility of creating an environment where creative ideas are born, gauged and implemented. An authoritarian management concentrating on methods and procedures inhibits innovations and improvements. People need to be given space to try new things that could bring required solutions to existing problems. For example, Willem Pronk idea of selling a selection of stylish coffee blends in stylish wooden boxes in Netherlands succeeded greatly at difficult times. He went ahead to make improvements that have helped Nespresso reach new targets. Clearly, without an innovative workforce, one cannot survive in the highly competitive business world that exists.
To reach its new targets, Nespreso needs to continue focusing on and even improve on quality. This includes quality on its coffee products, coffee making machines and its customer oriented services. Keeping its current customers, increasing its customers and urging its current customers to drink more coffee are considerations that should influence all policies, decisions and strategies that the company will want to undertake.
The company needs to expand its customer base. Building a club has been important and so far it is achieving its intended result. The number of club members is increasing annually. While this number is growing, the company has to take measures that ensure quality on any of its three fronts (Coffee, coffee machines and customer service) is not compromised but improved and maintained. The company should consider opening up more Nespresso boutiques to bring the product nearer to the customers. This will create and expand a market of non club members who like drinking Nespresso coffee.
The company also needs to concentrate on new opportunities in new markets. This includes opportunities in developing countries like Asia and African markets. Although these markets may need different approaches from those employed in Europe and America, they provide awesome market opportunities that can significantly increase sales if properly exploited.
Moreover, the company needs to maintain an edge over its competitors. To achieve this, the company needs to maintain and even improve on its range of innovations. Introducing new coffee brands that have the best quality over competitors is an important approach of staying at the top. This may require expansion and Improvement of processing Industries. These facilities should be designed to improve quality and increase quantity of production to cater for an expanding and competitive market. Working with its coffee making machine companies to improve quality and meet new customer needs should also be undertaken.
Carrying out comprehensive research on the dynamic coffee market with changing needs should be carried out. This will enable the company to notice new opportunities that are arising besides giving it a capacity to stay ahead of its competitors. In regard to expanding its customer base, the company may also be required to enter into new partnerships to foster its growth as it maintains its current partnerships. This should include players in the airline Industry, tourism Industry among others. (Miller)
Nespresso Company did something unique. Apart from introducing a new product into the coffee market they have transformed the coffee market itself. Coffee is seen as a service as much as it is seen as a product, thanks to their unique service innovations. Their success was achieved under difficult market conditions which forced them to come up with a range of innovations to which they owe their success. In the current business world that is extremely competitive with many difficulties, innovations after innovations may be the only way to go. Innovation needs to be bred in an environment where it will have most impact as it achieves its goals. This includes a supportive management team that encourages an innovative workforce at the workplace. To achieve set targets, Nespresso needs to keep applying the same strategy of innovating through which it is likely to even surpass set targets.
Miller, Joyce.” Innovation and Renovation: The Espresso story”, IMD international. 2003.