Speech by Me.
Peter Brabeck-Letmathe
Chief Executive Officer
Key Markets’ Conference and Market Managers’ Conference
14-17 May 2000

This document is Peter Brabeck’s speech on innovation and renovation regarding the new economy and how our business must shape the forces created by arising opportunities in order to maintain its competitive advantage and financial situation in the future. A summary of some of the ideas in this important document is displayed below to give the reader a glimpse of what contains therein.

Since the speed of transformation and the impact of the new economy have been faster and more influential on Nestlé’s business than foreseen, it has created accelerating discontinuities,ranging from:
Changes in consumer behavior, for instance, variations on the public perception of food.

Distribution discontinuities, such as the increasing pressure to globalize and centralize while physical retailing is trying to grow by adding more space.
And changes that electronic commerce has made in shopping behavior and distribution and consequently demanding new marketing skills where knowledge is seen as "today’s primary resource of economic productivity".
Mr. Brabeck emphasizes on how these ‘accelerating discontinuities in all aspects of our business provoke an increased level of ambiguity’. This is why Nestlé needs ‘new and innovative thinking to succeed in the changing business environment.’ ‘Success depends on clear long term goals, objectives, and strategies to achieve them, supported by shared values and leadership principles’.

Fortunatley, the new market environment also represents a few certainties such as growth: annual food market growth for the next decade is excepted to be approximately 2.5% per year, therefore in the next decade all parts of the globe should offer excellent growth opportunities. Another, and perhaps more important, certainty is that Nestlé has proven to be a very efficient operator through programs such as the "continuous improvement programme" which has already saved millions of dollars in less utilization of raw materials, packaging and labour through application of new technologies, productive initiatives to exploit better current technologies and better satisfaction of customer and consumer requirements.

Finally, Brabeck addresses the success of future business through the application of four pillar strategies, each of which explains with clear examples:
‘Low cost, highly efficient operations’
‘Our strength is our brands’
‘Whenever, wherever and however’
And ‘Communication’

He concludes his speech encouraging leaders to have ‘speed of action, creative thinking and constant questioning’ in order to survive, win and create the future in the rapidly changing economic environment we face today.


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