RESPONSIBLE LEADERSHIP NESTLE INDIA

Done by: Pratchaya Korsanan (3979015) Ie.ignatius Eric Cahya Saputra (3979155)

MGMT-351 RESPONSIBLE LEADERSHIP

Lecture: Dr. Mario Fernando Tutor: Keith.Ng

Executive Summary This paper is basically about the important role of social innovation not only for the society but also for the company itself. In this paper, we are proposing our idea about how Nestle India can do the social innovative activity. We are also suggesting and explaining about some practicals things that Nestle India ltd should consider in doing this social innovative activity. Moreover we are also explaining about some benefit and advantages if Nestle India actually carry out our proposed social innovative idea. Before we actually suggesting what social innovation action that we are suggesting, we would like to explain on the basic theory in terms of what social innovation is. Social innovation is a term of the willingness to help the other and help the society to become better with actions that are long-term orientation and sustained in the society so that producing something impactful in the society. Our proposed social innovation program is that we are suggesting Nestle India ltd to actually build an educational infrastructure and create a diploma in Food Science program using this infrastructure. The purpose of this program is actually to make the local people live in a better. When nestle created this educational program, it will actually help local people to get a better degree of education. With better education, the chance for them to get more earnings is getting higher. With these situations local people will be able to get job and finally make the entire family for each one of them become better. Moreover the company will have better image which eventually lead into higher sales revenue.

1. Introduction 1.1 Company Background Nestle India Ltd is a subsidiary of Nestle S.A. of Switzerland. Nestle group is the world largest nutrition, health and wellness company with operations in 86 countries, with a total employment of 281000 people. Nestle India is headquartered in Gurgaon with seven factories scattered around India. It entered into India since 1912 by importing and selling finished product in the market. Up until now, the company has existed in India for approximately one hundred year which is considered as one of the oldest multinational company in India. Moreover, it has been successfully integrated into the society. Strong relationship bond of commitment and trust has been built with stakeholders. According to people of India, it has been rated as one of the best company to work with. Nestle India does not only provides direct employment in India, but also indirect employment to other such as farmer and supplier. Therefore, it has a dominant role in the contribution of Indias economic prosperity. Nestle Indias operations can be broken down into four categories: Milk Products & Nutrition, Prepared Dishes & Cooking Aids, Beverages, and Chocolates & Confectionery. The core vision of Nestle is to provide family with taste and nutrition, and to create value to shareholder as well as society while managing its business in a responsible manner. 1.2 The leader : Mr. Antonio Helio Waszyk Antonio Helio Waszyk is a Brazilian who become the chairman of the company on 2009. Previously, Mr Waszyk was the head of food strategic business unit at Nestle S.A., Switzerland. He holds Bachelor degree in Pharmacy and Master degree in Food Biochemistry. He started his early career in the entry level position related to R&D. 1.2.1 The leaders Commitment and Philosophy Amongst of all, Mr. Waszyk has the commitment to companys Creating Shared Value (CSV) program. Nestle Indias CSV program consists of three pillars: Nutrition, Water, and Rural Development. Nestle believe that For a business to be successful in the long term, it must create value not only for its shareholders but also for society (http://www.nestle.in/csv/Pages/csv.aspx reference ) This is what company believe in creating a long-term success for shareholders. In addition, the company also have the

commitment to protect the trust of the consumers and other stakeholders. Previously, Nestle launched the biggest health awareness program on nutrition and it was strongly encouraged by Mr. Waszyk. According to the media, Mr. Waszyk said one of the main division of Nestle is to become the recognized leader in health and nutrition awareness. (media reference: Bloomberg) Base on this statement, we assume that Mr. Waszyks has strong commitment to support its corporate business principle which is to create value that benefits to every stakeholders. We are confident that our suggestion will be considered. The suggested social innovation is a part of nutrition and development pillars which will provide benefits to the whole society and company. 2.0 What is social innovation? According to Geoff Mulgan (2007) social innovative concept is defined as a new activities and services that happen because of the motivation of helping each other not only to meet the social needs but also developed, diffused and also sustained through organisations whose primary purpose are social. The main point in this statement is that the social activity that a company does must be able to sustained and diffused in the society. Another point that makes social innovation looks so good is that the sincerity of that activity which only has one intention which is makes the society better and without any other intention like makes money and etc. This is actually what makes Social Innovation different with Business innovation (Mulgan,2007). Business innovations are generally based on profit maximisation. it means that although the organisation do give something good to make the society better but in the end they still want their organisations name and reputation better in the eye of the society. We are what we repeatedly do. Excellence, then, is not an act, but a habit (Aristotle, 384BC) if we are talking about social innovative, we are also talking about how the result of our activity will sustained and become a constant activity which is also will resulting in the constant outcome. in our opinion, by creating this constant outcome, we can actually change the society behavior over the time. There are six steps to actually help the company who want to do social innovative activities to actually make a systematic society changes those steps are prompts, inspirations, and diagnoses; proposals and ideas; Prototyping and pilots; sustaining; scaling and diffusion; systematic changes (Murray et al, 2010).

3.0 How organization enact the key elements of Social Innovation through responsible leadership
1. People People are the fundamental element of social innovation. They are involved in the process which can be categorized as formal or informal group that are connected by special interest or common objective. The cohesion, devotion and collaboration of people will determine the success of any social innovation. For Nestle India, the leader should motivate and get the inclusive of employee as well as the community. They need staff and community cohesion and participation to make this social innovation program happen and success. 2. Challenge Challenge exists in every context which can be both internal and external. Challenge can be either a threat or an opportunity. Action must be taken to overcome the challenge when it is ambiguous or unclear. Thus, proper strategies or tools must be used to clarify and rectify the challenge. For Nestle India, many challenges are there which must be considered. Building a school is something that is very new for Nestle. It requires lots of step and procedure to formalize a school. The challenge could also form by the local school as a result of conflict of interest. Therefore, negotiation and clarification must be taken place to compromise. Apart from current success of integrating into the society, Nestle has an opportunity to build a stronger bond of trust and relationship with the community. 3. Process Process is the method or way that challenge is handled. In order to manage the challenges, Nestle must carefully choose and implement the most efficient process that will achieve the expected outcome and it should not effect or distract its main operation. 4. Goal The element of goal is to solve the social challenge that gives long term and sustained benefit to social well-being. As a part of Nestle Indias corporate principle, the goal is to create long-term success and value that benefits to every

stakeholder. By complying with the most efficient and effective process of dealing with challenge, Nestle will be able to attain the desired goal.

3.1 Suggested social innovation: Educational Programs Our proposed social innovation for Nestle India Ltd is to build a college with a government accredited educational program. With their Research and Development expertise in food and nutrition, Nestle is strongly encouraged to use this competitive advantage as a foundation for further development of social innovation. Inevitably, education is a necessity thing for everyone. It is a gate for opportunities. Without education, the person would have trouble of living in a society which could possibly end up harming other. Education provides knowledge, a powerful tool to survive, that improve overall quality of life. Therefore, we are suggesting Nestle India to build a college with for educational purposes. The course offered by Nestle India will be separated into two parts, which are morning and afternoon session. Both courses are commenced by Nestle staff and expertise, and some other lecturers who are expert in Food Science that Nestle India ltd will hire to teach in this college. The purpose of using Nestle India ltd expert and staffs is that to make the students get the real learning based on the experience of the staffs and expertise that they get from working with Nestle India ltd. With this method of learning we believe that once students graduated from the Nestles college, they will be more ready to work in Nestle India ltds research and development department. For the morning class, the course is primary focus on Foods research and development program. By participating in this program, students will be offered a Diploma degree major in Food Science. The length of study is 18 months. considering the cost in order to build the college, we suggest that a college with the total classroom of five will be sufficient enough to educate the local people, each class is limited to 20 students for the effectiveness of learning outcome. In the completion of program, a participant will be fully equipped with a basic knowledge of food industry. Moreover, students are offered an opportunity to work for Nestle India Ltd. For afternoon class, the program will be offered for everyone who is keen to gain further knowledge. The topic will be changed on a daily basis which is suitable for everyone. The course will provide the general knowledge about the food safety and nutrition. Participant will learn how to live in a healthy lifestyle. This afternoon class is actually targeting those housewives so that they know how to live healthy with doing things like learning how to cook healthy food, learn how to choose a good and fresh meat as well as vegetable, and learn how to differentiate clean water and dirty water.

Basically, social innovation is about using our own resources in order to sincerely help others, and improve the society generally. In this Social innovation idea which is about building an educational infrastructure, we suggest to Nestle India ltd, to actually sent out their experts in the research and development and their staffs to actually control, monitor, and sometimes teach the students for the morning class and the local people for the afternoon class in the classroom. 3.2 Impact on Stakeholder of Nestle India ltd 3.2.1 Benefit for Local People Based on our finding about the statistical data related the relationship between education or educational degree and money or earning in the year of 2008 as we can also see on appendix1, we can see that the higher people can get a degree the higher they can get the money from their degree. It means in order for those local people who actually want to make their life better they need one most important capital which is education. Therefore with Nestle India ltd diploma learning program, local people are benefited from it because not only they can get diploma degree, Nestle India ltd is also offering job in research and development area for them. Another program which is also become a benefit to local people is the afternoon class on the Nestle India College. This program is actually aiming on improving the understanding of local people in terms of the value of health. For example, micronutrient malnutrition has many adverse

effects on human health and can cause serious impairment to physical and mental development in young children. Addressing local deficiencies through fortification is a long-term solution that can deliver nutrients to large segments of the population without requiring radical changes in food consumption patterns All in all with all this proposed program we hope that local people are able to actually step out from the poverty, get a job, earn some money and make their life and their family's life become better and better.
3.2.2 Benefit for The Local Government A lot of benefit that government can actually get from Nestle India ltd educational program. First important thing that government can get is actually the fundamental thing to make the overall living condition better which is reducing unemployment rate. As we refer to appendix 1, the data shows that the higher the educational degree that a person can get, the higher the chance for them to get a job.

Another advantage that government is actually being helped on this sector is on reducing the crime rate on that region. Referring to appendix 2, the data show to us that every 5 percent increase in government educational budget it actually reducing the criminality rate in those areas. It simply means that with this educational program by Nestle India ltd, local government is being helped to educate local people and reduce the crime rate on that local area. 3.2.3 Benefit for The Shareholders of the Nestle India ltd When this proposed social innovation program has been implemented and it is sustained in the society, we believe that Nestle India ltd will have a good brand perception in the eyes of the customers and society as the bigger scope. When this kind of situation exist in the society Customers are more willing to buy Nestle product because they remember that Nestle has already helping them to live better and make the society better. The benefit for the shareholders is simply with this goodwill and good brand name, it will eventually make the company profit become higher. It is because with good brand name it would be likely to create more brand loyalty which is eventually lead into higher profit for the company as well as the shareholders. 3.3 Practical Way to Implement Social Innovation Firstly, the leader of Nestle India ltd which is Mr.Wasyzk as a responsible leader Mr.Waszyk is required to get the approval from the government for establishing and formalizing a school with some negotiation activities and formal talk with government. Nestle India ltd will need to explain how this social innovation activity will provide benefits to society, for example, Nestle India ltd can actually tell to the government with this social innovation program, Nestle India ltd can actually reducing the poverty level and unemployment level in the city of Gurgaon the place where the headquarter of Nestle India ltd exist and the place where Nestle India ltd will build the educational infrastructure. Once approved, Nestle can start building a school. The location must be carefully considered. The school should be located in a place where there is a need for development, for example, rural and slum areas. With the establishment of school, the surrounding community would benefit from the educational program as well as the supporting infrastructure such as road. After the school is built, Nestle needs to promote and encourage the local people to participate in the program. Lastly, the school needs staffs or lecturers. Therefore, Nestle must hire lecturer who is an expert in food and nutrition field.

3.4 Measurable Target According to Sridhar (N.D), measuring quality is actually a reflection of the number or the measurement of quantity. In this case, we as the consultant of Nestle India ltd, actually proposed a target for Nestle India College to be able to get not more and not less than 100 person per six month as we also considered about the number of the classrooms that we are proposing and we also concern about the quality in terms of how well this students will be educated. We assume that with this 20 students per classroom, the lecturer will be able to have in-depth conversations to the students, get to know them and able to educate them with the knowledge that the students may need in advance or in the working world in the future. The purpose of having these type of learning is actually to make Nestle India College produces a good quality and highly-skilled workers in terms of Research and development are especially in Food Science industry. Moreover we are suggesting to Nestle India ltd to actually keep their students personal data, so that in future they can actually track and do regular survey (every 2 years) about the development of those alumni of Nestle India College. From this regular survey we can actually take a look on how far they have actually developed in terms of the quality of living condition. We can assume whether their living condition have been better or not from some variables like for example earning per month, advanced educational degree they can get, and etc. 4.0 The Role of Responsible Leader to Enhance Social Innovation
According to Pless (2007), responsible leadership is defined as a values-based and thorough ethical principles-driven relationship between leaders and stakeholders who are connected through a shared sense of meaning and purpose through which they raise one another to higher levels of motivation and commitment for achieving sustainable values creation and social change. Leader is the centre of everyone. They are the representative of people who choose them. Therefore, leader must take the inclusion of stakeholder and consider the benefit of the majority rather than selfinterest. In order for leader to be responsible, he or she must be considered to demonstrate effectiveness, ethics, and endurance (Susan & Thomas, 2006). Lack of one attribute, leadership would not be considered as responsible.

Effective Effective is referred to the success of achieving an intended outcome. In order to be effective, many encouragements and incentives must be provided to the Nestles staff. A specific target, both long-term and short-term, must be set. So once the staff does not lose motivation along the path of long process. By doing this, it will ensure that the desired outcome is accomplished.

Endurance Endurance can be defined as the ability to endure an unpleasant or difficult

situation without giving up. Social innovation require lots of efforts to make it happens. When the challenge or problem arise, the leader must not be hesitated and held back. Instead, he must be able to endure and overcome the problem.

Ethics Ethics is the conformation to accepted standards of social or professional behavior

or adhere to moral principles. The social innovation of the company must be carried out in an ethical manner. They should not focus merely on the benefits for company.

Geoff Mulgan. 2007. Social Innovation: What It Is, Why It Matters, and How It Can Be Accelerated. Skoll Center for Social Entrepreneurship. Working Paper. Available: www.sbs.ox.ac.uk/centres/skoll/research/documents/social innovation.pdf Drucker, Peter F. (1992). Managing for The Future. Oxford Butterworth
Pless, N. M. (2007). Understanding responsible leadership: Roles identity and motivational drivers. Journal of Business Ethics, 74(4), 437-456.

http://www.nestle.in/Investors/StockAndFinancials/Documents/Nestle%20I ndia%20-%20%20Annual%20Report%202011.pdf http://www.nestle.in/aboutus/Pages/AllAboutNestl%C3%A9.aspx http://www.youtube.com/watch?v=2dyikAANsqs&feature=relmfu http://www.nestle.com/Common/NestleDocuments/Documents/Library/Do cuments/Corporate_Governance/Corporate-Business-Principles-EN.pdf

http://www.scribd.com/doc/4049981/Managerial-quality-and-leadership

http://www.nestle.in/asset-libraries/Documents/profile/Antonio.pdf http://www.adb.org/documents/information/knowledgesolutions/sparking-social-innovations.pdf