The Story of Nespresso - Learning from an Innovation Marathon

Hand-on-heart - I don’t own a Nespresso. However, the Nespresso brand has taken the world by storm - thanks, it seems, to a nifty piece of technology and the ever-sculpted George Clooney.

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However, Nespresso is a great example of an innovation marathon - a concept that actually took years to take off. Fortunately, Nestle recognised this early on - and continued to invest in Nespresso in a smart way.

See, some ideas take off overnight - think of MySpace, YouTube or Netflix. The technology is ready to go, the demand is there - it’s a matter of moving fast and getting the service in the hands of your market as quick as possible.

Other ideas, however, may take years to develop. Some require the customers learning a new skill or behaviour, whereas others depend on a new infrastructure, technological breakthrough - or even the development of complementary products and services.

This doesn’t mean that these opportunities should be dismissed outright - but the business should be aware of the difference in innovation type - and invest accordingly.

Nestle bought the first patent for the Nespresso in the 1970s - years before Starbucks mass franchising. Nestle invested small amounts to develop the Nespresso further over this decade - developing the pump and capsules that were required to make this a great product.

In the mid 1980s, Nestle moved Nespresso out of the nest, and formed a 100% owned affiliate. It took another 15 years for the growth-rate to take off. 

Yet, in 2011, Nespresso reported revenues of $4 billion NZD.

Over this lengthy time, Nestle saw their investment in Nespresso as an exercise in learning and business. They recognised that there were significant hurdles to overcome:

  • The technology had to be refined;
  • Customers had to replace their current coffee machine;
  • Customers had to learn a new way to make coffee.

But Nestle saw the size of the opportunity, invested small regular amounts and gave the idea the opportunity to succeed.

We tend to think that if an idea can’t be a fast win - it’s not valuable at all. Instead, adapt your innovation approach for valuable marathon innovations by conserving resources, continuing learning and manage the tension of commitment to the opportunity yet tentative in terms of investment.