Interpreting the RULES OF RISK
Associate professor of management practice at London Business School John Mullins explains how an entrepreneurial attitude is essential to business success and outlines the mindsets that defy conventional thinking
I n the mid-1970s, Éric Favre, a Swiss engineer in Nestlé’s packaging department, was beginning to tire of his Italian wife’s teasing that the Swiss knew nothing about coffee. He and his spouse, Anna Maria, decided that a holiday in Italy was in order so that she could educate her sceptical husband about what real coffee tasted like. Exploring the cafes in Rome, the couple discovered the Caffè Sant’Eustachio, which had a much longer queue of coffee enthusiasts than others, all lining up for its espresso. A barista named Eugenio told them the secret: aerating the coffee by pulling the lever not just once, but at several short intervals. “It’s chemistry: oxidation brings out all the flavours and aromas,” Favre later explained. Infatuated, he decided he would attempt to build a machine that would replicate Eugenio’s process and brew espresso of which Anna-Maria would be proud. Back home in Switzerland, Favre began tinkering. But Nestlé, the global leader in instant coffee with a 30 per cent market share, wasn’t particularly interested. Favre persisted but, after a couple of false starts in Nestlé’s office and food service businesses, by late 1987 the project was going nowhere. The following year, in a rare move for Nestlé given that it
almost always promoted people from within, an outsider was brought in to figure out what to do with Nespresso. Jean-Paul Gaillard had built a successful line of Marlboro Classics apparel for tobacco company Philip Morris, the maker of Marlboro cigarettes. He quickly tore up the former strategy. “At the original launch, the product was wrong, the positioning was wrong and the targeting was wrong. It had cost a lot of money and brought nothing,” he recalled. Observing the emergence and growth of Starbucks in the US and others like it in Europe and the UK, Gaillard decided to change the focus and target upscale coffee drinkers, figuring that consumers learning to enjoy espresso might like to make it at home. “I wanted to create the ‘Chanel of coffee’. The idea was to keep it to the level of people who have a doorman.” Breaking with convention Gaillard not only broke with Nestlé’s mass- market ethos and the company’s penchant for promoting only from within, among other things, but he convinced his superiors that, by targeting a narrow market with an exclusive offering, he could succeed where Nespresso’s earlier attempts had failed. It took years of
John Mullins is associate professor of management practice at London Business School and author of Break the rules! The 6 counter– conventional mindsets of entrepreneurs that can help anyone change the world (Wiley, £21.99)
38 | Ambition | FEBRUARY 2023
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