Mr Peter Brabeck, Nestlé chief executive, likes to think his company is different and its approach to business is timeless. But he is also the first to admit that the world's largest food and beverage group has been forced to change in a manner that makes evolution appear more like revolution for the 135-year-old Swiss pioneer of globalisation.
"There were three big events that changed the traditional picture of how we ran the company," he says, gazing out of his office in the small Swiss town of Vevey.
"The first was the creation of economic regions, such as the European Union, Nafta (the North American Free Trade Agreement), Asia and Mercosur. The second was the Uruguay (trade) round, which had enormous impact on the food industry.
Until then it had been a sacred principle that every country had to be able to feed itself. The third change was information technology."
He does not dwell on two other incidents that have shaped the company's thinking. The first goes back to 1923 when Nestlé, already a global company, nearly went bust and shed 20,000 jobs as a result of the depression that followed the first World War. The company vowed never again to indulge in massive one-off redundancies. It continues to open and close factories - as many as 55 last year - but always seeks to minimise job losses.
The second incident continues to haunt the company. An 11-year boycott of its products between 1973 and 1984 forced Nestlé to adopt some of the most stringent internal and external quality and marketing controls introduced by a multinational. It was accused of pushing powdered baby milk in poorer developing countries that allegedly caused illness to millions of infants. The main problem, it emerged, was the use of unclean water and consumer ignorance.
The company introduced a rigid corporate charter for its infant formula policy in developing countries, complying with World Health Organisation guidelines. Nestlé managers are now disciplined for breaching the rules and staff are encouraged to report unethical behaviour to an independent ombudsman.
Nestlé has done much to respond to its critics. But consumer activists still suspect the company, a symbol of globalisation, of clever public relations to win over pressure groups. The issue is not so much financial for Nestlé. Baby milk is only one element of its nutritional businesses, which in turn were only a modest contributor to its 85 billion Swiss francs (€58 billion) of food and beverage sales last year. But it hurts Nestlé's carefully nurtured "good food, good life" image.
For if, as Mr Brabeck claims, Nestlé is different from other multinationals, it is because of its peculiar history and its social values.
"Nestlé was created by foreigners who discovered Switzerland," he explains. "Henri Nestlé was a German with a social conscience who invented baby food as a way of curbing infant mortality in Switzerland. But the American Page brothers, who founded the Anglo-Swiss Condensed Milk Company which merged with Nestlé in 1905, had at least the same amount of influence on the company's early development."
Mr Brabeck likes to dwell on the company's history to explain its culture and long-term approach.
"Our top management has all been here between 30 and 40 years. All of us have been approached by headhunters offering jobs where we could have doubled or tripled our salary. None of us goes. Why? Because the social values we have are so strong that once you commit to them, you live them. This is a big difference with other companies."
Another difference is that Henri Nestlé and the Page brothers realised from the beginning that Switzerland's local market was too small. If they were to grow, it had to be internationally. But while European and US competitors followed the same philosophy by exporting from their headquarters, Nestlé built a network of foreign factories with strong local roots.
However, this all changed with the emergence of new economic regions, coupled with the Uruguay round of trade negotiations. Nestlé's heavily decentralised approach to manufacturing suddenly became redundant. Setting up regional factories to supply more than one country was a "revolutionary breakthrough" for the food industry. Nestlé could now concentrate production on fewer, more efficient factories inside regional blocs. Over the past four years about half its factories have been closed or sold.
Mr Brabeck has also been streamlining Nestlé's core industrial business. The company still wants to be the leading confectionery manufacturer. But that does not mean it has to be a chocolate-maker. Until last year it had a fishing fleet in Norway and was growing peas for Unilever.
"We do not need this any more," says Mr Brabeck, who is increasing emphasis on areas where research and development can add value to Nestlé products.
IT is the third big force for change inside Nestlé. A $1.8 billion (€2 billion) cost-saving project aims to adapt the tools of the new economy to Nestlé's old-economy activities. It requires the biggest internal reorganisation in the company's history, with a common IT platform that will permit standardisation of the company's global business processes without sacrificing its decentralised marketing structure - perhaps its greatest strength. Nestlé will at last discover how many products it sells.
All these changes are designed to improve Nestlé's competitiveness and Mr Brabeck's publicly stated objective of 4 per cent real internal growth per year.Mr Brabeck insists that one of Nestlé's main strengths is its long-term perspective. He is not overly bothered about turning Nestlé into a Wall Street darling with a US listing and full quarterly reporting.
With a market capitalisation of SFr150 billion and a 3 per cent voting limit on its shares, Nestlé is anxious to discourage any corporate raider from making a run at the company.
The recent spin-off of a minority stake in Alcon, a $10 billion US eye-care company, reflects Mr Brabeck's increasing efforts to increase the visibility of the value hidden inside his group.
