Competition winner: The Maggi Noodle Safety Crisis
in India (A), (B) & (C)
Who – the protagonists
Paul Bulcke, CEO, Nestlé
Nestlé was a 149-year-old, food and beverage multinational company (MNC). Henri Nestlé had created the company by developing a successful infant cereal, Farine Lactée.
Since then, the company had diversified into many segments beyond baby foods, including coffee, drinks, dairy and ice cream, cereal, bottled water, chocolates, pet care products, and, most recently, Nestlé Health Science and Nestlé Skin Health.
Nestlé’s predicament was fundamentally relationship based. Although its product was safe and the packaging legally permissible, it failed to maintain the trust of its customers and sales suffered dramatically as a result. The company had to consider what obligations it had to unsophisticated customers that it did not have to more sophisticated ones.
In June 2015, the local government in Delhi banned Maggi Noodles, Nestlé’s flagship product in India. It said that according to government lab tests the product contained excessive lead content. Nestlé disputed the government tests, noting that internal and third-party tests showed the product to be safe. Maggi sales began to plummet.
Nestlé’s headquarters are in Switzerland. It is the largest food company in the world, operating across 194 countries.
‘The most important thing we have is trust, which is fragile and we can lose that very fast. . . . Trust is built slowly. We earn it day by day. We can wipe that out with one mistake. That’s the biggest challenge we have.’ – Paul Bulcke, CEO, Nestlé
Other local governments and India's federal food safety regulator were also considering a ban on Maggi Noodles and Nestlé must decide how to respond. Options include suing the regulators and withdrawing the product, but such a move could affect up to 25% of Nestle's India sales.
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Ref 9-116-013, 9-116-014 and 9-116-038
Karthik Ramanna and Radhika Kak
The authors explain why they chose to write a case series and why the cases are so compelling to teach in the classroom.
We are deeply honoured and humbled to have won this competition, especially given the very distinguished panel of nominees and other winners.
Karthik is now helping to build a new case centre at Oxford’s Blavatnik School. He says: ‘I want to bring this powerful pedagogical method to the classrooms where some of the world’s most promising public leaders of tomorrow are educated. And for Radhika, this is a powerful recognition of her promise and potential, given that this was her very first case!’
The situation depicted in the case was fast evolving and the protagonists faced a series of very challenging decisions over the course of a few weeks. Pedagogically, it made sense to present these as separate cases – students first read the ‘A’ case before class. After discussing this in class for about 40 minutes, they are given an update via the ‘B’ case and faced with a new set of decisions.
Between a rock and a hard place
Karthik read about the situation depticted in the case series as it was unfolding in the media and wondered what he would do if he were the CEO of Nestlé – it seemed like the company was caught between a rock and a hard place.
‘As I was considering why this was such a difficult decision, I realised that it was because it highlighted the very important principle of ‘capability asymmetries’ that I taught in my class on leadership and ethics. And so an idea for a case was born!’
The cases give rise to a lot of disagreement in the classroom. But that’s what makes them so compelling – there’s no real ‘correct’ answer. It’s a question of judgement and values – and about defining who you want to be as a manager and as a human being. Ultimately, the case method is about education for judgement and about building empathy for those who have different lived experiences to your own. All this makes you a better leader.
About the authors
Karthik Ramanna was previously Professor of Business Administration at Harvard Business School and is now Professor of Business & Public Policy and Director of the Master of Public Policy Programme at the University of Oxford’s Blavatnik School of Government and a Visiting Scholar at Harvard Business School.