Even for an iconic brand such as Gerber, a division of Nestlé, social media and evolving generations of consumers have dramatically changed how business is done. This is just as true for the company’s legal team as it is for every business function throughout the enterprise. According to Kevin Goldberg, vice president and general counsel of Nestlé Nutrition, the factors driving those changes have also pushed corporate legal teams to redefine the relationships they have with the clients they serve.
Attorneys no longer act—or are seen—simply as advisors who operate separately from daily operations. They must be embedded business partners capable of providing real-time direction and insights that guide both compliance and business priorities.
“The days are gone when lawyers quote the law, issue edicts about what can and can’t be done, and try to avoid risk at all costs,” Goldberg explains. “We have to understand the business and the value of the activities we’re involved in well enough to develop different scripts for different circumstances and are able and willing to challenge sacred cows.”
Letting go of legal control to embrace social media
Gerber’s first foray into Facebook is one such example. Ten years ago, Goldberg wouldn’t have considered social media because, among other issues, it means constant exposure to risk and “losing control of the conversation”—both traditional cornerstones of legal and brand management best practices. However, being open to new strategies and values led to quite a different assessment.
“We learned that we couldn’t unilaterally determine every priority anymore, but we could respond quickly and effectively to consumers’ priorities,” Goldberg says. “We had to be open to accepting and addressing the challenges that accompanied new opportunities in a new environment.”
Flexibility and adaptability also led Goldberg to introduce new practices within his department. His team is responsible for reviewing thousands of contracts covering vendors and deals from around the world. To make the best use of available resources to manage that volume, he decided to change the threshold that determines which agreements are more highly scrutinized.
The practice is based on comparing current value to anticipated value, and is guided, in part, by the monetary or marketing value of a contract. The larger the value to the business, the more valuable the time and effort required to review it.
A smaller contract may have the same level of risk, but the potential consequences—if they occur—can be effectively dealt with both economically and legally at a later time to produce a desirable outcome.
“By changing the threshold that determines which items are reviewed, we’ve become more efficient, more timely, and more agile around priorities,” Goldberg says. “We’ve seen no changes in compliance levels or incremental risk, so we wouldn’t have been achieving any additional value if we’d continued reviewing contracts that are now below the threshold.”
How legal can drive profits
Gerber’s legal department has also been positioned as a profit center for the company. When the leadership team reviews financial targets, Goldberg finds ways for the legal team to contribute to those goals by identifying opportunities to bring financial value to its operations. This can occur by proactively monitoring legal events that may not be directly related to the company, such as state-based rebate programs or claims against a supplier for defective ingredients. In such cases, he and his team are able to leverage those external developments, which can result in recouping millions of dollars for the company.
An important philosophical approach for Goldberg is to optimize risk by gaining a better understanding of its consequences. For example, even though a particular marketing message may be subject to a high degree of scrutiny by a specific regulatory framework, the content may be so essential to communicate to consumers that it outweighs the risk of drawing regulators’ attention.
That was the case when Gerber made claims about its infant formula helping to reduce colic. The claim was challenged by five different attorneys general, but after presenting the science behind the conclusion, the company was actually praised for support and the proven benefit the product provides.
“Even if a particular business decision will almost certainly result in a lawsuit, we have to stay true to our mission—‘Anything for Baby’—and at least temporarily assume the role of marketers to develop innovative ideas that go beyond saying ‘yes’ or ‘no’ to clients,” Goldberg says. “There’s risk in absolutely everything, so if our philosophy is strictly avoidance at all costs, then we’re doing something wrong.”
A consumer compliance mind-set
For Goldberg and his team, this creative mind-set has developed in tandem with the evolving expectations of today’s consumers, which brings the discussion back to the immediacy of social media and the concept of “consumer compliance.” That is a standard that differs significantly from state and federal requirements. Even if the company fully complies with all statutory guidelines, it still has to answer to the mother of a newborn who wants to know exactly where her baby’s food came from.
“A new mom doesn’t care that we’re an industry leader, about how complex our compliance processes are, or how meticulously we review claims,” Goldberg says. “But she does want to know about our tracking capabilities to make sure her baby’s getting the best nutrition. That’s why we have to be more agile, more creative, and involved in every conversation about the brand.”
It’s that insight and understanding that enables Goldberg’s legal department to take such an important role in preserving Gerber’s reputation of reliability, integrity, and trust.