Establishing leadership in the Hygienic Manufacturing sector 

Mikkel Svold (00:09):

Innovation really drives competitive advantage, also in the hygienic manufacturing industry. But really, how? And in this episode, we are talking about how to establish leadership in the hygienic manufacturing market, and we want to dive into what really sets market leaders apart and also how innovators, they are actually revolutionizing hygienic manufacturing and the industry as a whole. My name is Mikkel Svold, and today I'm joined by Jacob Esker, who is the president of sales in the Americas of NGI. And you're here in Denmark, so welcome to you.

Jacob Esker (00:43):

Oh, thank you. Thank you for having me. Beautiful weather.

Mikkel Svold (00:46):

Well, you're lucky today then.

Jacob Esker (00:47):

Yes.

Mikkel Svold (00:49):

I want to start off by just zooming in on, what does leadership actually mean in this context, and why is it so important right now? What do you think?

Jacob Esker (01:00):

Ultimately, we provide and go into industries that rely heavily on consumer confidence. Food manufacturing is a direct consumer product, and when you're in the manufacturing side, that's utmost of importance so that it can go away in a second. We've certainly seen that in the last couple of years continue to accelerate, especially the way social media works. So ultimately leaders, there's a saying that goes, "A rising tide lifts all boats," and so being a leader in the industry, you need to be that tide, if you will, to future-proof your designs, to be innovative, to be forward-thinking, to be first to market. Because when we do that, then there's followers, and then when there's followers, everyone gets better, and then we continue to improve the industry. So that is the utmost importance.

Mikkel Svold (01:55):

Actually, it talks right into, what- We just talked to Thies in the last episode about knowledge sharing, information sharing and how that drives innovation. Where one of my questions to him was, when you share knowledge, are you not afraid that your competitors will pick it up and then just overtake you? And what is your answer? I'm going to give the same question to you basically, because if you're the tide, well, all of your competitors will rise with you.

Jacob Esker (02:25):

Yeah, I'm going to use another metaphor. So if you're in a race and you're racing by yourself, you're probably not going to go very fast in a hundred-meter dash. But if someone's behind you, say, Usain Bolt, the adrenaline kicks in and you push harder. So if you do have a competitor come in the space, good. Competition breeds more innovation. More innovation moves the industry forward, especially when you have strong brands, then you can be recognized as an industry leader. So at the end of the day, it's nothing but a good thing when we lack competition, especially if there's not that drive to be innovative, then things just stay stagnant. And that's problematic for the industry as a whole and for companies.

Mikkel Svold (03:10):

And also, the drive for development should come from the industry itself, not from legislation and third party people surrounding.

Jacob Esker (03:21):

Correct. Yeah, because it then moves too slow. Companies have shown, for decades now, that when might and resources are available and capital are available, then things move quickly. Especially in the last three years, we've seen a vaccine development that has been supercharged, and governments of course played a part, but at the end of the day, local industry and corporate environments really made that happen.

Mikkel Svold (03:50):

Yeah, that's absolutely true. It was quite tremendous to witness actually. Now, when we look at the hygienic manufacturing, hygienic innovation and that whole industry, are there any characteristics or practices that differentiates market leaders from regular players in the market or someone who is maybe not pushing the forefront?

Jacob Esker (04:15):

I think when you're a regular player, you are ultimately there to maximize your profit. And there's nothing really wrong with that inherently. There's always going to be someone in the market like that. It is what it is. But if you really want to be a leader, then you need to take risks. And a lot of times that risks includes capital expenditures, it includes putting a certain percentage of your revenue into innovation. And when you put that money there, then things continue to improve. When you're just an industry standard, you're just maximizing your cashflow and money, and so you're just doing your day-to-day and you're just there to improve your efficiency.

Mikkel Svold (05:01):

But Jacob, isn't that a better place to be because pushing money into innovation, well, ultimately that's going to have a cut on your bottom line. Isn't it better to be, not the front-runner, but number two up or five up?

Jacob Esker (05:16):

Well, I would say, you look at industries throughout the years. I mean, if you're the people who are manufacturing typewriters or let's say Apple, that's a really good example. They made computers. If they continue to only make computers, would they be the company they are today?

Mikkel Svold (05:33):

I would probably guess that iPhone is their biggest revenue driver.

Jacob Esker (05:36):

Correct. Yeah, right? Phones existed, but they innovated them. And so we see throughout time, not just in the food manufacturing space, but in manufacturing as a whole, those who do not innovate go by the wayside. And so, yes, you can maximize your profit in the short term for Q1, Q2, but if you want to win in 2028, 2030, you need to innovate.

Mikkel Svold (06:04):

Does that also go for the hygienic sector or hygienic manufacturing and manufacturing in general?

Jacob Esker (06:10):

Of course.

Mikkel Svold (06:11):

Why?

Jacob Esker (06:12):

Again, it comes back to consumer confidence. Hygiene is utmost important to the safety of anybody. When you see any sort of outbreak that leads to a recall, there is a dip in the consumer confidence of that company and that has long-term effects. And if you continue to ignore that and not invest and not innovate, those continue to happen. And so if we can't keep that consumer confidence that we talked about at the beginning, then you'll just get overtaken and then someone will take your market share. And so we need, as the manufacturing side, need to take all our stakeholders and bring them in the room and see where the problems are. And when we take a look at all those issues, we can innovate inside that.

Mikkel Svold (06:59):

Now, NGI, of course, is a Danish based company, but if we jump across the pond to your domain, do you see the consumer focus developing towards more focus on hygiene, more focus on manufacturing processes? Do you see the shift at the consumer level as well? Because, at least from our point of view, that's a couple of steps down the line, because that's even further down than just the machine builders. It's beyond the brand owners, the food producers.

Jacob Esker (07:40):

Yeah, 'cause I think, if you take a step back and look at the food producer himself and just outside the OEM realm, we saw a shift years ago to cleaner eating, to sustainability, to local ingredients, non GMO. And that, to some degree, eating clean can be seen as maxed out a little bit, I think. And so now's a look at is your food safe? And we certainly have seen- Netflix has done a really nice job bringing stuff to light and showing really what's beyond on the food. And people want to know where does their food come from? And so if you're not cleaning plants, and that's being shown by a documentarian, again, it goes back to your consumer confidence in your product. And so no one wants that. They want to be seen as someone, if you eat something, it's a safe product that's also healthy to eat, and we can't have that if we can't focus on the machine manufacturer that actually makes your food.

Mikkel Svold (08:39):

So basically what I hear you're saying is that product managers or people producing or in charge of production and food production, the entire production chain, so to say, they have a tremendous impact on brand value, sales value that comes along with it. Is that something that, should you be frightened by that responsibility or should you be encouraged? Does that make sense?

Jacob Esker (09:15):

I guess it comes down to person, but in my personal opinion, you should be encouraged that you have that value on all stakeholders now.

Mikkel Svold (09:26):

What are some of the challenges that you see in an industry that tries to shift their way into more hygienic design? What are the challenges that you see?

Jacob Esker (09:40):

Ultimately, it's this. We see companies that are... I think the challenges for anybody is to, "Okay, you are that tide. You are that leader and you innovate." But then you stop innovating. You were this. You came out with a widget. That was the most innovative widget that made it more cleaner to design, eat or clean, whatever. And now we've made it and we've created market share. The trouble is then you stop. And then when you stop, it doesn't take its next step forward in progression. And so that's the problematic is when you come up with something super innovative, it's like, "Well, I've got the best thing." Well, someone will come up or the industry will change, and you need to keep looking at improving that product or bringing new products that continue to move everything forward.

Mikkel Svold (10:27):

In practicality, how do you actually do that? Because your company just grew from, say, a good handful of people who did some great innovation, and now suddenly it's exploding and you have say, a thousand employees. And how do you keep pushing that innovative energy? What do you see of best practices out there?

Jacob Esker (10:47):

Ultimately, it's investing in your CapEx, because as you get bigger, you also have more revenue as a company. And so you do have the financial might if you choose to do that. So it's being mindful to take and say, "I'm going to take X amount of my profit every year and reinvest it back into innovation." We see that here at NGI. That's what makes us a very proud company, and others do that too. And so that's why you want to see that out of a leader industry that just doesn't... Okay, we reinvest in our operations or something like that. Yeah, it's still CapEx, but specific CapEx towards R&D and engineers and people who, that's their sole responsibility, is to go out to stakeholders, to go out to the food manufacturers, to go out to your customers and see where the gaps are, and then be the person that fills those gaps.

Mikkel Svold (11:40):

Do you have any concrete examples of companies that does that or some best practices?

Jacob Esker (11:47):

I like to think here at NGI we do that. I hate to be selfish and promote that, but the easiest one is to use your own if we're talking in industry. We can certainly look outside the industry. We talked about Apple earlier, they continue to put out products out there. But if we're talking hygiene manufacturing, here at NGI, we put 15% of all our profits back into R&D, and we've come out with certified products that no one's ever thought of before. And so we like to think and we'll continue to do that and so we hope that we can be that rock for the industry and people can look to us and say, "If they've got a product, we know they've invested, not just to do a product, but to be the leader in the market."

Mikkel Svold (12:32):

Now with evolution of products and methods and ways of producing things and designing things, innovation, it's evolving all the time. And how do you, as a company, can you say, future-proof your market leadership, if, say we push 15% to research and development? Then what?

Jacob Esker (12:57):

Well, I think ultimately it's not just CapEx spend. People can spend money for the sake of spending money, but it's being in touch. You mentioned Theis talked about in previous episodes, it's bringing your stakeholders in and having a conversation and knowledge-sharing through the industry is utmost importance. And it ties into each other because your customers will tell you their problems. Your consumers will tell you their problems, what they want. They'll vote in their dollars. But if you're just ancillary, then you don't really innovate. But if you could talk and bring everyone to the room, then that's how you move it forward.

Mikkel Svold (13:38):

Just a side note here, do you see any red flags or something that will be a telltale that you should be innovating more?

Jacob Esker (13:49):

That's a good question. I haven't really thought through that before. I don't have a really good answer for that one to be honest.

Mikkel Svold (13:56):

But if customers start moving away from you, that would be a pretty good sign.

Jacob Esker (14:01):

That's the obvious one. If people stop buying, then you've got a problem.

Mikkel Svold (14:05):

Yeah, but it also might be too late because it's going to be harder to win them back once they get used to some other sub vendor. Now, Jacob, our time's already up, but is there anything that you think we should add or something that we haven't really talked about?

Jacob Esker (14:23):

That's a good question. I think-

Mikkel Svold (14:27):

There's probably a lot.

Jacob Esker (14:27):

Yeah, we've covered a lot. And so I hope everyone's learned a lot and certainly I hope everyone thinks through and wants to bring other people on board, so we as an industry can come together and make decisions that are good for everybody and that we're just not ancillary in our practices.

Mikkel Svold (14:48):

All right. Jacob Esker, thank you so much for joining. And to our listeners out there, don't forget to... What was it I should say? Smash the subscribe button.

Jacob Esker (14:56):

That's right. Smash it.

Mikkel Svold (14:57):

Hit the subscribe button if you want to-

Jacob Esker (14:58):

Hit subscribe button baby.

Mikkel Svold (14:59):

If you want to listen more on future episodes and get valuable insights, obviously, into this industry of hygienic manufacturing. That's it for now. Thank you so much for listening.

Jacob Esker (15:11):

Thank you so much.