The consumer goods industry is at this critical turning point. The established players are being forced to listen as owning and selling a big global brand no longer guarantees survival. Changing consumer behavior—driven by the adoption of innovative technologies and wider access to information—and an avalanche of disruptive new digital competitors has led to falling sales and reduced market share.
So how can companies that operate across the consumer goods industry respond? The answer: relevance at scale. In the face of extreme competition, creating relevance and consumer appeal is now critical to stimulate new growth and it’s coming in many forms as companies go to great lengths to drive competitiveness.
The rise of plant-based, gluten-free, non-GMO, natural and organic products are a testament to the power consumers have today, which is influencing the trajectory of consumer goods companies and the products they develop and sell.
It calls for consumer goods companies to get closer to their customers to better anticipate their needs and cut the ties with those that prevent them from operating with greater speed and agility. It means putting the individual front and center in their business strategies—all the way from product innovation to point-of-sale and beyond.
That’s something a lot of companies are still struggling to do right now. The fact is, consumer goods companies can begin to compete by developing superior products, more relevant services and more personalized experiences to drive growth while keeping a careful eye on costs. However, there is a balance to strike. On the one hand, they need to keep current operations ticking and deliver on the near-term expectations of the stakeholders.
Successful companies will be those who start painting a vision of the future and then use it to frame the transformational path required to take the current business from where it is today to where it needs to be tomorrow. It means putting the consumer at the heart of their growth agenda. To do so, they will become faster, more agile and deliver relevant products, services and experiences that can be scaled and adapted around consumer and employee needs as they emerge.
The rise of game-changers such as craft ale, streaming video services and ride-sharing platforms demonstrate that growth is possible for consumer propositions that are truly relevant. Just look at Voodoo’s recent renovation of its production processes. The French gaming company combined 3D printing, robotics and custom software to create an agile, iterative design and production system. In contrast to traditional production lines, Voodoo was able to respond to the fidget spinner trend two months before Chinese manufacturers entered the market.
Understanding the challenge that lies ahead is only one part of the puzzle. Injecting competitive agility has implications for the skills needed to drive growth by delivering relevance at scale for a marketplace of millions of individuals. Accenture Research backs this up with just over half (51%) of CPG executives saying their workforce lacks the skills to drive growth and agility.
And they understand the need to move from work that is currently “activity-focused” to work that is “outcome-focused,” something they expect to decrease from 43% to 27% in the next three years.
So, how can consumer goods companies balance cost and growth? There are five key strategies they can adopt. Together, these offer a crucial “North Star,” guiding the path to new growth.
Operating model: Operationalizing change requires a fundamental realignment of the operating model. This entails running two parallel organizations that each have specific governance, talent and success metrics. One is grounded in scale and keeps the mega-brands running. The other is grounded in flexibility and launches, scales and retires the new, smaller brands.
Processes: Use data and sophisticated customer analytics to strengthen relationships and meet consumer needs for relevance by delivering something that’s “just right” for each individual consumer in each moment. From solely using data to keep brands profitable to using it to curate messages, pricing and promotions to engage directly with people.
Technology: Use advancing technology innovations to radically change ways of working. Reduce operating costs and free people to focus on creative and strategic tasks.
People: All levels of the organization need learning opportunities to develop key skills that support agility and growth. Drawing on the broader ecosystem of partners, suppliers and retailers can help provide hard-to-get or short-term skill requirements.
Culture: The imperative for leaders is to create and sustain a culture that puts consumers front and center of the growth strategy.
Creating an intelligent adaptive organization that can sense and respond to change, developing an ability to continuously optimize itself so that it can deliver relevance at scale isn’t just a good idea–it’s essential for competitive advantage.
Laura Gurski is senior managing director, global lead, Consumer Goods & Services at Accenture.