Innovation has always been the bedrock of consumer goods companies’ success. But in today’s technology-dominated digital world, innovation doesn’t function like it used to. The strategies of the past hold less sway, and brands are having to rethink long-held beliefs about what innovation really means.
We’re entering an era in which digital technology is so entrenched that we take it for granted. Consumers communicate their needs instantly in the moment—and expect gratification immediately. It means that instead of putting the brand at the center of their strategies, consumer goods companies need to ensure the consumer is at the heart of everything they do.
Competitive advantage now lies not only in the products a company makes but also in the myriad services and capabilities it offers alongside.
Meeting the consumers’ individual needs, at exactly the right moment, means that innovation is now about the “how” just as much as the “what.” So hyperpersonalization and on-demand fulfillment become just as important as dreaming up even better mass-market products.
In fact, according to Accenture’s 2019 Technology Vision for Consumer Goods report, 87% of leaders agree that customization and on-demand delivery will be the forces behind the next big wave of competitive advantage. It makes delivering relevance at scale the essential play for brands looking to drive competitiveness and growth.
Look at PepsiCo’s new artificial intelligence (AI)-enabled trend predictor engine, which tracks and analyzes online conversations to help determine what products, ingredients, brand extensions or other innovations it might introduce in the future.
Or what about Beam Dental's smart toothbrush? It tracks usage and offers personalized advice on improving customers’ dental hygiene. It can even be used to lower premiums on the company’s own dental plans.
These innovations show we’ve come a long way from traditional product-focused research and development.
Innovation in the Post-Digital World
In fact, all consumer brands must be ready to draw on a new set of capabilities to provide the sources of insight and inspiration they need to innovate in the post-digital era.
That means enhancing employee abilities through smart technology, data and analytics (the “human+” workforce). Consider how Italian coffee brand Illy is using an AI engine to analyze consumer and product data to optimize offers and predict customer subscriptions.
Post-digital brands also ensure they’re able to capitalize on “momentary markets.” Modern consumer markets are complex entities in which a multitude of individual opportunities emerge rapidly and exist only fleetingly. To capture these momentary markets when they arise, companies need exceptional levels of agility and insight. There are no second chances to get it right.
Leading brands are already starting to acquire these capabilities. Coca-Cola’s marketers, for example, are now using big data analytics from a staggeringly high number of data points around the world—even from individual vending machines—to guide its brand and marketing decisions.
To capitalize on momentary markets, brands must be able to sense and identify consumer needs before the competition—potentially even before consumers themselves. That means owning the direct channel to the customer and using a wealth of data points to understand and predict behavior.
Getting Ready for What’s Next
To seize the manifold innovation opportunities on offer, there are three steps consumer goods and services companies should be taking.
First, brands should be exploring the possibilities of the next wave of technology—specifically distributed ledgers, AI, extended reality and quantum computing (the so-called “DARQ” technologies). Most consumer goods companies (as much as 88%) are thought to be already experimenting with at least one of these technologies, recognizing that they will likely form a core part of their businesses in the post-digital era.
Second, brands should be building a “human+” workforce. Future innovation will require a workforce that is fully comfortable with and immersed in digital technology. Successful companies are already adapting to this new reality, establishing workforce models that integrate their best employees and on-demand freelance resources with intelligent machines.
Third, companies should be securing their ecosystems. Ecosystems of partner organizations let consumer goods companies innovate far more effectively than they could by going it alone. When each participant has the confidence that data can be shared securely, the ecosystem is better able to spark new ideas and develop the innovations that will provide future competitive advantage.
Forward-thinking consumer brands are well underway on this journey. They recognize we are on the cusp of an entirely new era—one in which baseline consumer expectations are continuously raised higher and higher. To keep up, smart brands are rethinking what innovation means and how they can deliver relevance at scale to a marketplace of millions of individuals.
Laura Gurski is senior managing director and global lead for the Consumer Goods & Services practice at Accenture.