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Becoming Future Fit: Challenges and Opportunities for Consumer Product Companies

| Charlie Ranalli

Faced with changing consumer preferences, accelerating technology change, and competition from nimble startups, today’s consumer products (CP) companies know they need to make major changes to their operations within the next half-decade to remain successful. But while many have started down the path of transformation, progress is uneven, with some companies stalled by a combination of conflicting leadership priorities and a shortage of the talent and capabilities needed to make change happen. Unless companies find ways to overcome these hurdles in the near future, they will fail to achieve their transformation goals and grow increasingly out of step with the demands of tomorrow’s consumers rather than becoming the models of efficiency and responsiveness they wish to be.

These are among the findings in a new MIT SMR Connections/EY LLP Global Consumer Industries research study based on a survey of 370 CP business leaders in 10 countries. Conducted in June and July 2021, the survey asked these leaders about the challenges they face as they endeavor to make major changes in operations ranging from manufacturing and supply chain to finance, marketing, and talent acquisition to meet changing consumer needs.

A multi-disciplinary team of advisors and academics then sliced and diced the results of the survey, identified patterns, and provided provocative recommendations.

“The way business models are architected in the large consumer goods companies, the way they account for profitability and marketing expenses, needs to change. They need to rethink the entire measurement system so they can get a more holistic view of the relationship between them and the customer.”
Len Schlesinger
Baker Foundation Professor, Harvard Business School

Published in a series of Sloan Management Review Articles, a (downloadable) paper and a summary infographic:

Is Your Company’s Operating Model Trailblazing — or Trail-Gazing?
September 2021

3 Priorities for Accelerating Your Operating Model Transformation
October 2021

Becoming Future Fit: Challenges and Opportunities for Today’s Consumer Products Companies
December 2021

Optimizing Operations for Now — and the Future
December 13, 2021

Why Investing in Technology Is No Longer a Choice

| Charlie Ranalli

In a sharp infographic, based on a survey of 229 companies, a team of Bain & Company consultants make a convincing case of why investing in technology is no longer a choice.

The numbers also reflect the challenge of, in their own words, “making the most out of [the] new models” as they found that only 14 are leaders, getting good outcomes like better customer experiences and lower cost, while the next 39% are followers, making progress in adopting modern operating models and architecture, but not getting the outcomes they want. The rest are almost evenly split between learners and late adopters.

Why being a technology leader matters? How about 8 times higher than the rest in customer loyalty ranking and 2.5x more likely to say that they innovate better than the rest of their industry.

Why Investing in Technology Is No Longer a Choice
By Vishy Padmanabhan and Lauren Brom
Bain & Company, August 2021

The New Elements of Digital Transformation

| Charlie Ranalli

The team behind The Digital Advantage: How Digital Leaders Outperform their Peers in Every Industry and The Nine Elements of Digital Transformation reflected on their influential research after surveying 1300 executives in more than 750 global organization.

Their earlier research on digital transformation identified two dimensions through which leading companies outperform their peers: digital capability and transformative leadership capability. They found that the elements of leadership capability have endured, but new elements of digital capability have emerged.

Particularly opportune is the addition of a digital architecture as a critical platform that enables nimble innovation. In my own experience, the lack if a well-designed and implemented architecture prevents the roll-out of initiatives large and small, consuming more technical resources and frustrating business partners.

The New Elements of Digital Transformation
By Didier Bonnet and George Westerman
MIT Sloan Management Review, November 2020

Bridging the Leadership Gap Between Tech and Business

| Charlie Ranalli

IT has a credibility problem – from C-suite stakeholders to individual contributors – who have come to associate IT with bottlenecks, frustration, constraints, and cost overruns. Yet, for many organizations, technology is the business, and it needs to be understood as a critical enabler in every stage of the business cycle, from the front line to the back office.

Based on his experience working with technology leaders, the author, partner with Bain & Company in Chicago, describes how visionary leaders bridge the gap between technology and business.

Bridging the Leadership Gap Between Tech and Business
By Will Poindexter
MIT Sloan Management Review, July 2019

The Agile C-Suite

| Charlie Ranalli

A new approach to leadership for the team at the top.

If a company wants to be very fast, thoroughly transform customer experiences, and systematically outperform competitors, it needs more than many agile teams. A truly agile company requires that the company’s top officials, most, if not all, of the top executives, also adopt agile principles.

Writing for Harvard Business Review, a team of Bain & Company consultants describe how such an agile leadership team works, how it differs from the conventional corporate-style executive committee and other agile teams, and what agile means for the day-to-day work lives of senior executives.

While the job of a conventional agile team is to create innovative solutions to a problem, an agile leadership team aims to strike the right balance between standardizing operations and pursuing innovation.

The Agile C-Suite
by Darrell Rigby, Sarah Elk, and Steve Berez
Harvard Business Review, May–June 2020

Building Digital-Ready Culture in Traditional Organizations

| Charlie Ranalli

Interviewing executives and employees at more than two dozen digital and in-transition companies and then surveying employees in over 500 digital and traditional companies, the researchers identified the values and practices from digital culture that make sense to transplant to traditional companies as they embark in their digital transformation journey.

They identify impact, speed, openness and autonomy as the four key values of digital culture, and then extrapolate them with eight digital and traditional practices to promote innovation without sacrificing the integrity and stability that enable a healthy workplace.

They support the empiric research with real-life examples.

Building Digital-Ready Culture in Traditional Organizations
By George Westerman, Deborah L. Soule, and Anand Eswaran
MIT Sloan Management Review, May 2019

Why You — Yes, You — Need Enterprise Architecture

| Charlie Ranalli

The authors define enterprise architecture as the holistic design of people, processes, and technology to execute digitally inspired strategic goals. They argue that every unpleasant customer interaction via a company app, website or telephone call exposes architectural inadequacies. Left unsolved, these issues will destroy formerly great organizations.

They suggest adopting three principles to tap the benefits of enterprise architecture: break processes and products into components, empower cross-functional teams, and allow business design to influence strategy.

Jeanne Ross and Cynthia Beath are coauthors of Designed for Digital: How to Architect Your Business for Sustained Success (MIT Press, 2019). Ross was principal research scientist for MIT’s Center for Information Systems Research for almost 27 years. Beath is professor emerita of information systems at the McCombs School of Business at the University of Texas at Austin.

Jeanne Ross and Cynthia Beath, “Why You — Yes, You — Need Enterprise Architecture”
MIT Sloan Management Review, August 2020

The Digital Future: A Game Plan for Consumer Packaged Goods

| Charlie Ranalli

Written six years ago, the robust analytical groundwork makes this paper a good read today. Furthermore, many of the recommendations are mainstream strategic plays in present-day toolboxes.

After outlining realities and challenges and how that game has changed, the authors argue that CPG companies should quicky move beyond establishing a digital presence—a website, some digital advertising, a presence in social media—and fully integrate digital into their operating model, build a big-data analytical capability, pursue a multichannel (or omnichannel) strategy, or tailor their product offerings to the digital or e-commerce marketplace

Their recipe to Playing the New Game to Win:

  • Develop an integrated strategy
  • Build brand equity online
  • Revisit category management across channels
  • Partner with retailers
  • Rethink supply chain configuration
  • Test, learn, scale
  • Build an adaptive organization
  • Manage internal tensions

Retrospectively, a missing item in this top-level list is advanced Data Analytics.

The Digital Future: A Game Plan for Consumer Packaged Goods
Patrick Hadlock, Shankar Raja, Bob Black, Jeff Gell, Paul Gormley, Ben Sprecher, Krishnakumar (KK) S. Davey, and Jamil Satchu
Boston Consulting Group, 2014

Welcome to the Digital Factory: The answer to how to scale your digital transformation

| Charlie Ranalli

At a time when our research reveals that just 16 percent of executives say their company’s digital transformations are succeeding, companies we have worked with over the past three years using the Digital Factory (DF) model have been able to:

  • bring products to market faster (in six months versus two years)
  • do more with existing resources (eight product launches per year versus one or two)
  • create dramatically reimagined experiences (opening an account in five minutes versus ten days)
  • reduce tech development costs by a third (fewer managers per engineer)
  • attract the great talent required to compete in a digital world

We see reductions in management overhead of 50 percent for technology teams in the DF, 70 percent in the number of business analysts needed to write technology requirements, and, as test automation becomes the norm, a drop of 90 percent in the number of testers.

Welcome to the Digital Factory: The answer to how to scale your digital transformation
By Somesh Khanna, Nadiya Konstantynova, Eric Lamarre, and Vik
McKinsey Digital