Innovation

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

Agility@Scale: Solving the growth challenge in consumer packaged goods

| Charlie Ranalli

Conducting research for a customer project I came across this paper.

The premise is that the reconfiguration of the US market has undermined traditional growth models for consumer-packaged-goods companies, particularly large ones.

The authors argue that there is no single solution to the growth challenge; rather, changes along multiple dimensions are necessary.

While not directly focused on digital innovation, the correlation between what growing consumer packaged goods companies are doing and the traits of digital leaders is astonishing:

  • Build an agile, streamlined organization
  • Develop triple-A capabilities: Advanced analytics and automation
  • Fuel growth through agile resource reallocation
  • Ditch the stage gate for ‘test and learn’ innovation
  • Reset customer collaboration: E-commerce and small format
  • Deliver next-generation consumer engagement: ‘Consumer 3.0’
  • Use Agility@Scale to go broader and smaller

Highly recommended reading for executives in consumer packaged goods companies revising their strategies to revitalize growth strategies.

Agility@Scale: Solving the growth challenge in consumer packaged goods
Jan Henrich, Ed Little, Anne Martinez, Kandarp Shah and Bernardo Sichel
McKinsey & Company, July 2018

Five major trends which will underpin another decade of digital innovation

| Charlie Ranalli

EY surveyed senior leaders and executive management team members from 500 corporations and 70 start-ups across a range of global geographies and sectors, in order to pinpoint where they are on their transformation journeys, and where they are heading.

According to the research, today, almost half (44%) of corporate companies said they are making good progress with their transformation plans and are starting to embed them across their businesses. An additional 4% of corporates said they were even more advanced, with their transformation fully embedded and optimized across the organization. In two years’ time, two-thirds (66%) of corporates expect to be making good progress, and 17% expect their transformations will be fully embedded – demonstrating that they are on a steep transformation maturity curve.

But because transformation is a continuous cycle, it is never complete, and companies will need to continually evolve their programs to meet customers’ changing expectations.

EY identifies five major trends for the next decade of innovation:

  1. Cloud is the digital foundation
  2. Businesses are pivoting around data
  3. Experience is everything
  4. Ecosystems and partners help bridge the skills gap
  5. Security and privacy are soaring in importance

Five major trends which will underpin another decade of digital innovation
By
Jim Little
EY Global Microsoft Alliance Lead and EY Americas Technology Strategy Lead

The Digital Innovation Hub

| Charlie Ranalli

The Digital Innovation team is the source of vision, knowledge and experience in how technologies will transform the way a company does business. It is the hearth of the Transformation program and will cement the ability of the organization to innovate identifying and adopting future technologies beyond the initial change initiative.

Name and purpose

While the name may change depending on company size and convention (e.g. Digital Innovation Center in larger corporations, Digital Innovation Team in smaller ones, Digital Excellence Center after becoming a Digital leader) the purpose is similar: a compact but assertive group of specialists to lead the design and implementation of the initiatives that bring to life the Digital Transformation.

Responsibilities and influence

Members of the Digital Innovation Team collaborate with business teams to identify, assess and eventually develop innovation opportunities enabled by technology, and then guide the IT teams to implement and manage the relevant systems. Some organizations call them Product Owners, although this may be more or less applicable depending on industry and scenario.

They are also influencers and a support function, the go-to experts when line of business leaders or teams come across ideas, opportunities o problems that could be addressed with technology. They partner with and empower the less technically-savvy to help them be Digital innovators.


Digital Innovation Hub

  • Contribute to the Digital Strategy
  • Monitor industry and competition
  • Research trends and innovations
  • Imagine novel applications of technology
  • Assess feasibility and potential impact
  • Develop and lead initiatives
  • Drive business outcome
  • Ensure alignment between business and technology

Organization

The team is usually structured to match the mayor “themes” or initiatives that form the basis of the Digital Strategy: Data Analytics, Customer Engagement, Digital Marketing, Process Automation, and so on. They are part of the same team (formally or virtually) to ensure that the plans they manage are aligned and connected.

In smaller organizations, this may be one of only two functions that report to the Chief Digital Officer, and in most cases will rely on a sister function, the Transformation Office, to orchestrate the Digital Strategy, the rollout of projects and drive change.

The Digital Innovation team is one -if not the- most impactful and cost-effective investment of the Digital Transformation program. Independent from line of business organizations and IT, they will focus on innovation regardless of short-term pressures or complacency.

Why Software Is Eating the World

| Charlie Ranalli

Technology entrepreneur and Venture Investor Marc Andreessen masterful piece was published by the Wall Street Journal in 2011 and a decade later still feels fresh.
He made a compelling case that entire industries – from banking to agriculture – to are being upended by increasingly affordable cloud technology, broadband internet, the popularity of mobile devices, and smart software.

Why Software Is Eating the World
by Marc Andreessen
Cofounder and General Partner, Andreessen Horowitz

Unlocking the Customer Value Chain: How Decoupling Drives Consumer Disruption

| Charlie Ranalli

There is a pattern to digital disruption in an industry, whether the disruptor is Uber, Airbnb, Dollar Shave Club, Pillpack or one of countless other startups that have stolen large portions of market share from industry leaders, often in a matter of a few years.

By decoupling the customer value chain, these startups, instead of taking on the Unilevers and Nikes, BMW’s and Sephoras of the world head on, peel away a piece of the consumer purchasing process. Birchbox offered women a new way to sample beauty products from a variety of companies from the convenience of their homes, without having to visit a store. Turo doesn’t compete with GM. Instead, it offers people the benefit of driving without having to own a car themselves.

Unlocking the Customer Value Chain: How Decoupling Drives Consumer Disruption
by Thales S. Teixeira and Greg Piechota

What’s Really Disrupting Business? It’s Not Technology

| Charlie Ranalli

Technology isn’t the main force hobbling many companies today—it’s changing customer needs and expectations.

Supporting and illustrating one of the two principles originating this blog that digital transformation is not about technology, marketing professor Thales Teixeira argues that successful disruptors are quicker to detect and cater to emerging customer needs than larger competitors, often with access to similar technologies and similar amounts of technology.

Mr. Teixeira discusses several cases of newcomers entering mature markets, and how incumbents reacted or adapted.

What’s Really Disrupting Business? It’s Not Technology
by Danielle Kost
Harvard Business School Working Knowledge, February 2019

See also: Unlocking the Customer Value Chain: How Decoupling Drives Consumer Disruption