2016 Review & Outlook: Innovation Trends

Innovation is not limited to new product launches, and the suggested uses of data and analytics the contributions in this section focus on, bring that point home. From providing consumer insights to building collaborative relationships with retailers, analytics can support both strategic and tactical innovation throughout an organization.
 
Mark Albers
VP, Business Insights and Analytics (BI&A)
Hitachi Consulting
 
As part of the transformation to a digital business, CG companies are spending resources collecting more “event,” contextual, and consumer data in advanced analytical solutions across the enterprise — pricing, inventory, supply chain, marketing, transportation, consumer interaction, and vendor collaboration.  Unfortunately, many of these same companies are struggling to capture the value of the new insights as they are unable to efficiently translate the new insights into decisions and do this as close to the data “event” as possible.  Future trends will focus on improving the effectiveness and efficiency of the data to decision-making and action-taking process by applying more automated decision-making technologies and Machine-to-Machine communication.

Technology advances will see consumers and CG companies using more data from new sources such as Advanced Video Analytics and Internet of Things (IoT) sensors in homes, stores, clothing, transportation, and people. CG companies will augment centralized DW, BI, and Analytics with de-centralized and even edge analytics to apply intelligence right at the point of data capture by leveraging smart sensors and smart data-streaming technologies.
 
To address these trends, many CG companies will require an updated BI, data and analytics innovation roadmap to incorporate edge analytics, advanced analytics, IoT, and smart data streaming.
 
 
Brian Carboni
Marketing Director for CPG-Retail Industry
Dassault Systemes
 
Innovation has always been a critical element to the success of brands and companies. Traditionally, innovation was won by brands delivering on a consumer insight with the right blend of benefit and value. Research departments led the charge by learning from consumers and compiling ideas. Today, with the availability of multiple sources of data (POS, Social Media, etc.) coupled with world-class analytics … more companies have access to more consumer information than ever before. The real challenge facing the industry now is about who can deliver innovation the fastest. Businesses now look to IT as a way to accelerate the race to win the consumer. It’s not just IT that facilitates program management or consumer research, it has extended to IT in R&D with formulation, in Creative with package design, in Manufacturing with production agility and at the shelf with design and collaboration with retailers.
 
 
Doug Caywood
WW Industry Director, Consumer Goods
Enterprise & Partner Group
Microsoft
 
Establishing an Insights Driven culture across your enterprise and within your industry ecosystem will be a requirement to outpace competitors!
 
Empirically knowing “WHY” things happened, or “WHAT” is likely to happen, is now within reach, just ask Coca-Cola’s top 10 bottler ARCA Continental. This can be achieved by employing strategies and new technologies to enable domain knowledge based data science modeling across your business and using data you have access to today. Over time, the need to drive your business based on actuals and insights, rather than history and schedules will become a reality. This is enabled by new and unparalleled cloud analytics services that can crunch through potentially limitless data, both highly secured on premise data as well as cloud stored private and public data. Enterprises of all sizes can now unlock insights on why things happen, creating amazing new business value and competitive opportunities. Additionally, BI and analytics solutions can now be consolidated and integrated directly into user’s tools to enable instant execution providing huge top line growth and bottom line savings opportunities.
 
 
Jon Copestake
Editor, Cost of Living, Liveability
Chief Retail & Consumer Goods Analyst
The Economist Intelligence Unit
 
Data is taking an ever more visible role in corporate strategies. In a recent survey by the Economist Intelligence Unit almost 60 percent of firms already use data to generate revenue and over two-thirds saw a case for creating new business units dedicated to data-related development. For consumer firms the case is more compelling, whether driving engagement, personalizing services or creating efficiencies. ?
 
The problem however remains how to utilize the vast and growing amounts of data out there. The last few years have seen host of data innovations steadily progress through stages of the Hype Cycle without setting the world alight. In 2016 data “creep” will continue with existing innovations bedding in rather than new ones taking over. Beacon technology is growing in sophistication, enabling more personalized engagement.
 
Equally, the IoT will see more devices connecting up to influence or pre-empt purchase decisions, especially as the Amazon Dash button technology integrates into smart appliance ecosystems. Gartner estimates that there will be 6.4 billion connected “things” in 2016 30 percent more than 2015. Consumer industries will account for 4 billion of them. Data will also make AI products better. Cognitoys, which use IBM Watson technology to evolve with a child’s development, are one example but other innovations capable of adjusting to individual consumer traits will follow.
 
Data remains a double-edged sword and there will continue to be objections to its use, misuse and security. Consumers are also capable of turning the tables, using data to assess the brands seeking their loyalty. Peer reviewing on social media or using price comparison tools will intensify as consumers push for visibility on internal company practices or ethical matters.
 
 
Kirsten Curtis
President and CEO
Northern Quinoa Production Corp.
 
Companies that have adapted the use of big data and analytics have changed their strategy and business functions in three ways. First, the availability of data and analytics has enabled these companies to gain better visibility into what is happening at store level. Whether it be a marketing campaign or on-shelf availability tracking, companies can now get a glimpse into what is going on at store level in real-time, or near-real time, and can make adjustments accordingly. As such, companies using the data now have the ability to adopt a more experimental outlook, iterating quickly on concepts and ideas.
 
Secondly, the use of data and analytics brings together various business functions, as well as improves relationships between retailers and suppliers. Instead of pointing fingers when issues arise, the data allows all parties involved to pinpoint issues and work together to resolve them. A natural outcome of this leads companies to develop more cross-functional, team-based structures instead of traditional business functions.
Finally, data and analytics allow both CPG companies and retailers to learn more about their customers, which if done correctly, leads to increased sales and delighted customers. However, if done incorrectly, it alienates consumers and negatively impacts revenue. Companies must closely monitor the customer response to their targeted campaigns.
 
 
Stephen F. DeAngelis
President and CEO
Enterra Solutions
 
Big data analytics are no longer a novelty in the CG sector. Valuable insights are being generated every day supporting all aspects of business enterprises. Nevertheless, there’s room for improvement. For example, supply chain systems remain fragmented and supporting data is often siloed. While supply chains extend to meet global demand, these challenges are exacerbated as more siloed systems are added. Historically, businesses have increased manual efforts to try to resolve emerging challenges, but that’s not a realistic or scalable path. The need goes beyond end-to-end supply chain visibility and requires a new System of Insights layer that is developing between a corporation’s Systems of Record and its external data. Fortunately, Enterprise Cognitive Systems are now available that enable these Systems of Insight to improve visibility, execute decisions, integrate data, and support corporate alignment. As they mature, cognitive systems combined with advanced mathematics will help transform companies into Digital Enterprises and, by extension, help build what Lora Cecere calls “autonomous supply chains.”
 
 
Dean DeBiase
Chairman, Reboot Partners and AKTA -
a Salesforce Company, Professor of Innovation and Entrepreneurship
Kellogg School of Management
 
Technological advancements have clearly improved our analytics capabilities, but many consumer goods companies suffer from big data disorder (BDD). Brands with BDD, that have spent thousands of hours and millions of dollars, struggle to extract value from their investment where it matters most — consumer retail engagement.
 
Two ways to get out of this big data - small results trap in 2016 is to pick a lane and partner with the entrepreneurial ecosystem. It’s too easy to boil the innovation ocean and tee up countless initiatives. Pick one, and bring together a small team of internal and external folks to deliver it in 2016. 
 
Our popular Dancing with Startups program helps large companies curate relationships and develop partnerships with upstarts, to drive their growth and innovation. Seek out startups with innovative products that can be quickly deployed and monetized, like Scanalytics, who’s teamed with Tyco’s ShopperTrak to bring smart floor IoT sensors to a store near you. Partners like this can deliver actionable analytics, from on-shelf dwell time engagement with your products to insights on how to improve conversions.

While waiting for your company’s big data project, that always seems to be a year late, bring yourself up on the insights learning curve in 2016, by Picking a Lane and Dancing with Startups.
 
Jonathan Golovin, Ph.D.
Chairman, CEO, Co-Founder
Retail Solutions, Inc.
 
Data and analytics have replaced orders and inventory as the new DNA of the CG industry. Companies once ran their businesses based on their ERP systems; they now operate primarily on retailer data across all functions, moving from inside-out to outside-in.
 
Increased downstream data brings transparency, helping suppliers align operations with retailers, redesign process boundaries to leverage strategic competencies and set up common measurements for success to turn joint business plans into day-to-day realities. Meanwhile, world-class analytics enable them to become leaner and nimbler, to respond or even preempt opportunities and issues — a new product flying off the shelf, an inventory allocation challenge, a new market trend…
 
Now is the time to go beyond experimentation and start systematically leveraging this data; industry leaders are scrutinizing and redesigning every process, customer facing or internal, challenging whether it could be improved by better data, faster or more accurate alerts or better insights.
 
 
Mark Hardy
CEO
InContext Solutions
 
Simply put, innovations in technology have created a world that puts the consumer front and center. The huge amounts of data available now have changed the way the industry thinks about its processes and strategies. And while it has the potential to change the CPG and retail landscape in profound ways, the challenge is that while some companies and brands are blazing the big data trail, much of the CG industry has yet to take full advantage of everything that new technologies have to offer.
 
Manufacturers and retailers now have the capabilities to work smarter and faster, ultimately saving time and money. But they need to embrace the new and not be so reliant on old, outdated methods. With the availability of data from so many different touch points, companies should begin to leverage the information for better collaboration, and ultimately a more optimized in-store experience for shoppers.
 
 
Jim Kelly Jr.
CEO
Market6, Inc.
 
There’s a new normal impacting CPG companies and retailers every day. New store formats, the rise in omnichannel, threats from overseas competition and innovative smaller brands are changing the landscape. As a result, CPG companies and retailers are searching for effective ways to uncover insights, compete and retain customers. Advances in analytics are providing the necessary edge. Suppliers and grocery retailers are reinventing collaboration using integrated data, advanced analytics and data driven solutions that simplify problem identification, root cause analysis and actionable intelligence. This new model firmly places suppliers as a very important extension of retailer merchandising teams. They use fine-grained analytics that blend data from inventory systems, merchandising, promotions and point of sale. These insights forecast demand but also report on supply, store authorizations, promotions and more — all at the same time. When this happens, insights jump off the page. Supply managers and replenishment buyers connect the dots using analytics. They anticipate problems, prioritize time and increase revenue through early identification.
 
 
Simon McLain
Principal, Monitor Deloitte Strategy Practice
 
Thomas Schoenwaelder
Principal, Doblin Innovation Practice
Deloitte Consulting LLP
 
Innovation is often perceived to center on bringing new or improved products to market, but companies that look beyond product performance to incorporate five or more types of innovation — twice as many types than other companies — tend to outperform the S&P 500 significantly. This requires tackling customer experiences and creating competitive advantage internally, rethinking configuration and profit models, in addition to product improvement. Despite this, we continue to see an enormous focus on product-centric innovation in the consumer products sector. When we discuss this with CPG executives, we hear that moving beyond product, the core tenet behind the Ten Types of Innovation, resonates strongly in principle. However, in practice it proves significantly more difficult to break out of historical innovation behaviors.
 
The use of technology and data to better capture information, identify where opportunities lie, and measure success across all forms of innovation may break this pattern. While technology and data have obvious applications in products themselves, the use of analytics to capture and make use of the data generated by customers, the technological underpinnings of user-facing platforms, and the ability to create “better over time” predictive analytics to improve internal processes have the potential to drive critical marketplace differentiation.
 
 
Mark Osborn
Global Lead, Consumer Products Industry Marketing
SAP
 
Consumers, businesses and things are now connected all the time and in real time. This has increased the pace of business to the speed of a moment, while also dramatically expanding the volume and granularity of insights available.
 
Companies can use this greater connectivity to sense, analyze, optimize and act on opportunities directly in consumers’ moments of need. That includes using real-time insights to sense moments of opportunity when they arise, and using greater flexibility and agility across different parts of their organizations to more quickly act on the opportunities.
 
And the potential goes far beyond reimagining how to deliver physical products. For example, companies are leveraging sensors to monitor consumption, automate replenishment and transform products into subscriptions. Using these enabling technologies to reimagine business models, business processes and work, companies can deliver value that goes well beyond simple transaction and use to deliver personalized “just for me” consumer experiences directly in moments of need.
 
 
Meena Surti Patel
Assistant Vice President - Retail & Consumer Goods,
Cognizant Business Consulting
Cognizant

What do you want to achieve by the year 2020? The rise of digital technologies and big data is changing everything; are you prepared? Digital disruption is not a new phenomenon, but the opportunities and risks it presents are shifting over time.
Competitive advantage flows to businesses that see and act first on those shifts. We are entering the third — and most consequential — wave of digital disruption: hyperscaling — “Think Big — Really Big.” The first wave, the commercial Internet — or the dot-com era — focused on reducing transactional costs. The second wave, Web 2.0, focused on the importance of strategic insights. The third wave, focused on hyperscaling with big data, the IoT, and movement of large volume data will require different technologies. The introduction of Li-Fi (Visible Light Communication) will start to replace Wi-Fi in to support of hyperscaling. Digital disruption will have profound implications on CG companies and industries at large. 
 
Among the many trends directly impacting CG companies is the overall increased importance being placed on health and well-being. The adoption of digital devices to better manage health and fitness and the integration of these tools with CG products is the future and will require big data. There is strong pressure on the industry to find new ways to inform, educate and engage consumers, governments and other stakeholders. To succeed, companies will have to leverage new channels of engagement — e.g. digital — and make better use of big data analytics solutions and platforms to disrupt the market. One example is how CG companies are collaborating with the GMA “SmartLabel™” initiative. By leveraging this platform, CG companies will have an effective means of two-way dialogue with their consumers; they can personalize their experiences, and better engage consumers on their health journey, which will benefit both the consumers and the CG companies.
 
 
Cheryl Perkins
Founder and President
Innovationedge
 
As a strategy consultancy focused on identifying emerging opportunities for our clients, the ever-increasing availability of detailed industry data has improved the level of analysis and the breadth of information we can provide for strategic decision-making, as well as the speed with which we can provide it. While this is almost entirely a positive thing, we continually remind our clients (and ourselves) that data must never replace the hard work of creative strategic thinking. As the mathematician John Turkey famously commented, “Far better an approximate answer to the right question, which is often vague, than an exact answer to the wrong question, which can always be made precise.” Data won’t give us the right questions — identifying the right questions is the hard work. But once we have worked together with the client to formulate the right questions, then the growing abundance of data can be leveraged to help drive the right answers, leading our customers to true strategic innovation that will grow their businesses.
 
Ed Porter
Research Director – Consumer Goods
Gartner, Inc.
 
World-class analytics will drive big change and big opportunity for those companies who embrace and master its capabilities. Take product innovation as one example. According to Nielsen’s 2015 report on new product success, only 24 percent of new SKUs introduced in Europe survived their first full year. In the United States, the numbers are not much better. This isn’t surprising given slow overall industry growth and an increasingly diverse and empowered consumer with heightened desire for more niche and customized products. 
 
Gartner predicts that by 2018 CG companies that expertly integrate data and analytics into their innovation processes will increase their new product success rates by 10 percent. These skills and capabilities can also enable stronger ongoing connections with consumers, more effective collaboration and trade promotion spending with retailers, and overall success in the coming digital business era. Many companies already recognize this and are shifting IT priorities towards this goal. In fact, Gartner’s 2015 CIO survey research lists business intelligence/analytics as the No. 1 technology investment area in CG. The expert use of faster and more granular insights will bring meaningful competitive advantage and new growth opportunities to those companies who make those investments.
 
Jason Purcell
CEO and Co-founder
Salsify 
 
In a recent study, 62 percent of e-commerce leaders at brand manufacturers said that retailer requests for product content data are unreasonable.* That may be, but fast-moving brands are now actively involved in providing the merchandising content that retailers formerly authored in-house. In return, innovative retailers are promising consumer behavioral data to drive optimization.
 
For example, using data from the Google Manufacturer Center, Google was able to demonstrate an 8.1 percent lift in sales across retailers for a major manufacturer of bath and shower products who provided digital packaging that supported a richer Google Shopping experience. Smart CG manufacturers are investing in technologies that allow the content stream to move both ways.
 
*Study of 200 brand manufacturers conducted by Echo Cove Research, August 2015
 
Bryan Seyfarth, Ph.D.
Director, Consumer Goods
Sopheon Corporation
 
For consumer firms focused on innovation, the increasing power of data and analytics creates the potential for transformational change. New portfolio management practices are emerging that enable business leaders to better prioritize their potential investments, focus resources on higher-value new products and market opportunities, and track progress against growth targets.
 
Perhaps the greatest opportunity, however, lies in the ability to use data to become more agile. The new flexibility companies have to better create, capture and share market, product, and consumer data — especially in the front-end of this process — is enabling companies to change the way they manage innovation processes. Rather than focusing on solely on speed to market, they are focused on speed to learning — i.e. how quickly can they iterate on a number of new product concepts, quickly learn what works and what doesn’t, and only then focus on bringing the winners to market as quickly as possible.         
 
 
James Shannon
Managing Director
Accenture – Consumer Goods & Services


There is a growing desire by consumers across the globe for additional information about the products they use and consume. They want access to accurate, detailed and consistent product information (e.g. nutrition, ingredients) in a simple digital format. Working with leading organizations including the Grocery Manufacturers Association, Accenture’s analytic, digital and mobility capabilities have contributed to the creation of the SmartLabel™ initiative enabling consumers to quickly access product information needed.
 
SmartLabel™ enables leading consumer goods and retail companies to adopt a standardized and scalable solution to share credible product information externally. Consumers can access information directly from their mobile phone through an easy-to-use search engine or QR code. Brand owners can store and maintain the attribute information in one location and have that information flow to the SmartLabel™ Landing Page or to any other entity that needs it. This creates a dialogue between the brand and the consumer.
 
More than 30 major companies are already committed to SmartLabel™ and early estimates indicate that within five years, more than 80 percent of the food, beverage, pet care, personal care and household products that consumers buy will be using SmartLabel™.