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12/02/2015

Are You Creating Value in a World Where the Consumer is in Charge?

By 2020, 7.7 billion people will be online, 6.1 billion will have smartphones, 200 billion things will be connected to the Internet, and everyone on earth will have one thing in common.  They will all be “just for me” digital consumers. Increasingly urban, hyper-local and continually connected to one another and to the world around them in real time.

But trying to reach these consumers with personalization through SKU and channel proliferation will only continue to increase complexity and cost. Couple this with 30 years of declining industry profitability and decreasing loyalty and share among the top 100 brands, and projections show that, in its current form, the industry is unlikely to grow beyond population growth.

For consumer companies pursuing ambitious growth strategies in an otherwise low-growth environment, there is an economic imperative to act now. However, driving growth through incremental efficiency gains from analog, capital-intensive structures and processes is the business equivalent of death by a thousand cuts. 

Business in the span of a moment

New business models, business processes and ways of working that redefine and transform traditional levers of performance improvement are emerging. Transformative approaches that deliver personalization without the cost and complexity of increasing SKUs. That help companies understand what consumers are thinking right now instead of guessing what they might be thinking tomorrow. And that extend brand value at no incremental cost to orchestrate and deliver personalized, high-value outcomes in moments of need.

These “moments” will rely on the ability to sense, analyze, optimize and act based on real-time market signals generated by the interaction of people, technology and things. And they will be supported by agile and flexible business processes designed to adapt as needs and market opportunities change.

Why?  Because what was once the consumer products industry is now the consumer outcomes industry. When consumers can get what they want, when and where they want, differentiation no longer results from quality, price, value or convenience but from subjective, nuanced and intangible outcomes and experiences like joy, confidence, control and protection.

From products to outcomes

Outcomes are not SKUs. They can’t be forecasted, manufactured, stocked or distributed. They are orchestrated, assembled and delivered in moments of need. New digital leaders are transforming products into services and subscriptions, delivering new frontiers of value by orchestrating business networks across categories and delivering outcomes that cannot be barcoded.
Consumers expect an experience that is personal, relevant and simple. One where commerce is seamless, technology is invisible, and privacy, security and trust are assumed and assured. Consumers don’t want to be influenced; they want to be inspired, guided and educated. The challenge now is to move from carts to hearts. 

For example, imagine a footwear company that helps runners improve performance and avoid injury through embedded shoe sensors. These sensors monitor pressure and wear relative to use and purchase date, and dynamically predict when a runner should purchase new shoes – proactively issuing recommendations and offers in the moment of need, encouraging repeat purchases and building loyalty.

Or an appliance company that changes its value to consumers by enabling better hygiene, flexibility and energy optimization. Through build-in intelligence, the washing machine can monitor use, temperature, detergent quantity, cycle times and fabric types to automatically sanitize or deep-clean, and calibrate water, energy and detergent to usage patterns on consumers’ behalf. Sensors can also predict maintenance needs, minimizing service risks and lengthening product life.
 
Finally, think about a beauty company that empowers consumers to define abstract notions of beauty, attractiveness and confidence, in the moment and directly for themselves, by enabling them to print cosmetics on-demand via a smartphone app and a 3-D printer.
 
Even more than innovative technology, however, what consumers consider most is the experience. Building and keeping trust means delivering exceptional brand experiences, every time, via agile processes that balance consumer needs with cost to serve. And one size does not fit all. 
 
New Digital Business Opportunities

Engaging consumers and capitalizing on new opportunities depends on the capacity to identify and deliver value in the moment a need arises. Miss the moment, miss the opportunity.

In this environment, profitable growth will not result from doing things incrementally better but from doing things fundamentally differently. How?

       1. Reimagine business models – transform products into services, transform physical assets into virtual capabilities and capitalize on insights.

      2. Reimagine business processes – optimize supply chain, automate manufacturing and logistics, innovate with personalized consumer engagement and scale with global business networks.

      3. Reimagine work – fundamentally transform productivity, improve enterprise intelligence and decision-making, and enable a flexible, agile workforce.

The time to re-imagine is now. And digital is at the heart of your transformation opportunity.