Kraft Heinz Expands Agile Pods Across Organization
Kraft Heinz’s expansion of its Agile-based strategy across all business functions, which includes pods of teams hyper-focused on specific challenges and opportunities, is expected to help it manage increased promotions this year to better compete with private label.
The company has established these multifunctional pods as part of its Agile@Scale strategy, each containing a dozen people who are focused on high-priority opportunities, such as revenue management and innovation. Kraft Heinz currently has 32 pods and is on track to end the year with 36, said CEO Miguel Patricio at an investors’ conference this week, according to a transcript.
The Agile@Scale strategy, part of the company’s multi-year turnaround strategy, has Kraft Heinz marrying tech investments with Agile methodologies to develop its in-house capabilities in tandem with vendor partnerships. Eighty percent of its U.S. organization are now trained in Agile, said Patricio.
The pods are defined by ROI and are situated in all areas of the company, including innovation, logistics, manufacturing, sales, and finance, he said. They include both Kraft Heinz employees and those from partners like Microsoft, with the teams dedicated to a specific challenge or opportunity.
“So, everybody now wants the pods to solve their problems. … We define in a very methodical way what are the ROIs [of the] projects, and then we put a group of 12 people working to solve this case. It can be a problem or an opportunity.”
Twelve of the pods are dedicated toward disruptive innovation, enabling the company to shrink its innovation timeline from up to three years down to six months.
“We were a company in the past very siloed, and the pod is the opposite of that,” noted Patricio. “When I have a pod working on innovation of a specific thing, this is the only thing those 12 people do; they don't do anything else. They are 100% of their time dedicated to fix or to solve that opportunity or that problem.”
Kraft Heinz has also improved the ROI on promotions by 10 percentage points through the use of artificial intelligence, which enables it to better identify the right product mix for a region or retail location, said the CEO. The company has previously shared that it’s developed in-house technology to provide insights and recommendations in a simplified way, leveraging its elasticity model to account for both potential product and retailer cannibalization and pantry loading.
Patricio indicated at the June conference that its revenue-focused pods, when combined with leveraging AI to maximize resources, has put the company on improved footing and will help it better navigate increased promotion activity this year to compete with private label.
“We are in a very different place than we were in the past on deploying resources and with much more discipline,” he noted. “We are not going to do promotions with negative ROIs, [which] was very common in the past.”
Learn more about today’s trade promotion strategies at the Consumer Goods Sales & Marketing Summit! Held Oct. 4-6 in Austin, this year’s Summit will explore how CPGs are Redefining Success for the New Metrics of Innovation.
