What’s the greatest source of inspiration and innovation for consumer goods companies? The clue’s in their name: it’s consumers. Organizations can develop better products, more relevant services, and more personalized experiences when they engage consumers actively as innovators.
In fact, this kind of open innovation is just the first step in transforming consumer relationships right across the value chain. In the face of extreme competition from digital challenger brands, established names in consumer goods must put the individual front and center in their business strategies — all the way from product innovation to point of sale and beyond.
That’s something that lots of brands are still struggling to do right now. Too many still hold the consumer at arm’s length, overemphasizing the “product” at the expense of innovating and disrupting by understanding and adapting to changing consumer demands and expectations.
In truth, the industry seems somewhat conflicted. Accenture research finds that nearly two-thirds of consumer goods executives recognize the value of ecosystem participation (including from consumers), and especially the value of getting a “reality check” on their growth strategies. But just 15% consider collaboration with the end-consumer as critical. That needs to change.
Innovating from the Outside In
Consumers want to be involved. And we’re talking about much more than the traditional consumer panels, focus groups and surveys that brands have used for years, which retain far too much of the old “us and them” ethos.
Thanks to digital technology, the boundaries between brand and consumer are well and truly breaking down. Indeed, today’s consumers feel a growing sense of “ownership” over the brands they love. And they’re ready and willing to engage as innovators, as product developers, as brand evangelists and marketers, and even as distributors.
Take beauty brand Volition, which is bringing customers right into the heart of product development. The brand lets individuals submit new product ideas and see them developed into prototypes. Its community of fans then vote for which ones should be developed into real products and marketed under the Volition name.
Or what about Orkla Foods, which has literally opened their doors by redesigning corporate headquarters with a new deli-kitchen for employees and customers? The co-mingling space functions as a meeting area, but also offers taste testing and insights into the brand’s product development.
One of the really interesting side-effects of this kind of co-innovation is its impact on trust. Consumers inherently trust products that they and others have helped make. For example, research finds that, when labeled as such, crowdsourced products outperform the market by as much as 20%.
It doesn’t always have to be about direct cooperation either. Brands can use advanced sense-detecting mechanisms to spot evolving consumer needs, leveraging technology like AI and analytics to glean insights from search trends and social media.
PepsiCo, for instance, has developed an AI-enabled trend predictor engine to inform future product, ingredient and brand innovation. Not to be outdone, Coca-Cola analyzes a vast number of data points from all around the world (including individual vending machines) to influence and enhance its brand and marketing decisions.
Made Just for Them With the future trajectory in consumer goods clearly heading toward hyper-personalization, it’s becoming even more essential to engage consumers at every stage. It won’t be long before people expect products created just for them in the moment — whether that’s a food item customized to their unique genetic makeup or a shampoo adapted for their personal hair type.
Some brands are already doing it. The Intelligent Brewing Company asks consumers to weigh in with their views about the company’s beers via its website. Artificial intelligence is then used to tweak recipes for each visitor’s unique palate. That’s responsive and personalized manufacturing taken to the next level.
Personalization applies just as much to the services built around a product. Beam Dental’s smart toothbrush is a great example. This innovative product tracks how it’s being used and offers personalized advice on improving dental hygiene. The resulting data can even be used to lower the user’s premiums on the company’s own dental plans.
What all this shows is that capabilities like hyper-personalization and on-demand fulfillment are becoming just as important as new mass-market product R&D. In fact, 87% of consumer goods leaders agree that customization and on-demand delivery will drive the next big wave of competitive advantage.
To make this kind of innovation a reality, brands must be prepared to think creatively, refocusing on open innovation and co-innovation models, and thereby allowing the end-consumer to get much more intimately involved. At the same time, companies need to orient their businesses much more closely around the needs and expectations of that end-consumer, leveraging their growing desire to get hands-on with brands. That’s the best way to innovate and thrive as a consumer brand today.
About the Author Laura Gurski is senior managing director, global lead for consumer goods & services at Accenture.