Review & Outlook 2015: Innovation Trends
Gene Alvarez
Managing VP, CRM & E-Commerce Research
Gartner Inc.
Don Scheibenreif
VP Industries Research – Consumer Experience
Gartner Inc.
According to Gartner research, CG manufacturers are increasing their investments in digital channels that lead to direct relationships with end consumers. E-commerce is one of those channels and once again tops the list of planned technology investments in 2015. In fact, CG manufacturers have begun to change their expectations for e-commerce, viewing it as a viable means of responding to market shifts, driving innovation, generating revenue and developing a direct relationship with their consumers and retail partners. Gartner recommends that CG companies pursue three distinct, but related paths: a dedicated online storefront, participation in online marketplaces (like Ebay, Ocado, and Tmall), and actively supporting retailers’ e-commerce initiatives.
For 2015 and 2016, we recommend IT professionals advocate the piloting of revenue-building activities by selling products on their own branded e-commerce site. Start with supporting your retailers’ e-commerce initiatives, but quickly move to open your own branded site and open a storefront on one of the online marketplaces. CG companies need to be careful of channel conflict with their retail partners. Sales of brands that retailers may not stock or under stock is one of the areas online selling can bring in incremental revenue. Activities such as new product testing and introduction, and linkage to social presence for selling, are other areas CG companies should explore online.
Justin Behar
Founder and CEO
Quri Inc.
There is a modern retail revolution afoot, thanks to new retail analytics and intelligence solutions that drill down big data into granular insights. And this is changing how brands conduct business.
In the past, CPG brands lacked in-store visibility and control of their trade promotions and distribution. Physical retail couldn’t be optimized quickly or efficiently like e-commerce channels could, resulting in poor retail execution, misused trade spends, and ultimately, negative ROI.
But in today’s world, accessible real-time sales data and crowd-sourced, in-store conditions data enable managers to analyze and oversee in-store promotions. These actionable insights provide CPG brands the opportunity to make real-time decisions that allow retailers to increase compliance and maximize promotion performance.
When planning your next promotion, consider what you could do with a data-driven dashboard at your fingertips. Imagine harnessing 400,000 data points over 48 hours. Now imagine the resulting visibility, control and clear actionability those data points would provide. While physical retail was once said to lack the agility and efficiency of e-commerce, leveraging solutions that turn data into actionable measures can level the playing field.
Jeff Bellairs
Sr. International R&D Director
General Mills
The title of Bob Dylan’s hit, The Times They Are a-Changin’, is even more appropriate now than in 1964. The pace of change that we are seeing is unprecedented and never before has it been more critical to connect with consumers around the world to integrate their voices into our development efforts.
At General Mills we call our effort Consumer First Design (CFD) and it impacts every aspect of how we approach the product development process. It begins with redoubling our efforts to build true empathy for our consumers — putting our cross-functional teams in the consumers’ shoes to experience the frustrations, tradeoffs and challenges as consumers make daily food choices.
CFD also gives our consumers a much better seat at the table as we turn ideas into products. We’ve incorporated “lean” thinking into our efforts and we now work collaboratively with consumers in short, iterative learning sprints to get our products right. What took us months before, sometimes now takes days, as we build new ways to effectively engage consumers.
Dylan included “you better start swimmin’ or you’ll sink like a stone” in his 1964 lyrics and in this era of seismic, global change, successful CPG companies will be those who begin swimmin’ even closer to their consumers.
Nitin Bindal
Director Mobility & Integration
Dr Pepper Snapple Group
Today, organizations are looking at technology for more than productivity/efficiency gains. They are looking to leverage technology to boost their top line, which will influence business leaders and their expectations of technology.
Innovation would come from the mining of data that organizations already have and finding that gem of information that will help win the next sale. How this is different from what has been built in past? The focus will be on the front-line sales team instead of folks sitting in corporate. The solution cannot be where sales takes a massive report and analyzes for hours to find the right information. The burden of analyzing data and identifying key customer opportunities will lie with the solution. These opportunities will be presented to a sales-person — for the right customer and just in time, when it will make the most impact.
To make this happen, people who understand the data will have to go out with sales to see how they work, understand the data points that impact sales and then convert that knowledge into an intelligent algorithm.
If the foundation of mobility and data analytics has already been laid at your organization, the challenge of “Intelligent Big Data” is what you need to conquer next for your sales team.
Jim Carroll
Futurist, Trends & Innovation Expert
Going into 2015 and beyond, the biggest issue for CG executives will be to think about how they have big holes that they need to fix — and fast.
The challenge is that with this tsunami of change, many companies still aren’t capable of coping, and so many mismatches become painfully clear:
Abhay Chaturvedi
Associate Vice President (Retail & CPG)
HCL Technologies Ltd.
The ‘Black Friday’, as a major event in Europe, has proven the power of promotions. The retail market’s ability to execute key promotional events is determining the success for CPG companies. While TPM is critical for CPG companies, success stems from the ‘Retailer’s Shelf’, where the value chain culminates to create monetary gain. This is where a subpar execution can compromise an excellent product/promotion/price.
Technology has played a key role in creating tangible improvements within the retail execution space. At the same time, a significant opportunity to unlock value in this space also exists. CPG companies now realize the need to drive efficiency and effectiveness for better retail execution through:
Jon Copestake
Editor, Cost of Living, Liveability
Chief Retail & Consumer Goods Analyst
The Economist Intelligence Unit
In his 2013 state of the Union address, the U.S. President Barrack Obama, described 3D printing as having “the potential to revolutionize the way we make almost everything.” So far this has not come to pass and the infiltration of 3D printing into the mainstream will be evolutionary rather than revolutionary. As with all young technologies 3D printers are currently expensive and restricted, from a consumer perspective, to simple items. Nonetheless 2015 will see some solid gains.
McKinsey Global institute estimates that 3D printing activities will generate between $230 billion and $550 billion by 2025 — a broad range reflecting uncertainty the impact this nascent technology will have. Aside from medical applications such as printing pharmaceuticals or joint replacements, 3D printing is creating waves everywhere. The consumer case is among the most compelling. People that can print goods no longer need to buy them.
The negatives for the global economy could also be significant. The development of manufacturing economies like India, Mexico, China, Bangladesh and Vietnam could be undermined by home production. The production of illegal goods such as drugs, weapons and counterfeit goods will be hard to regulate. Collecting VAT on printed goods could also be a thorny issue. Analyst Group Gartner estimates that 3D printing will lead to copyright losses of up to $100 billion by 2018.
Mike Darke
TPM/TPO Application Developer
Valvoline, A business of Ashland Inc.
Increasingly, CG companies are seeking a competitive advantage by uncovering actionable information contained in massive amounts of disconnected data. The data comes from a growing list of non-integrated sources, such as internal applications, third-party service providers, cloud applications, and social media. Gaining advantage from the information contained in this data requires hiring and training employees with new skills, and leveraging advanced computing capabilities, such as data mining, machine learning, and cognitive computing. A top priority for CG companies should be to develop and follow a roadmap that will enable them to profitably remain competitive by improving their ability to manage massive amounts data, and acquire the capabilities to extract relevant and actionable insights from this data. Business and IT must adapt and work together to make this happen. This requires new skills for business and IT, more robust technology platforms, and better software applications. Additionally, companies need to be prepared to react quickly to a fast changing landscape. Hardware and application technologies are changing at an accelerating pace. Social media platforms come and go, new technologies crop up constantly, and consumer buying habits never stand still. CG companies need to adjust their strategy to accomplish this, while not losing sight of what is working for them now. Companies that succeed can look forward to the exciting growth and profit opportunities that will arise from the increased knowledge they will have acquired from their data.
Mike Friedman
Partner
Kalypso
Why do so many companies consistently fail to deliver results from innovation? To achieve breakthrough innovation results, it’s important to be clear on what it takes to be successful. If you don’t know whether or not a new initiative or project is successful, and you don’t understand why, you’ll always struggle to reach your business goals.
In 2015, CG companies need to get a grip on their data and start converting insights into meaningful benefits. Organizations that use quantifiable data to measure, analyze and act throughout their innovation and product development cycles are much more likely to succeed.
You can’t just look at massive streams of data and expect to get answers. First, you need to understand what you are going to use the data for. Then, you can use data to make smart choices and enable strategic experiments to solve specific problems. This is especially important with disruptive and new-to-the-world innovation. Create innovation pockets where you can run experiments rather than throwing millions of dollars at the wall to see if it sticks.
Finally, make sure your entire organization knows how to use data to deliver more of what works and less of what doesn’t. This way, you can remain relentlessly focused on winning in the marketplace.
Ben Gadbois
Global President
Spin Master Ltd.
One key area of focus for Spin Master is creating products for children that both entertain and educate. We are embracing the STEM (Science, Technology, Engineering, and Math) movement and as an organization, and are focused on constant innovation.
Twenty-first century consumers are hungry for innovative products. As one of the world’s largest children’s entertainment companies we innovate everything we do to stay on the leading edge. Consider the metal parts and classic play pattern associated with Meccano sets — or Erector sets as they are known in the United States. This iconic “toy” has been entertaining and educating children since 1901, but as those children evolve so must our products.
This year we are excited to announce the launch of Meccanoid G15 KS, an advanced personal robot. It utilizes a sophisticated yet easy to use open source Robotic Building platform, making it accessible to a wide range of young builders and makers.
Embracing the STEM movement may not be applicable to all CG companies, but innovation must be a focus to stay relevant and current in today’s ever-changing, ever-competitive economy. Consumers are equipped with a wealth of tools and information and expect great value when making a purchasing decision. Those companies that are resistant to change and don’t invest in innovation truly risk being left in the dust.
Dennis J. Gerson, Ph.D.
IBM CTO — Consumer Goods Industries
IBM Corporation
Through 2020, the pressing question for CG firms will be how to engage with consumers and how to best harvest the insights to develop new products and an enthusiasm for the brand that goes beyond brand loyalty. A recent study found that a new class of “power consumers”, called brand enthusiasts, has emerged that is emotional and passionate about engaging with brands around products but only in the way most natural for them. A second group of empowered consumers, called brand ambivalents, has also emerged; consumers who have positive views towards brands, may be subject to influence to develop a deeper bond with a brand, but are reluctant to engage with the brands on an emotional level.
Globally, the empowered consumers have embraced the rapid evolution of technologies, are in the digital channel and are willing to share that information with brands. These deep consumer insights, developed using the emergent technologies of big data and cognitive analytics, will enable the brands to identify the needs and emotional triggers that drive passionate brand enthusiasm. This, in turn, will go beyond predicting behavior and next best offers into cognitive and adaptive next best action. Finally, cognitive analytics will help drive the rapid development of new products that could also help shift ambivalent consumers into brand enthusiasts.
Werner Graf
Consumer Goods Expert
CGT Industry Liaison
Startups can’t afford to launch a failed product because to do so is to die. They can’t “build it and they will come” because they can’t afford it. Startups constantly test their product hypotheses against the market and are prepared to alter their direction as the customer dictates. When they run out of money, they’re gone. Speed is of the essence and market acceptance is table stakes.
On the other hand, large CP companies are designed to deliver repeatable products and revenue. That’s a strength, and strengths such as size often come with weaknesses. Large companies typically have a slower, more methodical pace of innovation, and will understandably error on long investigations of consumer acceptability given the potential investments.
The ideation process in larger companies must navigate internal bureaucracies, politics and budgets. Even the most innovative projects are usually not make or break propositions. Employees are insulated by scale, which introduces the danger of complacency.
Just as startups use their burn rate for motivation, large companies require a burning platform to achieve speed-driven urgency.
Well, the burning platform is here: the exponential advancement of key technologies such as robotics, digitization and mobility is democratizing innovation. Size is no longer an excuse for latency. Today, the cost of innovation is low and every large company should consider itself (and act like) a startup.
Sandra Kurtzig
Chairman and CEO
Kenandy Inc.
Technology must respond to the needs of the business. The software that’s produced today should meet the following requirements:
According to ERP analyst, Frank Scavo, “this may well be the largest company running a cloud-only system as its only ERP system.”
Jeffrey M. Li
Business Intelligence Manager
Nestl USA
Companies looking to differentiate themselves will have the capability to authentically connect with the individual consumer in focused areas of their life. With the rise of mobile technology, it will be even easier to connect with each other and understand the drivers behind purchasing behavior. We need to realize that a one-size-fits-all approach no longer resonates with the consumer and encroaching in all aspects of the consumer’s life will only drive them away from the brand. The human desire for social affirmation is achieved by associating with brands that best exemplify a social identity. By understanding these social identities, we will truly understand the drivers behind each purchase. For example, consumers that resonate with being environmentally conscientious will gravitate toward companies that address key areas in the supply chain that reduce their environmental footprint. By identifying these social identities and integrating these values into the company’s blueprint, an organization will successfully achieve an authentic connection with the consumer. Organizations that can create this unique social identity will have a connected and loyal consumer for life. The days of mass manufactured solutions are gone, as people begin to demand customized products that carry a positive impact and social identity in their lives.
Nick Lynch
Global Planning Excellence Manager
Shell Lubricants (London, UK)
The CG world is presenting ever more complexity and greater challenges; be those geo-political, financial ($50 oil anyone?), environmental, increasing customer and product complexity, more volatile portfolios to forecast and plan, etc. We need to be able to up our game and become even more agile and responsive, yet achieve more with less.
In general, supply chain management (SCM) is still burdened with complex processes, long transactional chains, significant manual efforts, disparate data sources, heavy training and development needs, etc. Tools and technologies are essential to efficiently plan and manage our supply chains yet these seem to evolve far slower than the consumer technologies that power and guide our personal lives. I would like to see similar paradigm shifts in SCM technologies that we have seen with Internet, smartphones, tablets and endless gadgets for the home.
Where technology exists we need to exploit it fully to speed up and make decision making more effective. Where technologies don’t exist, we need to push the technology providers and ourselves for faster creativity and innovation. When we find those innovations, we need to ensure they are scalable to allow adoption of game-changing developments at speed across all boundaries within our organizations.
Richard Michalec
AVP of Consumer Strategy and Strategic Accounts
1010data
Most CPG leaders are up to their ears with recommendations on how to take advantage of the big data revolution. The
top priority in 2015 is going to be separating the noise from true innovation.
Simplify your BI Architecture: Old school BI systems are complex, difficult to manage, and often do not produce the desired results. Powerful technology that simplifies “The Stack” can remove yesterday’s limitations. There are more efficient methods of integrating data and delivering BI-driven business value and they are available today.
Integrate Differentiated Data: To realize the value of big data, you must first use all of your data and the most granular data. Leverage external data sets. If you want to understand your share of wallet, wouldn’t you also want to know how gas pricing, housing, and employment are affecting your shoppers? If the data exists, use it.
Build a Single Version of the Truth: Each department plays its own role in growing your business, but conflicting data and non-integrated technology mean that it’s easy to miscommunicate. Whether it’s operational silos within your own company or with a retailer partner, moving towards a single version of the truth will improve market management and joint planning.
Bobby Miller
Global Consumer Goods Chief Strategist
ORTEC
Some of the challenges and business drivers surfacing in 2015/2016 include adapting the supply chain to the unexpected changes and circumstances created by e-commerce business models. The end consumer will source from multiple-channels. Shippers will need innovative logistic capabilities and need to support multi-channel strategies. Manufacturers will provide greater service strategies by delivering direct to stores, etc.
The SMAC stack (Social, Mobile, Analytical, and Cloud) will drive all innovation and connectivity to consumers thus will drive consumer insights, partner collaboration, and data sharing. The IoT will require supply chains to provide more visibility and this will disrupt the way we think about the supply chain.
How do you best achieve success? Identify supply chain technologies driven from companies that can fill white spaces and drive innovation. Partner with technology providers who have provided proven quantitative returns to their customers. Embrace social media and the value it provides to your business.
Invest in optimization technology that addresses the new last mile multi-channel delivery need. Design a supply chain control tower powered by technology and analytics to help the organization monitor and direct all activities across the supply chain to make it collaborative, aligned, agile, and market-driven. Start with small target low hanging fruit before taking on the more complex requirements.
Gaurav Pant
SVP Research & Principal Analyst
EKN Research
There are three key dimensions where CG companies need to execute as they try and evolve to a more customer-centric organization: Digital Marketing & Engagement, Retailer-Manufacturer Collaboration and Insights/Business Analytics.
Retailers and manufacturers have collaborated for eons, but the relationship has focused on short-term objectives (pricing, in-store execution), and few have really embarked on longer-term strategic programs like downstream data sharing. As CG companies look to improve operations they need to get over any perceived value disparity and focus on building a longer term program with their retail partners focused on data sharing, logistics and fulfillment demand planning and promotions.
Business analytics will only evolve further into a strategic capability that sits at the intersection of customer preferences, business strategy and business processes. Insights will be deeply embedded across the functional value chain, affording it both the ability to be investigative and predictive (strategic), as well as the adeptness to be efficient and agile (operational). Manufacturers have already taken strides towards increased analytics maturity in areas such as supply chain insights (downstream data), shopper insights (category management) and trade promotion optimization (TPO). Big data presents an opportunity to expand the scope of these use cases to include larger data sets, new data sources and speedier analysis. The insights ultimately offer input that improve existing decisions, or uncover opportunities to make new ones.
Cheryl Perkins
Founder
Innovationedge
This year I see three areas that CG companies need to focus on in order to outperform their competitors: increase revenue, increase operating margins, and capitalize on adjacent opportunities.
First, senior leaders must move beyond status quo measures of success. If you’re not willing to take on higher levels of uncertainty and risk, you won’t grow.
Next, if you think you already have a dynamic and diverse culture, step up your game. Engage as many external partners and business functions necessary to help bring a diverse array of new ideas into your team’s innovation processes. Consider adding team members from a wide variety of backgrounds, experiences, attitudes, personalities and ways of thinking to develop a robust knowledge bank and to spur innovative thinking.
Lastly, if you want to get somewhere, you have to know where you are. And if you want to know how you are progressing, you need measurements. Metrics not only help you stay on track, but what gets measured gets done.
Yes, innovation initiatives can be risky in an uncertain future. But as I look forward into the next 18 months, it’s going to take tenacity and a bold commitment to embrace new ideas, the right skill sets, and analytics to not only survive, but succeed.
April Scee
Managing Director, Consumer Analyst
BTIG LLC
Some of the best innovation is coming from small, private companies as barriers to entry in Staples continue to decline. Trends are also changing faster, given the fickle millennial consumer, and this favors less complex organizations that make decisions and implement ideas more quickly. Big brands could be relegated to fast follower or buying growth if they fail to understand and attract this younger consumer.
Don Scheibenreif
VP Industries Research — Consumer Experience
Gartner, Inc.
In 2014, Gartner launched a comprehensive line of research on digital business. Digital business is more than e-commerce or digital marketing. It promises to usher in an unprecedented convergence of people, business and intelligent things that disrupts existing business models and creates new revenue opportunities. By 2020, we estimate more than 7 billion people and businesses, and at least 35 billion devices will be connected to the Internet. With people, business and things communicating, it represents new opportunities, especially for the CP industry. For example, we anticipate that a home could have over four hundred Internet-connected devices, representing a re-defined battleground for brands. A key way to understand the potential of digital business and make it less daunting is to create what we call a business moment — a speculative scenario where people, business and intelligent things interact seamlessly. What happens when your smart appliances or even the house itself adds items to your electronic shopping list? While it seems far off, the underlying technologies for this future actually exist today. Think about how intelligent things can change your consumer’s path to purchase. Then, reach outward and make intelligent devices part of your innovation roadmap with external technology partnerships.
Bryan Seyfarth, Ph. D.
Director, Consumer Goods
Sopheon
2014 was a good year for many companies, with the stock market at record levels. And yet, several of the world’s largest consumer firms found themselves trailing this growth curve. Although there are many reasons why some succeeded and others were left behind, years of innovation research points to a common principle — that is, prior to 2014, the leaders simply invested in the right new market growth opportunities, creating higher value than the laggards. More and more we see the way consumer firms are making those investment decisions is via a new approach to enterprise innovation management.
This is an increasingly common type of business initiative that leverages digital enablers in combination with a more holistic approach to innovation processes. Leading edge firms are beginning to raise their sights above the silos of traditional planning, concept development, stage-gate, and portfolio management. They are now taking an integrated approach, optimizing each investment decision across the innovation lifecycle. Doing this successfully requires technology enablement, but ultimately this is a business process transformation, not an IT project. PepsiCo is an example of a firm leading this charge.
Noha Tohamy
VP of Research
Gartner, Inc.
Analyze or perish. This should be the mantra for CPG companies in 2015. With sensors embedded in objects ranging from factory equipment to sneakers, and with new social networks like Lulu and SnapChat popping up and courting the ultra-expressive consumer, there is no shortage of data. This data is tantalizing CP companies, promising better insights into their consumer. Gaining these insights requires a strong analytics competency. In 2015, charting a solid analytics roadmap, building an ace analytics team and creating an attractive career path to retain top talent should be high on the priority list of every CPG company. On the technology side, companies need to keep their finger on the pulse of new and exciting solutions but make wise investments in analytics technologies with staying power. But the biggest priority of all is to change an organizational culture that’s leery of analytics to one that embraces fact-based decision making, combining the power of analytics with nuanced human judgment, to achieve the highest business performance.
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Managing VP, CRM & E-Commerce Research
Gartner Inc.
Don Scheibenreif
VP Industries Research – Consumer Experience
Gartner Inc.
According to Gartner research, CG manufacturers are increasing their investments in digital channels that lead to direct relationships with end consumers. E-commerce is one of those channels and once again tops the list of planned technology investments in 2015. In fact, CG manufacturers have begun to change their expectations for e-commerce, viewing it as a viable means of responding to market shifts, driving innovation, generating revenue and developing a direct relationship with their consumers and retail partners. Gartner recommends that CG companies pursue three distinct, but related paths: a dedicated online storefront, participation in online marketplaces (like Ebay, Ocado, and Tmall), and actively supporting retailers’ e-commerce initiatives.
For 2015 and 2016, we recommend IT professionals advocate the piloting of revenue-building activities by selling products on their own branded e-commerce site. Start with supporting your retailers’ e-commerce initiatives, but quickly move to open your own branded site and open a storefront on one of the online marketplaces. CG companies need to be careful of channel conflict with their retail partners. Sales of brands that retailers may not stock or under stock is one of the areas online selling can bring in incremental revenue. Activities such as new product testing and introduction, and linkage to social presence for selling, are other areas CG companies should explore online.
Justin Behar
Founder and CEO
Quri Inc.
There is a modern retail revolution afoot, thanks to new retail analytics and intelligence solutions that drill down big data into granular insights. And this is changing how brands conduct business.
In the past, CPG brands lacked in-store visibility and control of their trade promotions and distribution. Physical retail couldn’t be optimized quickly or efficiently like e-commerce channels could, resulting in poor retail execution, misused trade spends, and ultimately, negative ROI.
But in today’s world, accessible real-time sales data and crowd-sourced, in-store conditions data enable managers to analyze and oversee in-store promotions. These actionable insights provide CPG brands the opportunity to make real-time decisions that allow retailers to increase compliance and maximize promotion performance.
When planning your next promotion, consider what you could do with a data-driven dashboard at your fingertips. Imagine harnessing 400,000 data points over 48 hours. Now imagine the resulting visibility, control and clear actionability those data points would provide. While physical retail was once said to lack the agility and efficiency of e-commerce, leveraging solutions that turn data into actionable measures can level the playing field.
Jeff Bellairs
Sr. International R&D Director
General Mills
The title of Bob Dylan’s hit, The Times They Are a-Changin’, is even more appropriate now than in 1964. The pace of change that we are seeing is unprecedented and never before has it been more critical to connect with consumers around the world to integrate their voices into our development efforts.
At General Mills we call our effort Consumer First Design (CFD) and it impacts every aspect of how we approach the product development process. It begins with redoubling our efforts to build true empathy for our consumers — putting our cross-functional teams in the consumers’ shoes to experience the frustrations, tradeoffs and challenges as consumers make daily food choices.
CFD also gives our consumers a much better seat at the table as we turn ideas into products. We’ve incorporated “lean” thinking into our efforts and we now work collaboratively with consumers in short, iterative learning sprints to get our products right. What took us months before, sometimes now takes days, as we build new ways to effectively engage consumers.
Dylan included “you better start swimmin’ or you’ll sink like a stone” in his 1964 lyrics and in this era of seismic, global change, successful CPG companies will be those who begin swimmin’ even closer to their consumers.
Nitin Bindal
Director Mobility & Integration
Dr Pepper Snapple Group
Today, organizations are looking at technology for more than productivity/efficiency gains. They are looking to leverage technology to boost their top line, which will influence business leaders and their expectations of technology.
Innovation would come from the mining of data that organizations already have and finding that gem of information that will help win the next sale. How this is different from what has been built in past? The focus will be on the front-line sales team instead of folks sitting in corporate. The solution cannot be where sales takes a massive report and analyzes for hours to find the right information. The burden of analyzing data and identifying key customer opportunities will lie with the solution. These opportunities will be presented to a sales-person — for the right customer and just in time, when it will make the most impact.
To make this happen, people who understand the data will have to go out with sales to see how they work, understand the data points that impact sales and then convert that knowledge into an intelligent algorithm.
If the foundation of mobility and data analytics has already been laid at your organization, the challenge of “Intelligent Big Data” is what you need to conquer next for your sales team.
Jim Carroll
Futurist, Trends & Innovation Expert
Going into 2015 and beyond, the biggest issue for CG executives will be to think about how they have big holes that they need to fix — and fast.
The challenge is that with this tsunami of change, many companies still aren’t capable of coping, and so many mismatches become painfully clear:
- Strategy mismatch: Are you still trying to solve the social media challenges from 2013, while in 2015 it has shifted mobile?
- Skills mismatch: What’s your bench strength with all the new technologies flooding the space?
- Cultural mismatch: Are you equipped for speed? Everyone is talking about being agile and lean — but do you find that even with those strategies you are still falling behind?
- Worse yet, your technology mismatch is probably becoming bigger than ever. How are you going to fix these holes?
Abhay Chaturvedi
Associate Vice President (Retail & CPG)
HCL Technologies Ltd.
The ‘Black Friday’, as a major event in Europe, has proven the power of promotions. The retail market’s ability to execute key promotional events is determining the success for CPG companies. While TPM is critical for CPG companies, success stems from the ‘Retailer’s Shelf’, where the value chain culminates to create monetary gain. This is where a subpar execution can compromise an excellent product/promotion/price.
Technology has played a key role in creating tangible improvements within the retail execution space. At the same time, a significant opportunity to unlock value in this space also exists. CPG companies now realize the need to drive efficiency and effectiveness for better retail execution through:
- Priorities — Channels, accounts, regions
- Performance — Better execution, behavior
- Product — Assortment, availability, packaging alignment
- Promotions — Executing to plan, promotions kit
- Placement — As per the planogram
Jon Copestake
Editor, Cost of Living, Liveability
Chief Retail & Consumer Goods Analyst
The Economist Intelligence Unit
In his 2013 state of the Union address, the U.S. President Barrack Obama, described 3D printing as having “the potential to revolutionize the way we make almost everything.” So far this has not come to pass and the infiltration of 3D printing into the mainstream will be evolutionary rather than revolutionary. As with all young technologies 3D printers are currently expensive and restricted, from a consumer perspective, to simple items. Nonetheless 2015 will see some solid gains.
McKinsey Global institute estimates that 3D printing activities will generate between $230 billion and $550 billion by 2025 — a broad range reflecting uncertainty the impact this nascent technology will have. Aside from medical applications such as printing pharmaceuticals or joint replacements, 3D printing is creating waves everywhere. The consumer case is among the most compelling. People that can print goods no longer need to buy them.
The negatives for the global economy could also be significant. The development of manufacturing economies like India, Mexico, China, Bangladesh and Vietnam could be undermined by home production. The production of illegal goods such as drugs, weapons and counterfeit goods will be hard to regulate. Collecting VAT on printed goods could also be a thorny issue. Analyst Group Gartner estimates that 3D printing will lead to copyright losses of up to $100 billion by 2018.
Mike Darke
TPM/TPO Application Developer
Valvoline, A business of Ashland Inc.
Increasingly, CG companies are seeking a competitive advantage by uncovering actionable information contained in massive amounts of disconnected data. The data comes from a growing list of non-integrated sources, such as internal applications, third-party service providers, cloud applications, and social media. Gaining advantage from the information contained in this data requires hiring and training employees with new skills, and leveraging advanced computing capabilities, such as data mining, machine learning, and cognitive computing. A top priority for CG companies should be to develop and follow a roadmap that will enable them to profitably remain competitive by improving their ability to manage massive amounts data, and acquire the capabilities to extract relevant and actionable insights from this data. Business and IT must adapt and work together to make this happen. This requires new skills for business and IT, more robust technology platforms, and better software applications. Additionally, companies need to be prepared to react quickly to a fast changing landscape. Hardware and application technologies are changing at an accelerating pace. Social media platforms come and go, new technologies crop up constantly, and consumer buying habits never stand still. CG companies need to adjust their strategy to accomplish this, while not losing sight of what is working for them now. Companies that succeed can look forward to the exciting growth and profit opportunities that will arise from the increased knowledge they will have acquired from their data.
Mike Friedman
Partner
Kalypso
Why do so many companies consistently fail to deliver results from innovation? To achieve breakthrough innovation results, it’s important to be clear on what it takes to be successful. If you don’t know whether or not a new initiative or project is successful, and you don’t understand why, you’ll always struggle to reach your business goals.
In 2015, CG companies need to get a grip on their data and start converting insights into meaningful benefits. Organizations that use quantifiable data to measure, analyze and act throughout their innovation and product development cycles are much more likely to succeed.
You can’t just look at massive streams of data and expect to get answers. First, you need to understand what you are going to use the data for. Then, you can use data to make smart choices and enable strategic experiments to solve specific problems. This is especially important with disruptive and new-to-the-world innovation. Create innovation pockets where you can run experiments rather than throwing millions of dollars at the wall to see if it sticks.
Finally, make sure your entire organization knows how to use data to deliver more of what works and less of what doesn’t. This way, you can remain relentlessly focused on winning in the marketplace.
Ben Gadbois
Global President
Spin Master Ltd.
One key area of focus for Spin Master is creating products for children that both entertain and educate. We are embracing the STEM (Science, Technology, Engineering, and Math) movement and as an organization, and are focused on constant innovation.
Twenty-first century consumers are hungry for innovative products. As one of the world’s largest children’s entertainment companies we innovate everything we do to stay on the leading edge. Consider the metal parts and classic play pattern associated with Meccano sets — or Erector sets as they are known in the United States. This iconic “toy” has been entertaining and educating children since 1901, but as those children evolve so must our products.
This year we are excited to announce the launch of Meccanoid G15 KS, an advanced personal robot. It utilizes a sophisticated yet easy to use open source Robotic Building platform, making it accessible to a wide range of young builders and makers.
Embracing the STEM movement may not be applicable to all CG companies, but innovation must be a focus to stay relevant and current in today’s ever-changing, ever-competitive economy. Consumers are equipped with a wealth of tools and information and expect great value when making a purchasing decision. Those companies that are resistant to change and don’t invest in innovation truly risk being left in the dust.
Dennis J. Gerson, Ph.D.
IBM CTO — Consumer Goods Industries
IBM Corporation
Through 2020, the pressing question for CG firms will be how to engage with consumers and how to best harvest the insights to develop new products and an enthusiasm for the brand that goes beyond brand loyalty. A recent study found that a new class of “power consumers”, called brand enthusiasts, has emerged that is emotional and passionate about engaging with brands around products but only in the way most natural for them. A second group of empowered consumers, called brand ambivalents, has also emerged; consumers who have positive views towards brands, may be subject to influence to develop a deeper bond with a brand, but are reluctant to engage with the brands on an emotional level.
Globally, the empowered consumers have embraced the rapid evolution of technologies, are in the digital channel and are willing to share that information with brands. These deep consumer insights, developed using the emergent technologies of big data and cognitive analytics, will enable the brands to identify the needs and emotional triggers that drive passionate brand enthusiasm. This, in turn, will go beyond predicting behavior and next best offers into cognitive and adaptive next best action. Finally, cognitive analytics will help drive the rapid development of new products that could also help shift ambivalent consumers into brand enthusiasts.
Werner Graf
Consumer Goods Expert
CGT Industry Liaison
Startups can’t afford to launch a failed product because to do so is to die. They can’t “build it and they will come” because they can’t afford it. Startups constantly test their product hypotheses against the market and are prepared to alter their direction as the customer dictates. When they run out of money, they’re gone. Speed is of the essence and market acceptance is table stakes.
On the other hand, large CP companies are designed to deliver repeatable products and revenue. That’s a strength, and strengths such as size often come with weaknesses. Large companies typically have a slower, more methodical pace of innovation, and will understandably error on long investigations of consumer acceptability given the potential investments.
The ideation process in larger companies must navigate internal bureaucracies, politics and budgets. Even the most innovative projects are usually not make or break propositions. Employees are insulated by scale, which introduces the danger of complacency.
Just as startups use their burn rate for motivation, large companies require a burning platform to achieve speed-driven urgency.
Well, the burning platform is here: the exponential advancement of key technologies such as robotics, digitization and mobility is democratizing innovation. Size is no longer an excuse for latency. Today, the cost of innovation is low and every large company should consider itself (and act like) a startup.
Sandra Kurtzig
Chairman and CEO
Kenandy Inc.
Technology must respond to the needs of the business. The software that’s produced today should meet the following requirements:
- It should be agile, so a company can easily extend the functionality for business growth and innovation.
- It should be flexible, so it runs your business processes, as opposed to pre-defined processes.
- It should be connected to everyone and everything in the enterprise.
- It should be available anytime, anywhere, on any device.
- It should be easy to use, and provide the immersive experience that millennials have in the software they use.
- It should be multi-tenant, so a company never has to go through a costly upgrade process.
According to ERP analyst, Frank Scavo, “this may well be the largest company running a cloud-only system as its only ERP system.”
Jeffrey M. Li
Business Intelligence Manager
Nestl USA
Companies looking to differentiate themselves will have the capability to authentically connect with the individual consumer in focused areas of their life. With the rise of mobile technology, it will be even easier to connect with each other and understand the drivers behind purchasing behavior. We need to realize that a one-size-fits-all approach no longer resonates with the consumer and encroaching in all aspects of the consumer’s life will only drive them away from the brand. The human desire for social affirmation is achieved by associating with brands that best exemplify a social identity. By understanding these social identities, we will truly understand the drivers behind each purchase. For example, consumers that resonate with being environmentally conscientious will gravitate toward companies that address key areas in the supply chain that reduce their environmental footprint. By identifying these social identities and integrating these values into the company’s blueprint, an organization will successfully achieve an authentic connection with the consumer. Organizations that can create this unique social identity will have a connected and loyal consumer for life. The days of mass manufactured solutions are gone, as people begin to demand customized products that carry a positive impact and social identity in their lives.
Nick Lynch
Global Planning Excellence Manager
Shell Lubricants (London, UK)
The CG world is presenting ever more complexity and greater challenges; be those geo-political, financial ($50 oil anyone?), environmental, increasing customer and product complexity, more volatile portfolios to forecast and plan, etc. We need to be able to up our game and become even more agile and responsive, yet achieve more with less.
In general, supply chain management (SCM) is still burdened with complex processes, long transactional chains, significant manual efforts, disparate data sources, heavy training and development needs, etc. Tools and technologies are essential to efficiently plan and manage our supply chains yet these seem to evolve far slower than the consumer technologies that power and guide our personal lives. I would like to see similar paradigm shifts in SCM technologies that we have seen with Internet, smartphones, tablets and endless gadgets for the home.
Where technology exists we need to exploit it fully to speed up and make decision making more effective. Where technologies don’t exist, we need to push the technology providers and ourselves for faster creativity and innovation. When we find those innovations, we need to ensure they are scalable to allow adoption of game-changing developments at speed across all boundaries within our organizations.
Richard Michalec
AVP of Consumer Strategy and Strategic Accounts
1010data
Most CPG leaders are up to their ears with recommendations on how to take advantage of the big data revolution. The
top priority in 2015 is going to be separating the noise from true innovation.
Simplify your BI Architecture: Old school BI systems are complex, difficult to manage, and often do not produce the desired results. Powerful technology that simplifies “The Stack” can remove yesterday’s limitations. There are more efficient methods of integrating data and delivering BI-driven business value and they are available today.
Integrate Differentiated Data: To realize the value of big data, you must first use all of your data and the most granular data. Leverage external data sets. If you want to understand your share of wallet, wouldn’t you also want to know how gas pricing, housing, and employment are affecting your shoppers? If the data exists, use it.
Build a Single Version of the Truth: Each department plays its own role in growing your business, but conflicting data and non-integrated technology mean that it’s easy to miscommunicate. Whether it’s operational silos within your own company or with a retailer partner, moving towards a single version of the truth will improve market management and joint planning.
Bobby Miller
Global Consumer Goods Chief Strategist
ORTEC
Some of the challenges and business drivers surfacing in 2015/2016 include adapting the supply chain to the unexpected changes and circumstances created by e-commerce business models. The end consumer will source from multiple-channels. Shippers will need innovative logistic capabilities and need to support multi-channel strategies. Manufacturers will provide greater service strategies by delivering direct to stores, etc.
The SMAC stack (Social, Mobile, Analytical, and Cloud) will drive all innovation and connectivity to consumers thus will drive consumer insights, partner collaboration, and data sharing. The IoT will require supply chains to provide more visibility and this will disrupt the way we think about the supply chain.
How do you best achieve success? Identify supply chain technologies driven from companies that can fill white spaces and drive innovation. Partner with technology providers who have provided proven quantitative returns to their customers. Embrace social media and the value it provides to your business.
Invest in optimization technology that addresses the new last mile multi-channel delivery need. Design a supply chain control tower powered by technology and analytics to help the organization monitor and direct all activities across the supply chain to make it collaborative, aligned, agile, and market-driven. Start with small target low hanging fruit before taking on the more complex requirements.
Gaurav Pant
SVP Research & Principal Analyst
EKN Research
There are three key dimensions where CG companies need to execute as they try and evolve to a more customer-centric organization: Digital Marketing & Engagement, Retailer-Manufacturer Collaboration and Insights/Business Analytics.
Retailers and manufacturers have collaborated for eons, but the relationship has focused on short-term objectives (pricing, in-store execution), and few have really embarked on longer-term strategic programs like downstream data sharing. As CG companies look to improve operations they need to get over any perceived value disparity and focus on building a longer term program with their retail partners focused on data sharing, logistics and fulfillment demand planning and promotions.
Business analytics will only evolve further into a strategic capability that sits at the intersection of customer preferences, business strategy and business processes. Insights will be deeply embedded across the functional value chain, affording it both the ability to be investigative and predictive (strategic), as well as the adeptness to be efficient and agile (operational). Manufacturers have already taken strides towards increased analytics maturity in areas such as supply chain insights (downstream data), shopper insights (category management) and trade promotion optimization (TPO). Big data presents an opportunity to expand the scope of these use cases to include larger data sets, new data sources and speedier analysis. The insights ultimately offer input that improve existing decisions, or uncover opportunities to make new ones.
Cheryl Perkins
Founder
Innovationedge
This year I see three areas that CG companies need to focus on in order to outperform their competitors: increase revenue, increase operating margins, and capitalize on adjacent opportunities.
First, senior leaders must move beyond status quo measures of success. If you’re not willing to take on higher levels of uncertainty and risk, you won’t grow.
Next, if you think you already have a dynamic and diverse culture, step up your game. Engage as many external partners and business functions necessary to help bring a diverse array of new ideas into your team’s innovation processes. Consider adding team members from a wide variety of backgrounds, experiences, attitudes, personalities and ways of thinking to develop a robust knowledge bank and to spur innovative thinking.
Lastly, if you want to get somewhere, you have to know where you are. And if you want to know how you are progressing, you need measurements. Metrics not only help you stay on track, but what gets measured gets done.
Yes, innovation initiatives can be risky in an uncertain future. But as I look forward into the next 18 months, it’s going to take tenacity and a bold commitment to embrace new ideas, the right skill sets, and analytics to not only survive, but succeed.
April Scee
Managing Director, Consumer Analyst
BTIG LLC
Some of the best innovation is coming from small, private companies as barriers to entry in Staples continue to decline. Trends are also changing faster, given the fickle millennial consumer, and this favors less complex organizations that make decisions and implement ideas more quickly. Big brands could be relegated to fast follower or buying growth if they fail to understand and attract this younger consumer.
Don Scheibenreif
VP Industries Research — Consumer Experience
Gartner, Inc.
In 2014, Gartner launched a comprehensive line of research on digital business. Digital business is more than e-commerce or digital marketing. It promises to usher in an unprecedented convergence of people, business and intelligent things that disrupts existing business models and creates new revenue opportunities. By 2020, we estimate more than 7 billion people and businesses, and at least 35 billion devices will be connected to the Internet. With people, business and things communicating, it represents new opportunities, especially for the CP industry. For example, we anticipate that a home could have over four hundred Internet-connected devices, representing a re-defined battleground for brands. A key way to understand the potential of digital business and make it less daunting is to create what we call a business moment — a speculative scenario where people, business and intelligent things interact seamlessly. What happens when your smart appliances or even the house itself adds items to your electronic shopping list? While it seems far off, the underlying technologies for this future actually exist today. Think about how intelligent things can change your consumer’s path to purchase. Then, reach outward and make intelligent devices part of your innovation roadmap with external technology partnerships.
Bryan Seyfarth, Ph. D.
Director, Consumer Goods
Sopheon
2014 was a good year for many companies, with the stock market at record levels. And yet, several of the world’s largest consumer firms found themselves trailing this growth curve. Although there are many reasons why some succeeded and others were left behind, years of innovation research points to a common principle — that is, prior to 2014, the leaders simply invested in the right new market growth opportunities, creating higher value than the laggards. More and more we see the way consumer firms are making those investment decisions is via a new approach to enterprise innovation management.
This is an increasingly common type of business initiative that leverages digital enablers in combination with a more holistic approach to innovation processes. Leading edge firms are beginning to raise their sights above the silos of traditional planning, concept development, stage-gate, and portfolio management. They are now taking an integrated approach, optimizing each investment decision across the innovation lifecycle. Doing this successfully requires technology enablement, but ultimately this is a business process transformation, not an IT project. PepsiCo is an example of a firm leading this charge.
Noha Tohamy
VP of Research
Gartner, Inc.
Analyze or perish. This should be the mantra for CPG companies in 2015. With sensors embedded in objects ranging from factory equipment to sneakers, and with new social networks like Lulu and SnapChat popping up and courting the ultra-expressive consumer, there is no shortage of data. This data is tantalizing CP companies, promising better insights into their consumer. Gaining these insights requires a strong analytics competency. In 2015, charting a solid analytics roadmap, building an ace analytics team and creating an attractive career path to retain top talent should be high on the priority list of every CPG company. On the technology side, companies need to keep their finger on the pulse of new and exciting solutions but make wise investments in analytics technologies with staying power. But the biggest priority of all is to change an organizational culture that’s leery of analytics to one that embraces fact-based decision making, combining the power of analytics with nuanced human judgment, to achieve the highest business performance.
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