1. How to go big and global like you’re small and local
7 min read

How to go big and global like you’re small and local

Empower local teams with the agility to deliver more relevant products

Consumer Packaged Goods (CPG) companies have experienced industry growth for several decades but often at the cost of operating margins. The investment community continues to demand growth and put profitability under a large magnifying glass. CPG boards have reacted by looking for the next wave of value by determining how they will achieve sustainable growth while controlling costs. The models they try to emulate tend to be smaller, more agile players.  

In the CPG industry, smaller usually means faster, and very often more profitable. In North America, according to the Boston Consulting Group, $22billion in industry sales shifted from large to smaller companies over the past five years, with this trend replicating globally. New brands emerging in the market somehow defy the generally-accepted timelines of the industry, miraculously accelerating their products to market and shelf in just a few months. By comparison, new innovations from global brands tend to move to the various markets at glacial pace. Their average time to revenue trails at around 18 months.

The difference comes down to the agility of younger start-ups. They often have simpler operational requirements, uncluttered lines of inter-departmental communication and low-risk production volumes. These efficiencies allow them to shorten the time to revenue on new innovations and keep internal costs low. As a result, they are drawing more revenue and profit from the industry.

Transforming the organization

So, what is the secret to speeding up the delivery of innovation to markets? For example, how do you make sure that packaging evolutions – whether you’re adding a new claim or fulfilling a completely fresh design – don’t signal a red light to the wheels of motion? 

Sustainable innovation requires operational excellence. To achieve that goal not only requires strong leadership from senior management, but also buy-in from the shop floor upwards. In short, any organization – big or small – would be foolish to underestimate the role of their human capital.

“Companies are introducing new ways of working to large numbers of employees, with the goal of producing a step-change, sustainable boost in business results… However, the painful reality is that most transformations fail. Research shows that 70% of complex, large-scale change programs don’t reach their stated goals,” articulates the introduction to The how of transformationan article by McKinsey & Co, which has its own designated CPG consultancy practice.

“Common pitfalls include a lack of employee engagement, inadequate management support, poor or nonexistent cross-functional collaboration, and a lack of accountability. Furthermore, sustaining a transformation’s impact typically requires a major reset in mind-sets and behaviors – something that few leaders know how to achieve.”

The conclusion is that real transformation requires a business’s leadership to embrace holistic operational change including all the value factors – top line, bottom line, capital expenditures, and working capital.

Innovate Faster for Profitable Growth in CPG

Implement the processes allowing your organization more agility, and more profitability

Innovate Faster

Part of the trick of launching compelling innovation that will resonate with consumers is doing it in a timely manner.  If you miss the window of opportunity, your competitors will be more than happy to fill that void for you and grab that market share.  How do you just 'go faster'?  You need to identify the processes that are slowing you down and consider digital tools and best-practice processes that can set you apart from the rest.

Engineering a better use of time

Inefficiency is also the enemy of successful organizational transformation.  If you want to follow the consumer and react swiftly with relevant innovations, it’s imperative that your best people are focused on that task.  Far too often, crucial resources are engaged in non-value-added work, resulting in slow response times to market opportunities and falling out of touch with consumers’ needs.

The Tech-Clarity white paper Reducing non-value-added work in engineering: improving efficiency with real-time access to design information’ states: “To be successful in today’s market, companies need to keep engineers focused on developing differentiated products that stand out from the competition. Engineers can create this differentiation by developing products that offer higher quality, better performance, and greater innovation at a reasonable price. Unfortunately, engineers report that rather than focusing on this important work, on average, they spend a third of their time on non value-added work.” 

Based on findings from the white paper, 20% of engineers’ time is spent working with outdated information. Clearly, to improve efficiency and decision-making, engineers require real-time access to design data, in the right context. This will empower them to innovate and enable their organizations to succeed.

Interestingly, the top performing manufacturers (those who are better at quickly and efficiently designing high quality, innovative products that meet cost targets and resonate with consumers) are nearly two-times more likely to maintain up-to-date, real-time models supported by product data management and product lifecycle management software solutions.

View Infographic
5 ways Digital Continuity can speed up innovation in CPG
View Infographic
5 ways Digital Continuity can speed up innovation in CPG
5 ways Digital Continuity can speed up innovation in CPG

Goliath need not surrender to David

There’s no doubt that the 4th Industrial Revolution has turned the tables. In our industry today, it’s the more traditional, larger businesses that find themselves as the underdogs, desperately playing catch-up with their more light-footed competitors. The fact is that inefficient collaboration and ill-managed product data often lead to poor decision-making, errors, delays and rising costs.

However, as Austrian neurologist Victor E. Frankl sagely said: “When we are no longer able to change a situation, we are challenged to change ourselves.” Indeed, we have already witnessed that some of the Goliaths in the CPG industry are capable of reassessing their position and fundamentally changing their processes – designing and delivering innovation faster than ever before, thus shortening time to revenue. And soon enough, the more agile Davids will need to better understand from the larger players the best way to scale operations and expand into more markets. Change is a two-way street.

And as case study after case study tells us, visibility of information and transparency of action is crucial to success. By dissolving departmental silos and maintaining data digitally on a platform, data becomes shareable and reusable, empowering local teams with the agility to deliver more relevant products while enabling the entire business to scale faster.

Do this right and, whatever size your business is, it can leverage digital continuity to move innovation faster from concept to consumer, wherever the latter happens to be on the map: global, local or somewhere in-between.