Business Strategy

Agility is the new competitive advantage in CPG

Agility is the new competitive advantage in CPG

For consumer-packaged goods (CPG) companies looking to win customers in increasingly competitive markets, agility is what will give them the edge.

In fact, it’s essential, according to a 2017 research survey conducted by McKinsey & Company’s Consumer Packaged Goods Practice. The study found that consumer preferences and behaviors are continually evolving and e-commerce channels are proliferating at a breakneck pace. CPG brands must also compete with emerging players and disruptors large and small.

When constant and rapid change is the new reality, CPG brands need to look at what kinds of structures, processes and skills are needed to win. The McKinsey study found that increasing organizational agility was a top three priority for 73% of respondents—they want to enable faster and smarter decision making at every level of their business.

To be more agile, there are several things a CPG company must do. But to be truly nimble enough to gain competitive advantage, CPG companies must include their research teams.



Hierarchies must die

Kylo Ren may be right about killing the past. The McKinsey study found CPG leaders now see traditional organizational models as a liability because hierarchies constrict the flow of information, which in turn delays responsiveness. The fast pace of change means budgets are often out of date before they’re even done, and these outdated structures mean CPG brands are unable to source insight quickly or able to act on it fast enough.

CPG companies are combating these challenges by “delayering” hierarchies, automating business capabilities and rethinking market strategies, says McKinsey. They’re also making other structural and process changes to improve their responsiveness, so they can be agile at scale.

However, agility doesn’t mean the company isn’t stable. The Holy Grail is to be both dynamic and stable at the same time. Stable practices provide a foundation of structural elements that don’t have to change very often, says McKinsey. This includes being consistent and reliable. Dynamic practices include rapid iteration, quick adoption to new ways of working in response to market changes, nimbleness and the ability to see and seize opportunities quickly.

McKinsey suggests that CPG companies who want to be more agile should look at the changes they need to make through three lenses: agile structure, agile working principles and agile leadership mindsets and behaviors. This “thematic filter” enables CPG leaders to more clearly focus actions and achieve results quickly.

An agile-structured team demands moving away from a hierarchy, including its rigid systems and silos, to more organic structures that support fast and effect collaboration on projects and tasks. These teams will continue to be supported by the stable, traditional functions such as finance and HR. This move requires the adoption of agile working principles to maximize the productivity of these teams.

Finally, being agile means the leadership of the CPG companies must adopt certain mindsets and behaviors that are different from traditional, hierarchical organizations. For example, the work done by teams will no longer be reviewed through layers of management—agile leaders will look at the work directly. These leaders should also instruct teams to “swarm” high priorities instead of trying to multitask many initiatives simultaneously.

Research must go along for the ride

Becoming an agile organization requires that everyone get onboard with these changes in structure, mindsets and behaviors, including your market researchers. It’s important for research teams at CPG brands to be agile without blowing up their budget, so they need to evaluate how they can support their stakeholders.

Implementing the right technology is important to achieving agile research, but there’s more to it. The McKinsey survey highlights that having the right people is also critical, but just as important are customer relationships—having authentic ones enable research teams to move faster and deliver more return on investment (ROI).

For research teams to be agile, they must strike a balance between speed and quality. It means understanding the difference between pumping out high-volume, ad hoc surveys that potentially damage your brand and finding customer intelligence that can actually make an impact in your organization.

An insight community supports agility by providing research teams in CPG companies with the best of both worlds. They can harvest fast and ongoing feedback from customers who have opted in to share their opinions. For certain business decisions, traditional research methods may take weeks, but an insight community allows research teams to get a good qualitative, directional read on buyer opinions and attitudes within days.

Simplicity plays a role in being more agile. Reducing question length and scope of research and making interactions fun in an insight community keeps members engaged and speeds up response times—this speaks to the value of eliminating hierarchies to become more agile. Similarly, insight communities also provide direct access to customers and enable CPG research teams to collaborate with their stakeholders in marketing to deliver quantifiable results.

Be ready for the long haul

Transforming into an agile organization is not a one-time project. It’s a long-term process of constantly cultivating specific behaviors and mindsets that must include your research teams, especially for CPG companies as they face increasing competition and evolving consumer preferences. Your research teams can support agility while bringing more ROI to the table by leveraging technology and modern methodologies that focus on building and deepening customer relationships.

 



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