CPG Needs a New Approach to Innovation
By Laura Gurski
Consumer goods leaders are used to hearing that change in their industry is a constant. But that doesn’t make it any less true. And, according to Accenture’s 2019 Technology Vision, 92 percent of industry executives think innovation is happening faster than it was three years ago. Times are set to get even more turbulent for consumer goods brands.
In fact, we’re on the cusp of a new era in brand-consumer relationships. Digital is becoming so entrenched in customer expectations that it no longer really offers a competitive advantage. It’s just part of the baseline every brand is expected to meet. In this technology-dominated “post-digital” world, consumers can communicate their individual needs instantly – and they expect gratification immediately.
The Innovation Imperative
This raises the innovation stakes considerably. Innovation has always been important in this sector, of course. But in the post-digital world, it’s essential.
What’s more, the nature of innovation has changed. Once it meant creating an R&D arm or acquiring an up-and-coming brand; today innovation requires companies to go further. That means innovating the whole business model to develop the exceptional levels of responsiveness needed to meet individual consumer needs at each specific moment in time.
Capabilities like hyper-personalization and on-demand fulfillment thus become just as important as developing products for mass retail. Notably, a large majority (87 percent) of consumer goods leaders agree that customization and on-demand delivery will be the drivers of future competitive advantage.
A Brand New World
Evidence of this changing innovation is all around us. Consider how Beam Dental has created a smart toothbrush that tracks usage to help customers improve their brushing technique. The resulting personalized data can also support lower premiums on the company’s dental plans.
Look, too, at PepsiCo’s development of an AI-enabled trend predictor engine to analyze online conversations and guide the company’s future product, ingredient, and brand innovations. In fact, PepsiCo now uses machine learning for a whole range of purposes across its business – everything from streamlining recruitment to optimizing potato peeling.
Coca-Cola’s marketers, meanwhile, are using big data analytics from a staggeringly high number of data points all around the world (right down to individual vending machines) to influence and enhance their brand and marketing decisions.
Leaders Prepare for the Next Wave
What is the thread that ties all these developments together? The companies pursuing them understand the changing nature of innovation in their sector.
First, they recognize they now have access to a wealth of technologies that let their employees do entirely new things, with artificial intelligence and big data analytics in particular now at the forefront of the “human+” workplace revolution.
As a result, many are rethinking their talent acquisition and upskilling strategies. They are refocusing on digital skills while establishing new workforce models that integrate employee expertise with on-demand external resources and intelligent digital technologies.
The innovators also understand a fundamental truth about modern consumer goods and services: that competitive advantage increasingly lies in capturing the fleeting “momentary markets of one.” These are the highly specific individual consumer opportunities that arise in the moment – and disappear just as fast.
The only way to capture those momentary markets is to develop extremely well-attuned sense-detecting mechanisms that enable a brand to identify consumer needs before the competition – and sometimes before consumers themselves.
Shining a Light on Future Success
Technology experimentation is critical to this, and brands should be exploring every possible tool in the digital toolbox, including new and upcoming technologies.
Specifically, that means understanding how distributed ledgers, AI, extended reality and quantum computing (the so-called “DARQ” technologies) are going to fundamentally change what consumer brands do, and how they do it. The good news is that almost nine in ten industry executives say they’re already experimenting with at least one of these technologies.
It’s also essential to rethink enterprise security for a world in which ecosystems of partner organizations are increasingly central. Ecosystems enable consumer goods companies to innovate far more effectively than by going it alone. But the extent of data sharing this relies on means companies must double down on data security – not just for their own organizations but also for the whole ecosystem.
As we race headlong into the post-digital era, hyper-personalized and instantaneous digital experiences will increasingly determine competitive advantage for consumer goods brands to deliver relevance at scale. That’s why forward-looking companies are rethinking innovation – in the workplace, in business models, and in ecosystem partnerships. They’re using it as a lever to push their brands to new heights of in-the-moment consumer relevance.
Laura Gurski is senior managing director, global lead of the Consumer Goods & Services practice at Accenture. For more information: www.accenture.com.