December 2, 2019
10 Characteristics That Will Define Successful Future CPG Leaders
By
Spencer Stuart’s Global Consumer Practice
With digital technology creating massive disruption, and customers themselves no longer behaving in traditionally recognizable ways, CPG leaders have two choices: Adapt and thrive, or risk being left behind.
Drawing on a series of interviews with leaders of some of the world’s largest CPG companies, we identified 10 characteristics that will define the CPG CEO of tomorrow.
1. CPG leaders will be experimental and curious.
Even the most successful CPG companies must continually innovate. Some are diversifying their product lines in surprising ways. Mars has moved into pet health services, Danone into plant-based nutrition and Coca-Cola into coffee.
Being curious and eager to try new things are hallmarks of a bold leader. But not every acquisition or new product line will succeed, so it’s equally important to recognize and embrace the lessons learned from failure. As James Quincey, chairman and CEO of Coca-Cola, says, “If you’re going to do something new, it needs to turn into a leader brand. You’re in the innovation game.”
2. CPG leaders will be disruptive, but also grounded.
Being innovative is not enough. With the very nature of work changing rapidly, leaders must be transformative, willing to expand thinking, go beyond the dominant paradigm and, more than anything, think digitally. Today, digital is impacting everything from customer service to the supply chain, which is why, according to Quincey: “Digital stops being a thing to measure, because it is the business. Digital success now becomes business success.”
Still, as valuable as the capacity to think disruptively is today, it’s just as important that CPG leaders be grounded in functional expertise. Jan Zijderveld, CEO of Avon, says: “I need people in the swimming pool who can swim. I don’t have time to help them learn.”
3. CPG leaders will be entrepreneurial.
CPG leaders must be capable of thinking like a startup founder, with both an openness to new ideas and the structure to move quickly on them. This is a departure from the traditional mindset of CPG leadership, where mitigating risk and increasing efficiency were typically top priorities.
Jorge Mesquita, former executive vice president and worldwide chairman of Johnson & Johnson, describes this ethos: “Startups tend to be single-country companies, so they feel intensely local, very on-trend and immersed in the culture and folklore of the country. If you have a global brand, each market needs to feel like the brand belongs there and nowhere else.”
4. CPG leaders will be both globally minded and locally connected.
Leaders in large CPG companies need to have global vision plus (ideally) past experience in global category management. But in this age where personalization is more and more important to consumers, leaders must also be tapped into consumer needs in local markets.
David Taylor, president and CEO of Procter & Gamble, describes how his company works in specific regions from R&D to marketing: “We show up locally with an organization that’s empowered to develop local ad copy and local programs to connect the brand with consumers. Connecting to consumers locally, we’re seeing 20 percent growth on some brands that were not growing before.”
5. CPG leaders will be data-driven.
In a highly competitive, accelerated CPG arena, data-driven innovation can speed the process of getting to market. Ram Krishnan, president and CEO, PepsiCo, greater China region, says, “You need really rapid innovation enabled by a very flexible supply chain. That is completely getting disrupted with data-driven innovation.”
But an affinity for data must be balanced by proven experience. Yiannis Petrides, former chairman of the board of Refresco and former president of Europe for The Pepsi Bottling Group, cautions, “You can’t just bring in a great digital guy as CEO. Instead, look to what extent they have changed the paradigm in their business decisions in the past, and done things that were totally new and disruptive.”
6. CPG leaders will be agile.
CPG companies have always stressed the importance of mitigating risk, tending to launch safe solutions versus bold category disruptors. That’s changing in a time when agility is critical to keeping up with the pace of digital transformation. In the current climate, Jean-Marc Duvoisin, CEO of Nespresso, says, “If you are not fast, the trend could be dead by the time you get to market.”
CPG leaders now need to embrace a dynamic, flexible approach to strategic planning and the ability to course-correct easily. Javier Ferran, chairman of the board at Diageo, weighs in: “The key is to have the agility, speed and entrepreneurship to assemble things yourself. You want to be able to move quickly when you see your competitor move.”
7. CPG leaders will be growth-oriented.
CPG leaders will need to strike a difficult balance: Be champions of growth and on the lookout for new areas of consumption, but at the same time, not overly focused on expansion to the detriment of the core product line. In particular, this means correctly balancing opportunities from new consumer trends and long-term growth strategies.
Allen Jope, CEO of Unilever, puts it this way: “If we adopted an attitude that ‘core brands are doomed’ and compensated by buying 100 million-dollar brands, that would be the path to absolute disaster.” Unilever, which purchased Dollar Shave Club, has seen that brand rapidly achieve double-digit growth. However, Jope still warns against fixating on acquisitions: “They’re the icing. The cake remains our growth business.”
8. CPG leaders will be emphatic about values.
Purpose is a critical issue for younger shoppers, and the values a company displays are becoming a key deciding factor for customers. Consumers use their dollars to vote for products they perceive as meaningful, whether that means wellness-focused brands or companies that “give back.” CPG leaders must possess clarity of purpose, with the ability to move it to the center of brand-building tactics and across all activities to connect more deeply with consumers.
Along with the growing demand for purpose comes an expectation of transparency from brands. Consumers look for companies and products with holistically sustainable practices and want to know where their products come from. Grant Reid, president and CEO of Mars, says, “There’s a quest for authenticity and for a product as straightforward as a candy bar to have a backstory.”
9. CPG leaders will be inclusive.
As culture-setters, CPG leaders must be comfortable empowering others — not stuck in a hierarchical mentality. The culture that leaders foster must be, in the words of Jope, “held up as the role model for diversity and inclusion, way beyond gender, way beyond race.” Leaders who want to oversee organizations where diversity and inclusion are tangible realities must act out those intentions in their hiring choices and actual practices.
10. Above all, CPG leaders will be transformational.
It’s highly likely that next-gen CPG CEOs will need to harness technology and creativity to transform their organizations for the challenges and opportunities of the future. CEOs must have the curiosity and courage to enact change.
As Jope says, “I have this dilemma, which is that I want to transform the culture, but I don’t want a culture transformation program. I believe that culture comes out of your deeds, not your words.” The ability to inspire organic change and transform culture without a playbook will ultimately define the CPG CEO of the future.
Read more about what it will take to be a world-class CPG leader by 2025.