Leadership Matters

Perspectives on the key issues impacting senior leaders and their organizations
July 29, 2019

Consumer Goods Forum Global Summit: Are You Ready for the Era of Collaboration?

By Spencer Stuart’s Consumer Practice

Digital transformation and sustainability were key themes at the 2019 Consumer Goods Forum Global Summit, both in sessions dedicated to the topics and in conversations throughout the forum. As one food manufacturer CEO said when talking about the fact that one-third of all food currently produced is wasted, “business as usual is not an option.” Responding successfully to these shifts requires the right leadership and culture.

Digital transformation is as much about teams and culture as it is technology

While companies are well-versed on the mobile habits of today’s “connected consumer” — each day, 1.32 billion people log onto Facebook, 3.5 billion conduct a Google search and approximately 602 million apps are downloaded — some organizations continue to struggle with the scale of change required. One common obstacle to transformation is the perception in the organization that mistakes and risk-taking will be punished. One large retail company CEO said her organization took that challenge head on when embarking on digital transformation five years ago, emphasizing the need to take more risks, test multiple trials, focus on learning and prioritize a few substantial projects.

Organizations that are farther along in their digital transformation tend to do the following:

  • Prioritize learning and agility as core organizational cultural traits to help drive innovation and respond more quickly in a highly dynamic, increasingly digital-first world.
  • Set the tone from the C-level that failure is not only acceptable, but it should be embraced — and that message needs to travel from the boardroom to all levels of the organization for it to take root. C-level leaders should keep an ear to the ground to understand how transformation is being embraced at lower levels of the business, as surveys show that there can be a disconnect between top leaders and others in the organization about how transformation is progressing.
  • Reevaluate who does what, as bureaucratic siloes get in the way of fast decision-making. Recognizing the need to overcome this challenge, some organizations are rethinking how they build their teams, in some cases, creating smaller teams within the larger organization to drive innovation and react more quickly to changes in the marketplace.
You have data, but what do you do with it?

Everyone has access to massive amounts of data, but how do you collect, store and organize it so you can use it to compete? Much of the future value of data lies in extending its availability and usefulness beyond the C-suite into the hands of managers and front-line employees so they can keep up with changing consumer behavior, drive better experiences for customers and increase opportunities for sales. But how effective those teams are will largely depend on the quality of data and analytics leadership in the organization. Over the past five years, we’ve seen a 320 percent increase in hiring activity in the data and analytics domain, with no sign of demand decreasing.

As for how data impacts innovation, one attendee cautioned organizations against “becoming a victim of your own speed.” Move quickly, but don’t confuse fake, cosmetic innovation with true innovation. And while much of the discussion on innovation centered on adding new products and enhancements, there are times when removing something, such as a product or inefficient process, can be just as innovative and impactful. Plus, when a lack of minority CEOs was addressed at one session, one CEO said diversity in leadership is a missed opportunity for companies, as innovation is also “diversity of thinking.”

Sustainability is an industry priority — and requires a collective solution

The same manufacturer cautioning against the “business as usual approach” made the case for collaboration, detailing the company’s work with a retailer to produce a range of soups from surplus fresh vegetables. Digging deeper into sustainability, one word that attendees likely heard most often during sessions on sustainability was “plastics.”

According to one presenter, 80 percent of all plastics are thrown out. Many consumer leaders acknowledged that the industry is uniquely positioned to develop solutions at scale, for example, to meet the current demand for 18 million edible straws or to reuse or replace plastic packaging. One beverage company was recognized for mining 350 million pounds of landfill plastic for reuse. But CPG company leaders also recognized that they need to assume some risk for getting these products to market. As the leader of one startup said, “Who is going to help scale the technology?” Others recommended that leaders look beyond one’s sector and geography for smart ideas, “borrow with pride” and learn from others.

Food and food waste also are a focus for sustainable solutions. In a world where at least one-eighth of the world goes to bed hungry each night and roughly $940 billion of food is wasted each year according to the Consumer Goods Forum, leaders are actively working to find answers. The Consumer Goods Forum and its membership have committed to cutting food waste in half by 2025 and the CEO of a leading grocery chain that committed to becoming zero waste by 2025 argued that Europe is five years ahead of the U.S. when it comes to sustainability and can serve as a great source of ideas for advancing sustainability efforts.

Many manufacturing and retail leaders spoke in favor of putting sustainability at the heart of strategy by prioritizing purpose first. As one CEO said, “Lead by example, but make sure others follow.” And when organizations fall short of aggressive goals, “be brutally honest,” advises one CEO, whose organization missed its initial deforestation goal set in 2010. Said another CEO, “Consumers don’t want transparency about the company, they want transparency about the product.”

What it all means for consumer leaders

The pace of transformation shows no sign of slowing. As one executive commented, it’s about how you make the store and e-commerce better. Consumers don’t think about bricks and mortar; they just want to shop, and organizations will need to continue to create new ways to make that experience seamless. Consumer companies will need to harness the power of their people and data to succeed. At the same time, consumers, stakeholders and employees increasingly expect companies to do the right thing when it comes to sustainability — and be honest and transparent about their efforts. As more consumers, especially Gen Z, are pushing brands to have a purpose — and to prove that the organization is living that purpose — consumer leaders need to embrace new approaches and recognize it takes the entire organization to deliver on these consumer promises.