Getting Ahead of the Game-Changing Trends

Consumer products executives are confronting a bitter truth: conventional recipes traditionally used by multinationals for profitable growth no longer are enough. As the marketplace undergoes a rapid transformation, it's forcing leading brands to rethink everything—from where and how they compete to what capabilities they will need to thrive in this new world order.

For companies in developed markets, shifting market dynamics primarily raise the question of how to build sustainable, profitable growth models. Consumer goods executives know that in a demand-constrained market, they won't have a choice but to reduce costs continuously. But they will also have to identify new formulas to grow premium products and brands in a world where more and more consumers seem to have split personalities when it comes to spending. Consumers sometimes splurge on premium items in certain categories but also trade down in other areas. That is forcing companies to rethink how to innovate to give consumers added value, how to price and promote and how to "compete" effectively against retailers that are more aggressively managing shelf space—all without wrecking the entire profit pool.

Companies competing in emerging markets face different challenges. They must establish themselves as profitable market leaders as they go up against increasingly competitive local players—with higher brand recognition, lower costs, more flexible and responsive organizations and an impressive ability to learn, replicate and gain scale quickly. To ensure that their products are affordable, consumer products players have to adapt their product range, price point and innovation strategies while trying to grow their premium and super-premium market share as well. They must also determine how to overcome the often prohibitive cost of reaching consumers in hard-to-reach rural areas with poor product distribution infrastructures. And they must overcome a serious talent shortage and develop a sustainable talent pipeline that matches their needs.

Top Ten Capabilities

1. Design repeatable growth models to accelerate learning and execution, in particular when expanding into developing markets;

2. Artfully manage brand portfolios—defining optimal portfolio roles, winning strategies, investment levels and profit expectations;

3. Develop 360-degree consumer and shopper engagement through multiple media and touch points;

4. Accelerate brand growth, even in slow categories and developed markets;

5. Become a true partner for retailers, adding value through sophisticated collaboration programs built on shopper insights, integrated supply chains, systems and data sharing;

6. Align, measure and incentivize the frontline for perfect execution;

7. Build a culture of continuous cost improvement, ensuring the organization measures and tracks true cost to serve in order to drive it down relentlessly over time;

8. Master mergers and acquisitions to gain a competitive advantage at target selection, valuation and integration—building additional scale and the resulting economic efficiencies;

9. Simplify, speed up and slim down operating models to maximize organizational effectiveness and efficiency;

10. Create a talent pipeline to deliver growth expectations.

Five winning behaviors

Most people will agree that faithfully adhering to these capabilities is challenging in a complex global and multi-category landscape. These capabilities are grounded in simple organizational behaviors that will increasingly distinguish the best from the rest:

1. Repeatability and Consistency
2. Simplicity and Alignment
3. Speed
4. External Focus
5. Selectivity

Repeatability and consistency

We are astounded by how often organizations successfully identify best practices but then struggle to win broad and consistent adoption across their organizations. Also surprising is how infrequently they develop models for repeatability and consistency in all elements of their businesses. Organizations should choose three or four things that they need to be great at to spur growth and gain a competitive advantage—for example, mastering point-of-sales execution, developing successful innovations or swiftly integrating acquired companies. They need to measure and create incentives around these value drivers and continuously improve them until feedback indicates that these levers are no longer giving them an edge.

Simplicity and alignment

The entire organization must wage war on complexity. Too much complexity can undermine even the best initiatives. And the evidence of complexity is everywhere—from overly complex consumer segmentations that are never understood by frontline employees to analytic measurement models that are so complex no one uses them to decision-making models that are so complicated that decisions aren't made. In such a competitive marketplace, it's critical that the frontline is aligned and engaged, the strategy gets executed—and time and effort are not wasted.

Speed

To outcompete and win, organizations simply have to get faster. They need to speed up their metabolisms-whether it's swifter decision making, getting new products to market quicker or creating a more responsive supply chain.

External focus

A large number of organizations remain internally focused. In contrast, winners gain an edge by heavily focusing on factors outside the company that influence performance such as consumer, shopper and customer insights, competitor intelligence or supply chain evolutions. By relentlessly focusing on external forces, they ensure faster growth.

Selectivity

Often, organizations are too democratic in allocating resources, making decisions, managing talent and investing. Leading companies are much more selective: they know their "must win" battles, "must buy" acquisitions and "must develop" talent.

Source: Bain and Company Industry Brief