2019 Consumer Goods Roundtable

In April 2019, The Barton Partnership hosted a roundtable in Singapore for senior strategists in the Consumer Goods space. The key topics discussed on the evening are summarised below.

Strategy - out of the ivory tower

Responsibility for ‘strategy’ is generally decentralising and moving towards local markets, with the regional layer being the most impacted.

M&A typically still sits at the global HQ and the high level strategic direction is set at HQ but local markets are gaining flexibility.

This is partly in recognition of market differences. Strategy set at HQ does not always work for Asian markets where the landscape can vary hugely. For example: competing in Japan where local companies can have a 50 year business plan and may be willing to sacrifice low ROI in the short term for longer term goals, or competing in China where there are a lot of cheap / affordable options. Even market strategies for rice in Asia differ by market.

The other factor is the drive towards ownership of the strategic choices by the leaders that need to implement the change – this is one of the factors that Qvartz referenced in terms of success in turning a strategy into tangible business impact, and is consistent with empowerment of local leaders for strategic choices that we see in companies like Unilever, P&G, and Avon.

However, there is a potential risk in terms of loss of efficiency, consistency and choices that could be detrimental to the brands / business in the longer term.  For example Airbus outsourcing parts manufacture may have been a good P&L decision in the short term but it meant that IP became more available to competitors.

Turning data into appropriate and actionable insight

Most companies these days have more data than they can make sense of.

Companies are looking to balance ethical questions around data usage while leveraging insight from that data to create the level of personalisation of experience that consumers increasingly expect.

Analytical capabilities are evolving but there is still improvement required in terms of turning the data into actionable and timely insight. Strategists can help companies to make better use and sense of the data.

Current day management tends to be “pro data” but there is a risk that it has a placebo effect – we have dashboards that make us feel like we’re on top of market evolution but without the “so what” we may be missing the appropriate action. However, the right dashboards when used appropriately can be extremely powerful.

Personalisation at scale – product, variant, and experience

Research from Kepios shows that consumers expect personalized products, while looking for shared experience.

We segmented personalisation into brand / user experience, personalisation of product, and the nuance in variant and marketing messaging.

One of the strengths of the global MNCs is in development of globally relevant products, but with local variants / messaging to retain local relevance: an example shared by P&G was around sanitary towels across Asia where some markets respond well to the idea that periods won’t hold them back, others responding to a fitness message, and others requiring different messaging even if the product itself is consistent.

There are a number of startups that take full product personalisation to scale and there is an element of this happening in the MNCs (for example bars of chocolate with an individual name printed) but the bigger trend flagged around the table was around personalisation of brand / user experience.

Blockchain is allowing people to understand the specific story of the product and it’s ingredients, which is making the product feel more personal.

Approaches to innovation and disruption – different approaches but no silver bullet

There are multiple approaches to tackle innovation – including startup hubs, M&A, corporate VC, and in house innovation teams. Without it companies risk market share and relevance (Philip Morris and Walmart were referenced) but there is no silver bullet solution to date.

Unilever has set up a startup hub called Foundry (separate to Unilever Ventures) where anyone with a good idea (not only in consumer goods) can come into Foundry and leverage the resources (space, exposure, and industry knowledge) to develop it.  This has effective in created an innovation ecosystem and sparking ideas.

Other companies have taken an acquisition approach to innovation (for example Kellogg acquiring Kashi) – however, there was a concern raised about the detrimental effect of imposing corporate structure on the startup. What makes an innovation successful isn’t just a product recipe that can be plugged into the machine, it can also involve a way of working, culture, agility… factors that are harder to scale up and easier to lose.

In house innovation has been a large part of all businesses but tends to follow evolution and companies may be blindsided by revolution. Bose shared that each time they look to make a larger step in terms of innovation (e.g. new adjacency) there is a risk they are aware of to the core. However, in a world where competition is releasing new products far more frequently it is important to keep evolving. Don’t play by other people’s rules but find another way.

The value of Strategy Consulting in today’s world

These days, most consulting propositions include a balance of strategy, implementation, and technology.

Consulting firms often lack the level of industry knowledge that the client has, but they can bring a fresh prespective as well as adding speed and rigour that the in-house junior staff cannot. For example, McKinsey have a very strong aerospace team but even their leaders lacked the level of industry insight that Airbus held. However, they were able to execute a project with speed and rigour.

Engagement of key business leaders with the strategy formulation is important in terms of ensuring effective implementation.

Talent Challenges:

Every company would like more high calibre talent but in this region it is exacerbated by cultural difference. We may be trying to hire in location A, by the standards and norms of location B. For example, a concern around intrinsically lower creativity may be a challenge of unlocking latent creativity.

There was a comment made that web-like cross functional teams have been proven better and more agile than the typical hierarchical structure, particularly when it comes to transformations but this may be more of a challenge in hierarchical cultures.

Constraints in terms of ability to hire international talent is felt particularly in markets like Singapore where the local talent pool is smaller and in high demand.