May 18, 2018

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Changing consumer needs, combined with shifting workforce expectations, are altering the competitive landscape and dictating transformation of existing company operating models for consumer industries.

These companies are facing wholesale change—from defining how technology reinvents entire functions to how the organization manages new workforce models to how to unlock value with cross-industry ecosystems.

But it is not just the nuts and bolts of a company that need to change. Stakeholders demand a new level of accountability and corporate responsibility from the C-suite. To turn a profit is no longer enough. Outcomes must work not only for the business itself but also for the greater good of a larger group—consumers, the workforce, shareholders, communities, and the environment.

Nimble digital competitors are showing growth that the largest consumer goods and retail companies are not, for multiple reasons. While disruptive technologies negated many of the advantages historically enjoyed by only large companies with scale, these same technologies have changed the way consumer goods and retail companies create value. An empowered consumer has changed the growth game. Today, digital competitors are using new business models to win, attracting and retaining consumers by reimagining products and services to meet consumers’ changing needs. Market leadership requires companies to create distinctive insight about the consumers they serve, insight drawn from data that only consumers themselves can provide.

As consumer landscapes continue to rapidly evolve over the next 10 years, incumbent consumer goods and retail companies have a window for transforming, and in doing so, they must adapt the characteristics of disruptors. Accenture, in conjunction with the World Economic Forum, has created a vision of the operating model of the future for consumer industries. These seven transformative characteristics are essential in three main areas of an operating model.

Mindset: Companies will create a profound shift in culture and ways of working. A future company’s mindset will be:

  • Human: Purpose is deeply embedded in the organization of the future. Wise leaders will enable individuals to be entrepreneurs and masters of their own fate. Workers will be empowered to drive business outcomes, have material impact, and continually develop their potential.
  • Living: Business will combine external awareness and a highly agile organization that continually reshapes and adapts to a volatile market. Many digital disruptors are already there, with 62 percent saying their operating models respond quickly to changing market conditions. Only 15 percent of today’s industry leaders think the same of their own operating models.
  • Enhanced: The use of technology and analytics will transform each function as workers use technology to augment innovation and productivity. Already, consumer industry disruptors have digitalized 50 percent of their processes, compared to just 27 percent digitalized by incumbent consumer industry companies.

Structure: Enterprises will break down the boundaries between themselves and the broader market, becoming:

  • Ecosystem friendly: A network of relationships enables participating companies to accomplish far more working together than they can alone. This requires a fundamental reexamination of what companies should do themselves and what they can do working with others. It extends into end-to-end consumer solutions, data sharing, and open innovation.
  • Modular: Companies enable diverse business models to leverage central capabilities, while also enabling external organizations to access their assets. By establishing a plug-and-play structure, company leaders efficiently accelerate the development and integration of new business ideas, start-ups, acquisitions, and external capabilities.
  • Fluid: Companies source and manage their workforces by accessing the best talent at the right time. They seamlessly integrate and holistically manage talent across five workforce models that include permanent employees, company affiliates, partners, publicly available talent, and consumers.

Economic Viability: Companies will develop operating models that generate lasting performance and sustainable impact. A future company’s legacy will be:

  • Enduring: Companies will create organizations that can survive for the long term through building deep consumer understanding and robust supplier relationships that protect production in a resource-constrained world. Changing consumer behavior—driven by the emergence and fast adoption of innovative technologies—is making many question whether consumers have fallen out of love with big brands.

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SOURCE: Accenture Strategy 2017 study, “Tech-Led Change in M&A”, a survey of 1,100 C-Suite executives representing 13 industries in seven countries. Accenture Strategy explored strategic areas and opportunities where companies are harnessing technology to increase business value.

Changing the operating model is no small feat, but it is necessary for companies to achieve sustainable results in an ever-changing world.

Strategy defines the company’s purpose and goals, while business models set how the company captures value and goes to market. When companies design their operating model, it is crucial to take a zero-based “clean sheet” approach. They are building the organization to create value and deliver the strategy; the core should focus on the muscles required to win.

Today, that means focusing on delivering core functions with efficiency and process excellence and then leveraging the broader market and ecosystem for those functions that are not critical to winning. With a strong core, companies can utilize experiments to test new ideas and ways of working. Using data to seek opportunities, challenge the organization to continuously improve, and share the results will motivate change. Working in this manner, the operating model will be fluid, evolving over time.

Massive changes in the market require massive transformation within consumer goods and retail companies. Changing operating models now is essential to claiming leadership in the digital age. There’s no time to lose.

Click here to learn more from Accenture Strategy.


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