For leaders at a global consumer products company, the biggest challenge is to keep your organization transforming fast, so it’s always ahead of the changing consumer. To stay relevant, you must deliver multiple business models, strategies, and propositions fast. But you can’t build a different operating model every time you need to do something new. You won’t have time and it would cost too much. Instead, you need to create more agile, responsive, and resilient ways of working that enable you to pivot overnight.
Many organizations are struggling to create that kind of operating model, according to a new report EY commissioned from MIT SMR Connections. Based on a global C-Suite survey and interviews with CEOs and industry researchers, the study explores the challenges organizations face as they change their operations to meet evolving consumer needs. Eighty-six percent of the C-suite said transformation was essential to becoming future ready, but the study reveals great uncertainty as to whether leaders are taking the right steps to steer their organizations.
Further down this piece, there are five design principles that can help you keep your transformation on track. First, here are three priority actions for you as consumer products leaders:
- Set a leadership vision that disrupts organizational barriers
You might be on a transformation journey, but are you bringing your organization with you? It’s part of the leader’s job to challenge orthodoxy and inspire action. But in the survey, 63% of leaders expected their corporate culture to be a source of resistance. And 55% said failure to orchestrate a transformation roadmap was another potential barrier.
As one CEO interviewed in the study said, “[successful transformation] is going to require org structure change and leadership change that cultivates creativity and encourages employees to not think with the traditional corporate mindset”.
- Be realistic about how long it takes to build capabilities
The leaders in the study are working to create the capabilities needed to reach their corporate goals, and they’ve set very ambitious deadlines. For example, 61% say it’s critical for them to create a flexible talent pool within two years. But as an adjunct professor quoted in the report said, “For every operational innovation I’ve studied and written a case study about, it was a three-to-seven-year effort just to get everybody on board, align the incentives, and get buy-in”.
- Start from what’s needed in the future, not from today’s capabilities
The pace of change requires transformation even in areas of perceived strength. In the study, 77% of leaders said they had the emerging technologies and analytics capabilities needed to transform their operating model. At the same time, however, 70% said the need to upgrade their technology infrastructure created a significant barrier to transformation. This contradiction illustrates the gap between having what is needed for today versus tomorrow and has consequences for defining and delivering on a transformation agenda.
Adopting an ecosystem-based mindset is an effective approach to supplement or even replace capabilities critical to achieving transformation goals. This will help free up capacity that enables focusing efforts on areas of highest value creation. Among the leaders interviewed, it was noted that CP companies must build decentralized ecosystems for every part of their business.
Leading systemic transformation
You need to create a transformation mindset and set a C-suite agenda that reflects a new reality: the global pandemic, economic uncertainty, technological change, and other factors have profoundly changed and will continue to change every aspect of the consumer’s life – their needs, expectations, and behaviors.
The challenges and opportunities this creates for your business are by nature systemic – they impact all your operations. But most operating model transformations are not systemic. They focus on specific business functions, not the system as a whole. They are about taking incremental steps along a linear roadmap towards an end goal. This is too narrow and inflexible for the times we are in. Transformation efforts that are designed for the world as it used to be are likely to falter or fail completely.
The future belongs to companies that are agile, responsive, and resilient. You can build those key characteristics into your business by applying the five design elements set out below. They are shown as a list, but they are all interconnected. Doing well in one or two is good but not enough – you need to master them all. And you need to do that in a way that builds and sustains trust – with consumers, your people, and all your ecosystem partners.
- Harness dynamic ecosystems
Make your organization part of a connected, dynamic and flexible ecosystem that integrates your consumers, customers, suppliers, partners, data research companies, start-ups – and sometimes even your competitors. Everyone in the ecosystem has a role in creating value. They will all benefit from a share of it.
- Embed digital and data into your DNA
Create a listening organization – one built on data and analytics that enables you to make the right decisions at the right time. Digital networks and their data flows are the connective tissue and nervous system that enable the ecosystem “body” to function. Many companies are prioritizing analytics, but that’s not enough.
- Embrace talent flexibility
Develop people with deep skills in key areas like technology and data transformation, but you also need brilliant generalists across functions with the mindset and capabilities needed to work together in new ways. An adaptive workforce and culture thrives when supported by emerging technologies and new ways of working.
- Innovate at scale
Involve everyone in the effort to innovate. People on the front line, dealing with consumers and ecosystem partners daily, are often the best sources of ideas. But these ideas are often not captured, or rigid processes stop them from gaining traction. The most successfully innovative companies support cultures, technologies and processes that capture, rapidly develop and scale ideas that work.
- Let your purpose shape everything
Embed your organization’s purpose in everything you and your people do, every day. It will define your value propositions, your role in ecosystems, how you attract and retain talent, who you partner with, and which consumers you serve. Sustainability and purpose are key drivers of value, but they aren’t always made an integral part of operations.
By Kristina Rogers & Steve Basili
Read the full article at https://www.ey.com/en_us/consumer-products-retail/delight-consumers-with-one-operating-model.
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