Research Report
The Future Ready CPG: Powered by humans
Putting humans—not consumers—at the heart of everything you do.
5-MINUTE READ
August 27, 2022
Success in this new world calls for a new breed of data-fuelled, human-led business, able to effortlessly reimagine growth, and endlessly re-engineer themselves to capitalize on it. We call these Future Ready Businesses.
A new dawn for the CPG industry
In the CPG industry, “The Era of the Brand” is over. Today, human beings—not companies—are the ones who own and architect your brand. And emerging business models from industry disruptors prove that individuals expect to be active participants at every stage—as investors, manufacturers, creators, marketers and even sellers.
What’s changed? Technology and large-scale cultural forces—including the pandemic—have fundamentally altered how people live and seek to satisfy their needs. Other challenges threatening the industry’s long-term prospects for growth include competition among deep-pocketed incumbents and ever-tighter margins as advertising, raw materials and other costs continue to rise.
CPGs have a choice. They can be relegated to being simply the makers of products, or they can embrace the data that will help them rethink roles and relationships, and ultimately reaffirm their critical place in the lives of human beings and shape the future of commerce.
At the heart of this change is the human being
By putting real people at the center of their thinking and embracing the potential of new technologies, CPGs have the opportunity to redefine the industry.
68%
of people plan to shop more health-consciously. (*)
42%
of people have purchased a physical good in a virtual world. (*)
7.1x
Sustainable brands are growing 7.1x faster than conventional products. (*)
*Datapoints taken from Accenture Research, NYU Stern Center for Sustainable Business
CPGs need to embrace 360° value
In the past, investors saw CPGs as the providers of slow growth and reliable returns. Today, investors are asking companies to look at new sources of growth as well as demonstrate resilience and responsibility. Financial success is not enough.
CPG companies need to embrace what we call 360° Value. This means looking beyond short-term financials to understand what generates enduring, long-term, sustainable value in a world where people are more empowered than ever to choose the companies with whom they engage.
The path forward for Future Ready CPGs
CPGs have typically focused on winning by targeting current industry best practices. But given the rate at which technology and consumer habits are evolving, what is “best-in-class” will have changed by the time the company gets there. Thus, CPGs should take a cue from hockey great Wayne Gretzky: Skate to where the puck is going, not to where it is. Future Ready CPGs will make the leap to mastering emerging capabilities in the areas where they must win—before the puck is out of reach.
Future Ready CPGs will be a new breed of human-led, data-fueled businesses, able to reimagine, grow and endlessly reengineer themselves effortlessly. With 360˚ Value as their North Star, these companies will have the visibility across their value chain and the flexible manufacturing capabilities to put real human beings—with all their complexity, contradictions and unpredictable shifts in taste—at the heart of everything they do.
Embrace the 5 principles of a Future Ready CPG
The transformation to being Future Ready begins when companies learn to incorporate humans as active participants in forging and defining their brands. Future Ready CPGs will adhere to these five core principles:
- Seek and scale new growth, redefining the industry and their growth potential.
- Create and deliver winning experiences, co-created with people and flexibly delivered as the partner of choice with customers and across the value chain.
- Power their people so they can be human agents of new growth.
- Unlock 360˚ Value through seamless, dynamic investment of resources.
- Embrace sustainable purpose, integrated in their strategy, delivered through their offerings and executed through their operating model.
Set a course for steady, long-term growth
Though Future Ready CPGs will demonstrate proficiency in all 12 characteristics, not all should expect to achieve world-class status in every characteristic in the near term. These characteristics are meant to help leaders forge a clear view of the long-term strategy for their company against which they can execute in the coming years.
As you make progress against each of these principles and characteristics, your organization’s definition of value will change for the better, with less emphasis on short-term financials and a better alignment with 360˚ Value. This is a formidable challenge, but one that will help set a course for perpetual growth.