The gauntlet has been dropped for large consumer packaged goods (CPG) companies. Smaller, nimble CPG companies are disrupting the marketplace by reinventing home dining, delivery, grocery replenishment and health. In fact, 53 percent of reported growth in US food and beverage came from the smaller players, while only 2 percent came from the largest.1
1Amid the FMCG downturn, small manufacturers are tapping big growth; Nielsen, June 1, 2017.
Traditional CPGs need to figure out how to get to market faster with new products, services and experiences that delight today’s connected, engaged and demanding customers. Yet most are not sufficiently flexible or responsive. They are hindered by complexity across their business. CPGs need to become modern enterprises.
Some CPGs are pivoting to new ways of working across their enterprise to drive new innovation and growth. They are “starting their startups," i.e., modeling themselves after nimble digital companies through creating new, agile, self-organizing work teams. These “pods,” “squads” and “circles” foster innovation that leads to business growth, but getting this approach to take hold in traditional organizations has proven to be challenging.
To gain full adoption of this new way of working, and to unlock value, business transformation must start at the top. The CEO, CFO and CHRO need to team to create a fundamental shift in operating model, ways of working and talent.
Three actions can help executives increase the viability of their own company’s startup model.
Adapt the workforce model
CPGs are at various stages of readiness. Many organizations have tried to move to new ways of working by adding “innovation” as an extra project for their top talent. Not surprisingly, this hasn’t led to desired outcomes. To work effectively, the startup approach requires new workforce models integrating employees, machines and freelancers. Some leading companies are successfully creating their Future Workforce models by freeing people to focus on innovation and delighting consumers through the gradual transition of transactional activities to robotics and AI. They are also enabling an on-demand workforce through creation of flexible talent pools.