RESEARCH REPORT
Total Enterprise Reinvention in Consumer Goods
5-MINUTE READ
August 1, 2023
In brief
- Consumer goods companies must move at the speed of life to compete with established brands and upstarts across new digital commerce channels.
- Total Enterprise Reinvention — continuous, dynamic change across every function and business area by leveraging a strong digital core — is essential.
- Building a flexible business that can constantly reinvent itself to align with consumer expectations will unlock a New Performance Frontier.
The time is now
In the past decade, we have seen a shift in power from brands to consumers.
Today’s consumer has a louder voice and more control than ever before. Loyalty is increasingly based on a complex set of factors beyond the traditional buyer values of price, taste and quality. At the same time, consumers are engaging with brands in incredibly fluid ways. Competition among deep-pocketed incumbents is fierce, and new competitors are emerging constantly: In the past decade, an average of five new consumer goods brands launched every week.
Retailers, too, have gained more power. Traditional retailers such as Walmart, Kroger and Tesco are monetizing their shopper insights to create new offerings to sell to consumer goods companies — following the lead of Amazon, whose ad business continues to expand by leaps and bounds, generating $37.7 billion in revenue in 2022 (a 25% year-over-year increase).
Amplifying this change is the ongoing disruption caused by innovative technologies. Generative AI, for example, will affect every part of the consumer goods value chain. Product developers are co-innovating with AI to discover new ingredients and craft new formulations. Marketers are using AI to generate dynamic and personalized content for their individual consumers. And consumers are becoming comfortable using AI to solve their needs — for example, asking ChatGPT what they should cook for dinner.
At the heart of the industry, and driving this change, is the human being. Humans are passionate about what they want — and highly unpredictable in how they translate that into behaviors, demands and purchases. Accenture’s consumer pulse research shows that consumers overwhelmingly believe we are living through a time of unusual — and pervasive — uncertainty.
54%
of consumers surveyed expect this level of uncertainty to continue past the next 12 months.
20%
expect it to last longer than five years. The pace of change in the consumer goods industry — already rapid — will only continue to accelerate.
Introducing: Total Enterprise Reinvention
In this age of disruption, the companies that succeed will be those that adopt Total Enterprise Reinvention. We call these strategic leaders Reinventors. Reinventors embrace continuous, dynamic change across every function and business area — and unlock human potential through a strong digital core. A handful of consumer goods companies have already made the commitment to adopt all the characteristics of Reinventors, which offer value in both financial and non-financial terms.
Financial impact: In consumer goods, Reinventors report generating:
8%
higher incremental growth
10%
higher cost reduction
19%
higher balance-sheet improvements compared with the rest of the industry
Rapid results: Reinventors across industries deliver 1.3x more financial value in the first six months of their transformation investments than their peers. This is predominantly because of their ability to move at greater speeds, enabled by their more sophisticated technology infrastructure and ways of working.
66%
Reinventors say they are moving “significantly faster” than before
360° value: Companies that have committed to reinvention already deliver better and broader value than their industry peers:
32%
better on sustainability
31%
better on experience — for customers, suppliers and employees
11%
higher on innovation
11%
higher on “net better off” outcomes for talent
7%
higher on inclusion and diversity
Six characteristics of Total Enterprise Reinvention
- Reinvention is the strategy.
- Reinvention goes beyond benchmarks, embracing the art of the possible.
- Reinvention is boundaryless and breaks down organizational silos.
- The Digital Core becomes a primary source of competitive advantage.
- Talent strategy and people impact are central to reinvention.
- Reinvention is continuous.
Navigating to a New Performance Frontier
Reinventors target a New Performance Frontier — the next-generation capabilities that will be the default in five years’ time.
We have defined distinctive capabilities that allow companies to:
Seek and scale new growth
Emerging brands and competitors have been creating and capitalizing on new waves of growth. Evergreen companies generate continually renewing growth through an expansive and life-centric view of market opportunities — and have designed their capabilities to pursue those opportunities at scale and at pace. At the core, this means the willingness to reinvent what we think our industry does to embrace holistic human needs — and to move quickly to build scaled, future-proofed businesses around them.
Create and deliver winning consumer and customer experiences
Companies must be “human first,” integrating human needs and preferences into every part of the enterprise — from R&D to marketing to supply chain — and partnering seamlessly with channel players to deliver what humans want, where they want it. We call this “life centricity.”
Unlock value
Consumer goods companies need to focus on a more holistic definition of value, continually reallocating internal and external resources to meet changing market demands and maximizing ROI beyond financials.
Power your people
Executives express concern about their ability to recruit, develop and retain the future-skilled talent they need. We’ve yet to come across a single leadership team that believes they have the skills and mindsets to drive reinvention. Technology dramatically transforms human productivity — and yet, economists have shown a growing productivity gap, as measured by real wages. In short, the industry has failed to realize human potential through the continuing waves of technology innovation.
Total Enterprise Reinvention drives competitive advantage
Total Enterprise Reinvention isn’t a to-do; it’s a to-be: an opportunity to continually reinvent and transcend not only present practices, but also future possibilities. There’s no going back — in fact, the gap between what technology makes possible and what’s being done in practice is widening, and the urgency to act is escalating.
The New Performance Frontier represents a roadmap to building a flexible business that can constantly reinvent itself to align with consumer expectations. The capabilities that define the New Performance Frontier 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.
Every consumer goods company should determine their unique New Performance Frontier across the capabilities and identify the organizational, operational and cultural obstacles to delivering ambitious, net-new growth in the near term and beyond. This will make clear which areas to prioritize to drive the highest value for their organization.
Total Enterprise Reinvention isn’t just important — it’s imperative, and over the next 10 years it will become the consumer goods industry norm. Those that embrace this philosophy the most profoundly and rapidly will be the most successful in the long term and most able to withstand whatever the future holds.
Ready to get started
Reach out to talk with one of our industry experts about Total Enterprise Reinvention and to complete a diagnostic to assess your organization’s performance and ambition against industry peers.