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Digital Transformation is Rewriting CG Business Models

10/3/2016
We all have those “right now” moments. Maybe it’s after a visit to the doctor, when we decide we want to take better control of our health. Or it’s when we see a recipe in a magazine that looks interesting and makes us think we should change up our dinner routine. Or maybe it’s one of those simple instances where we unexpectedly run out of a basic household supply and want to reorder it at that very second.

This is the new reality in the digital economy, where consumers expect to get what they want, right at the moment they want it. And it’s put significant pressure on CG companies to meet consumers in those moments of need – in the time and place they occur – or risk missing out on the consumer engagement opportunity entirely.

It’s no surprise then that many CG companies are looking to digital technologies to transform how they engage with consumers and deliver these in-the-moment outcomes and experiences.

According to a survey conducted by The Economist Intelligence Unit (EIU) and sponsored by SAP, 44 percent of CG company executives said that improving the experience they offer their consumers and retail partners is a digital-transformation priority – higher than any other priority. Additionally, 43 percent of CG company executives said that understanding and quickly responding to consumer needs is the most important element for the success of their digital initiatives.

CG companies looking to put digital technologies to use to achieve these goals can learn from some CG companies that are already testing the waters with very compelling digital strategies. These innovators are challenging the traditional idea of marketing, CG business models, and even operational roles and responsibilities. Let’s take a look. 

A New Notion of Moments
Some CG companies have enabled consumers to reorder everyday essentials in their home with the simple push of a button. Some are taking it a step further, allowing consumers to automatically reorder anything from pet food to laundry supplies when a connected device detects supplies are running low. Others are using mobile apps to interact directly with consumers in real-time, learn about them as individuals, and deliver personalized content or offers based on that information.

In all of these instances, CG companies are applying technology to transform consumer engagements and interactions. And in doing so, they’re fundamentally changing business models and reshuffling organizational responsibilities.

CG companies have long built their operations around moments of truth. This approach focuses on two moments – when the consumer buys a product and when they use it – with products that are designed to be standard across the broadest possible group of consumer segments. It also favors big marketing campaigns that are designed to build awareness and push brand recognition, and a value network that is defined for efficiency of scale.

However, consumers in the new digital economy not only want something different, they want something more.  They don’t want to be influenced or sold. They want just-for-me experiences, in which CG companies help them get what they want, when they want it and how they want it. As a result, CG companies are increasingly moving from “moments of truth” to “moments of opportunity.”
This approach involves creating ongoing, personal engagements that are relevant to each individual consumer, and that help the CG company better understand each consumer.

Such engagements can only happen, though, with agile value networks that can sense, create and deliver outcomes in real time, right in the consumer’s moment of need. Which brings us to another critical organizational aspect of digital transformation: the changing role of IT.

A Leadership Role for IT
The IT department has traditionally been tasked with making systems reliable, taking ownership of technological assets and providing efficient, cost-effective IT competency. But digital transformation has led CG companies to rethink the role of IT as a partner. Now we look at IT as critical in helping the business understand consumers and deliver in-the-moment experiences through the application of innovative technologies.

Findings from the EIU survey, however, indicate that many CG companies still have a gap between the role they envision for their IT department and the role it actually fulfills today.

For example, only 4 percent of CG company executives said their IT department has a leadership role in identifying opportunities to innovate – while 30 percent believe that it should have such a role. Additionally, 21 percent said their IT department has a leadership role in understanding and quickly responding to consumer needs – yet 38 percent say the department would assume this role in an ideal world.

The changing role of the IT department begins at the top. The CIO is now expected to be a courageous visionary who can create a compelling vision of what it means to transform the business through technology and tools. They’re expected to lead through influence rather than through ownership, and to have digital competency in addition to technical competency.

Is Your Organization Ready?
The EIU survey findings reinforce what many CG companies have experienced firsthand: digital transformation is central to meeting consumers’ evolving expectations and succeeding in the digital economy.

This is creating significant opportunities for business leaders, and especially IT leaders, to rethink their roles and the leadership contributions they can make to help drive their company’s transformation efforts. Through that change, however, it’s important to always keep consumers at the center of the business goal. After all, they have changed as well, and now it’s our job to keep up.

For more analysis and full data from the EIU survey to see how CG companies are faring in the digital economy, visit http://digitising-it.eiu.com/.
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