2) Rapid-Fire Pace of Innovation Requires Data & Analytics Competency
The rapid-fire pace of technological and digital innovation has the potential to define winners and losers in the CPG industry, and an integrated core competency around small data, Big Data and analytics is a requirement for the winners.
The CPG industry is entering a new era in which the rapid pace of innovations, fueled by exponential trending technologies, will produce an “exhaust” of totally new forms of data, the likes of which (volume, variety, and velocity) the CPG industry has never seen before.
Technological and digital Innovation will be a driver of strategic growth in this new era, and innovation and Big Data analytics will go hand-in-hand. A CPG company’s formula for growth will require an integrated competency around innovation, data, and analytics.
Savvy analytical competitors (traditional and emerging) will use their analytical maturity as a barrier to entry for their competitors by being able to rapidly test, adopt, and scale innovations across functions. This ability has the potential to separate the winners from the losers.
To illustrate this point further, consider the following competitive scenario presented by Marcus Shingles, Principal at Deloitte Consulting:
This formula for growth has proven itself in the past within the CPG industry. When the POS system became a mainstream technological innovation in the early 1990s, it produced what, by the standards of the day, would be considered Big Data. Some leading CPG companies turned that data into analytics and insights (e.g., category management), and as a result grew share and gained competitive advantage (e.g., category captain). The video below presented by Marcus Shingles, Principal at Deloitte Consulting, further illustrates this point.
Similarly, in this next wave of innovation, CPG companies with a strong analytical maturity will be better prepared to capitalize on and keep up with the volume, variety, and velocity of Big Data available to aid in decision making. They will have the capabilities to integrate these new sources of data with their existing data assets to produce new insights and drive profitable growth.
Those companies lacking the required foundational analytical competencies (as discussed in Recommendation and Conclusion 1 with the Analytical Maturity Model) will be challenged to even partake in many forms of emerging technological and digital innovation. With the exponential pace of change contrasted against the industry’s historical linear pace of change, the “quick-follower” and “late adopter” strategies may not be sufficient to remain competitive.