Recently I had lunch with the kind of person you don’t meet much these days: a CEO from the consumer products industry who was feeling optimistic about the future. Their enthusiasm was a timely reminder of just how important – and rare – a positive mindset is right now.
There’s no doubt this individual is in the minority. Recent EY research shows, for example, that less than a quarter of respondents said they feel confident in their organization’s ability to innovate in response to changing customer behavior.
I believe that there are five simple mindsets consumer products leaders could adopt that would help them seize the upside of disruptive change and overcome some of the imbalances that remain widely apparent across the industry.
Such imbalances include a persistent tilt toward short-term results; over-reliance on cost-cutting to buoy the bottom line rather than fund growth; and on-again, off-again romances with emerging markets.
Meanwhile the consumer – the all-important “C” in “CPR” – gets neglected.
I have written in significantly more detail about all five mindsets here, but here’s a quick heads-up on three of them:
Mindset 1: Cutting that fuels growth
Too many companies appear intent on cutting costs at the expense of growth. With private equity challenging established margin benchmarks, shareholder activism rife and pressure to maintain returns despite falling volumes intensifying, this is understandable. But while such cuts will help margins in the short-term, they risk damaging the company’s long-term health. Cuts have to be matched by investment: companies need to encourage a firm-wide mindset that cost cutting is ‘fuel for growth.’
Mindset 2: Be fast, be flexible
The immediacy of digital, coupled with greater market volatility, means speed and agility are paramount. In response, companies must nurture a culture in which ideas and experimentation are encouraged. This means being bold enough to embrace open innovation, tracking success, moving away from linear approaches and being willing to fail in order to eventually succeed.
Mindset 3: Consumer first, investor next
Leaders need to ensure that the consumer is at the center of decision-making, rather than the investor. This can mean putting emerging markets consumers at the center of R&D efforts, making use of advanced analytics and social listening. As interest in niche brands grows, and supply chain traceability becomes more important, companies that are closer to the consumer will be better placed to build flexible supply ecosystems.
In a recent blog post I urged consumer products leaders to clear out any blockages in their innovation processes, dump baggage from their portfolios and eliminate organizational sclerosis. Likening the approach to a form of corporate yoga, I recommended that firms should develop flexibility to gain agility.
But yoga is about mind as well as body; dealing with mental blocks as well as the physical. So, which mindsets do you and your team hope to adopt?
This blog was originally published on LinkedIn, July 2016, under the headline “Growing Consumer Products - Is it All in the Mind?”