“You can get to work. That’s all it is. You just begin.” So says Matt Damon in the movie The Martian. Damon plays astronaut Mark Watney, accidentally left behind on the Red Planet for nearly two years.
In one scene, Watney tells a classroom of eager NASA cadets about his approach to adversity – how it kept him alive until rescue came. “You solve one problem ... and you solve the next one ... and then the next. And if you solve enough problems, you get to come home.”
In the movie we see Watney refusing to accept the odds stacked against him. He finds ingenious ways to conserve scarce resources, like water. He labors constantly to create and develop new resources – like seeds and a microclimate – that tip the odds in his favor.
Watney is a powerful example for executives in consumer products as well as other industries: cost-cutting (conservation) and investing for the future (development) are not mutually exclusive; they can be in balance. And if you get that balance right, and keep it right, you have a bright future.
But what is the right balance?
In consumer products, I see too many companies that are struggling to find the ideal balance in their organization. Too often, there’s a bright a spotlight on costs – intensified by pressure from activist investors – and too little focus on the kinds of continual investments that will propel profitable growth over the long-term.
In my experience, not many industry CEOs can say with confidence that they’ve figured out how to grow – and how to grow profitably – in the current environment. They face white-hot competitive pressures, digital everything, disruption from totally unexpected places, volatile emerging markets and consumers who are savvier and less loyal than ever.
What are the challenges?
The pressure to perform is no surprise. Recent conversations EY had with global industry leaders show that more than two-thirds of them think it’s harder to sustain profitable growth today than it was a decade ago. But awareness clearly does not equal action. An alarming proportion of those we’ve talked to say that big changes aren’t really possible without an external catalyst — such as a merger or moves by an activist investor.
An enduring challenge is that many consumer products companies are held back by their heritage. It’s not uncommon for us to hear executives fret that they’ve got to “protect the brand and the company’s personality.” Yet in reality, today the brand is effectively owned by the consumer. For many companies built on the brand management model, that’s a hard truth to hear.