How Can Consumer Brands Pivot to Profitable Growth?
Paul Prendergast, Managing Director for the Consulting practice in the Products Industry at Accenture, looks into the role of CFOs of consumer brands and their unique position to help unlock growth.
Consumer brands are at a crucial point in their competitive journey. Traditional market-leading positions are under threat from all sides. Consumer expectations are changing profoundly and permanently. And a host of new digital-by-birth market entrants are making hay in a rapidly levelling competitive playing field.
It makes for a highly uncertain, disruptive environment. And it means consumer relevance is now the number one priority. Today’s consumers expect brands to know them inside out – and use that knowledge to deliver authentic products, services, and experiences that are entirely relevant when it really matters.
Doing this at scale takes an incredible amount of organisational agility. It also calls for a rethink of the entire value chain, all the way from developing new concepts, through manufacturing, to the store shelf and beyond.
The traditional operating models simply weren’t designed for this level of complexity. Successful companies will be those who achieve an incredible amount of organisational agility – something that many businesses just don’t have yet.
To find new growth, brands must solve these challenges, injecting agility across the value chain, leveraging a wider ecosystem of partners, and delivering relevance at scale for a marketplace of millions of individuals.
Successful companies will be those who achieve an incredible amount of organisational agility – something that many businesses just don’t have yet.
Enter the CFO
Chief Financial Officers (CFOs) are uniquely positioned to help drive this journey forward. They have the necessary insights to build the business case for change, targeting operational improvements and the use of new digital technologies. And they have a crucial role in driving the efficiencies in the core business that will fund the pivot to more profitable growth.
Accenture’s research shows that CFOs see their role is changing. They’re now just as likely to view themselves as “value champions” and “transformation drivers” as their more traditional business functions. For instance, 81% of surveyed CFOs say targeting areas of new value across the business is a major focus, while 78% say they lead efforts to drive business-wide operational transformations and efficiencies through digital technology.
CFOs understand the need for speed and agility today, with over half those surveyed (58%) saying they’re working towards real-time analysis of business performance. Notably, that’s expected to rise to a massive 89% in three years’ time – the highest proportion of all the sectors Accenture surveyed.
New roles, new skillsets
Delivering relevance at scale means adapting the consumer goods supply chain for new levels of personalisation and multiple sales channels. Given the challenges of doing this alone, most brands will need to leverage a much wider ecosystem of partners across the value chain. And here CFOs have a vital role to play. Bringing a data-driven approach to selecting partners, CFOs can ensure this complex endeavour remains focused on the value-adding outcomes the business is targeting.
CFOs themselves say that anticipating and managing risk, long-term strategic thinking, and insight into new technologies are now their most important capabilities.
When it comes to operational efficiency, CFOs are also increasingly looking beyond SG&A expenses to target the cost of goods sold (COGS). Zero-based budgeting is a methodology gaining traction in consumer goods, with Accenture’s research showing the greater visibility it brings can lead to rapid COGS savings of up to 10%.
In addition, consumer goods CFOs are taking a lead in data governance. They understand the value of data and see it as a strategic business asset, with 84% of finance departments taking responsibility for their organisation’s data governance (higher than in any other industry surveyed). In fact, Accenture’s research shows that “inconsistent, inaccurate and inaccessible data” is viewed as the greatest challenge facing today’s consumer goods CFOs.
These new requirements are changing the CFO skills profile. CFOs themselves say that anticipating and managing risk, long-term strategic thinking, and insight into new technologies are now their most important capabilities. What’s more, they know the broader finance function needs to change too, with the ability to innovate now the most sought-after capability for junior finance staff.
Five actions every CFO should be taking today
So what are the immediate priorities for consumer goods CFOs as they drive relevance at scale for their brands? There are five actions every CFO should be taking today:
1.Digitalise finance – then the company.
Finance is an ideal testing ground for digital technology, automation, and AI. CFOs should be using their experience and lessons learned to drive a digital transformation across the business.
2. Harness data for insights.
CFOs know the value of data visibility and should champion the use of real-time analytics and insights across the C-suite and beyond.
3. Develop the future finance workforce.
CFOs should be planning holistically for their future talent needs, including promoting the greater use of AI and other innovative digital technologies.
4. Drive a deep transformation of operations.
CFOs should be considering zero-based budgeting as a means of creating spend visibility, driving the efficiencies that can fund a pivot to new growth.
5. Be the architect of value.
CFOs should be influencing decisions about ecosystem partner organisations, ensuring every move is focused on delivering ultimate value for the business.
Above all, CFOs need to put themselves at the centre of business decision making as their companies pivot to the operating models that deliver consumer relevance and capture new growth opportunities in a highly complex, uncertain, and ever-evolving consumer goods marketplace.
For more information, please go to: https://www.accenture.com/us-en/industries/consumer-goods-and-services-index