January 9, 2014
CPG companies are a great example of what Business Agility really means in “The Age of the Customer”. They produce tissues, disinfecting wipes and cold remedies are finding new ways to predict and chase outbreaks around the country.
Forrester is putting significant effort into Business Agility – what it is, how it relates to the success of companies within industries, and what foundations business agility is built on. Our recent study of agility and performance found that high-performing companies were building agility into their core business. (see recent Agility Performance Report)
No where does this seem more true than CPG industry. CPG has been innovating in – Market Responsiveness – one of forrester's 10 dimensions of business agility. This means simply understanding what’s going on in your market and shifting strategies and resources to respond. In the CPG context, it means to figure out when people are getting sick and ramp up marketing, and then reduce expenditure when people are well.
Let me back up for a minute. For this and all ten dimensions of our Business Agility framework, we have awareness and execution indicators. For awareness, leading CPG companies use social media and on-line snooping to watch our health. They watch when we get flu shots, search on line for symptoms, or even when we complain about coughs and body aches in social media. This snooping may make you uncomfortable. Welcome to 2014. But in terms of our Business Agility model, they are a poster child for our awareness indicator for market responsiveness. They also rate high scores for execution by shifting resources rapidly to respond to the insight gained, targeting that zipcode with commercials and other ads on hand, ready to attack markets where the illness is just starting to pick up.
Social media is the key to this market awareness Clorox Co. maker of bleach and germ-killing wipes, and Procter & Gamble Co., which makes Puffs tissues, keep track of flu search trends on Google –people searching on "flu contagious" and "walmart flu shot”. Clorox is also mining chatter about the flu on Twitter allowing them to identify hundreds of ZIP Codes with higher numbers of tweets or discussions about the flu. The company matches ZIP Codes with stores across the country, to make sure shelves are well stocked.
Our Business Intelligence agility dimension is also Key. Kimberly-Clark has an online flu-prediction tool with a proprietary forecasting model to come up with a cold and flu forecast. The model uses social-media discussions, weather and air-travel patterns, over-the-counter drug sales and (I find this particulalry interesting) public events that could increase transmission opportunities. Reckitt Benckiser Group PLC, maker of Airborne vitamin supplements and Mucinex cough remedies, uses search data from WebMD users to the identify outbreaks.
Business agility is the new must have in the “Age of the Customer” where market demand, collapsing product life cycles, and technology-enabled alternatives are the norm. CPG is a great example of not depending solely on traditional distribution, but using emerging technology to heighten awareness – having a stethoscope directly on the beat of the market.