October 12, 2021 Four Principles to Drive Growth

Why manufacturers need fresh thinking to grow market share.

The path to growth has never been so complex. For many large manufacturers, growth has proved elusive in recent years with many losing market share to smaller and more agile players who were better able to combine digital operations with data and analytics to respond faster to market trends.

Combine this with a global pandemic and months of disruption and uncertainty, and the search for growth doesn’t appear much easier.

As consumer expectations and behaviors continue to disrupt category norms, still don’t know exactly which of the new habits and behaviors consumers picked up during the pandemic will stick, or to what extent. But we do know their changing preferences and expectations are disrupting category norms.

The tipping point

In fact, we’ve now reached the point at which traditional retail models simply can’t deliver the growth they once did. Incumbents know they must be more operationally agile, better at using data, more creative in their use of digital technology, and able to move faster to capture new opportunities as industry boundaries blur.

Research from Accenture highlights the scale of the challenge facing today’s companies. For instance, we found that, absent a change of approach, the top 20 consumer packaged goods companies will grow five times slower than their smaller category competitors over the next five years.

The need to change is now essential. But it won’t be easy. In an uncertain business and consumer landscape, it can be difficult to see the way forward. However, there are four overarching principles that can help guide company leaders’ thinking.

#1 Success is more than financial performance

Of course, financial performance still matters. But in measuring business success it’s only part of the story. When Accenture analyzed hundreds of earnings reports, for example, we found that while 90% of the self-reported focus was on financial performance in 2015, this had dropped to 60% by 2020.

This is creating space for other drivers of growth—business purpose in particular—that align with evolving consumer, employee, and investor priorities. Just look at how Unilever has identified 28 Sustainable Living Brands which have consistently outperformed other products on growth.

#2 Growth is now found in unfamiliar places

Traditional “buying in” growth strategies such as expanding geographical reach via acquisitions, are being supplanted by more flexible data-driven approaches. These alternative growth models exploit digitalized routes to market to scale the business model from one category/market to adjacent categories and/or new markets. A study of $730 billion worth of M&A deals over the last five years found that deals focusing on geographic expansion made up just 16% of the total in 2020 – down from 67% in 2015.

#3 Drive growth by working with others

In the new manufacturing landscape, it’s not just that business models and routes to market are becoming much more diverse, there’s also now a much greater emphasis on rapid innovation in products, services and experiences. This growing complexity can simply be too much for any one organization to manage on its own. The obvious solution is to share the burden by working with others. Indeed, the research shows that almost 60% of companies are now trying to drive growth through building ecosystems.

#4 Data shows the way

An effective data and analytics strategy has become central to business growth. But creating insights that the business can use at scale is still challenging. Around three-quarters of executives told Accenture they struggle to scale capabilities like artificial intelligence across their business.

The goal is to have a truly holistic data model for consumer goods with a clear structure around what data is required, where it comes from, how to use it, and how to measure success. It’s arguable that no-one has cracked this yet, although some are making big strides forward. For instance, Coca Cola is using its intelligent Freestyle vending machines to mine huge volumes of data for optimizing products, locations and consumer targeting.

Practical steps on the path to growth

As companies respond to these trends, there are some key principles to bear in mind:

To be an effective driver of growth, a company’s purpose has to be more than a marketing tagline. So look to “pressure test” your purpose by empowering the whole organization to hold itself accountable with transparency and rigor.

Be proactive about finding partners that can help unlock new capabilities and customer experiences, focusing on shared incentives as well as transactional efficiency.

View data as a strategic asset and be prepared to redefine the role it plays across the business—while identifying where your current insight gaps are.

Press ahead with advanced analytical capabilities like artificial intelligence in the cloud, but remember that data alone can’t drive disruption. It needs to be combined with human insights to have a real impact.

There’s little doubt that the greater complexity and speed of change has made growth harder to find than in the past. But for those that can get it right, this is an exciting time, with huge rewards on offer. This is both the challenge and the opportunity facing leaders today.

Oliver Wright the global lead for Accenture’s Consumer Goods and Services industry group. Oliver works with the C-suite of leading companies to set strategy and guide growth, developing offerings and thought leadership to help consumer goods clients become more agile and innovative, transform and reshape their businesses for growth.

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