October 11, 2019 Rethinking Innovation in Manufacturing

Digital technology has fundamentally changed the way companies innovate – manufacturers cannot assume it’s business as usual.

October 11, 2019

By Laura Gurski, senior managing director, global lead of Consumer Goods & Services practice, Accenture

Innovation has always been central to manufacturing. But in today’s technology-dominated digital world, innovation doesn’t function like it used to. The strategies of the past hold less sway, and companies are having to rethink long-held beliefs about what innovation really means.

We’re entering an era where digital technology is so entrenched we take it for granted. Consumers communicate their needs instantly in the moment – and expect gratification immediately. In this “post-digital” world, competitive advantage lies not only in the products a company makes, but also in the myriad services and capabilities it offers alongside.

It means innovation is now as much about “how” the supply chain operates as “what” it produces. So, for instance, hyper-personalized on-demand fulfillment become as important as innovative product R&D. Indeed, according to Accenture’s Technology Vision for Consumer Goods 2019, 87% of leaders agree that customization and on-demand delivery will be the forces behind the next big wave of competitive advantage.

It makes delivering relevance at scale the essential play for companies looking to drive competitiveness and growth. Look at how PepsiCo’s new AI-enabled trend predictor engine analyzes online conversations to help determine what products, ingredients, or other innovations it might introduce in the future.

Or what about Beam Dental’s smart toothbrush? It tracks usage and offers personalized advice on improving customers’ dental hygiene. It can even be used to lower premiums on the company’s own dental plans. These innovations show we’ve come a long way from traditional product-focused R&D.

Innovation in the post-digital world

All manufacturers must be ready to draw on a new set of capabilities to provide the sources of insight and inspiration they need to innovate in the post-digital era.

That includes enhancing employee abilities through smart technology, data, and analytics (the “human+” workforce). Consider how Italian coffee brand Illy is using an AI engine to analyze consumer and product data to optimize offers and predict customer subscriptions. Combined with employee expertise, this is providing a powerful blend of human and machine capabilities.

Consumer-focused brands must also ensure they can capitalize on “momentary markets”. Modern consumer markets are complex entities, in which a multitude of individual opportunities emerge rapidly, and exist only fleetingly. To capture these moments when they arise, companies need exceptional levels of agility and insight. There are no second chances to get it right.

Look at how the Intelligent Brewing Company is creating the world’s first “intelligent” beer, using consumer feedback plus artificial intelligence to tweak recipes for each customer’s unique palate. This is responsive personalized manufacturing on a whole new level.

To capitalize on momentary markets, companies must be able to sense and identify customer needs before the competition – and potentially even before customers themselves. That means owning the direct channel to the end customer and using a wealth of data points to understand and predict behavior.

Leading manufacturers are already starting to acquire these capabilities. Coca-Cola’s marketers, for example, are now using big data analytics from a staggeringly high number of data points around the world – even from individual vending machines – to guide their brand and marketing decisions.

Getting ready for what’s next

To seize the manifold innovation opportunities on offer, there are three steps manufacturing companies should be taking.

First, exploring the next wave of technologies – specifically distributed ledgers, AI, extended reality and quantum computing (the so-called “DARQ” technologies). Many companies are already experimenting with at least one of these technologies, recognizing that they will likely form a core part of their businesses in the post-digital era.

Second, building a human+ workforce. Future innovation will require a workforce that is fully comfortable with and immersed in digital technology. Successful manufacturers are already adapting to this new reality, establishing workforce models that integrate their best employees and on-demand freelance resources with intelligent machines.

Third, securing their ecosystems. Ecosystems of partner organizations enable the supply chain to innovate far more effectively. When each participant has the confidence that data can be shared securely, the ecosystem is better able to spark new ideas and develop the innovations that will provide future competitive advantage.

Forward-thinking companies are well underway on this journey. They recognize we’re on the cusp of an entirely new era – one in which baseline customer expectations are continuously raised higher and higher. To keep up, smart companies are rethinking what innovation means – and how they can deliver relevance at scale to a marketplace of millions of individuals.

Laura Gurski

Laura Gurski is senior managing director of Accenture’s consumer goods and services practice where she oversees the development and delivery of marketing, customer service, commerce and sales transformation services. 

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