Patagonia is a leader in social responsibility, paving the way as a role model for other corporations with flexible work, maternity, and adoptive leave, and paid time off policies. In addition, their Social/Environmental (SER) team considers the social and environmental practices within the supply chain that meets quality standards in areas such as financial stability, adequate capacity, and fair pricing. Because of their commitment and evolving flexibility to adapt to the world’s needs and anticipate social and digital transformation, the company is a leap year ahead of the shift in consumer goods.
Patagonia is a standard-bearer; however, they are not alone. Consumer goods corporations like Zappos, Watkins, Malouf, and Lululemon, to name a few, all have forward-thinking ESG and DI&E practices to address current issues and stakeholder expectations.
A recent report compiled by a McKinsey team suggests that the disruption – digital technologies, e-commerce giants and price pressure, consumer preferences, and small brands – of the consumer goods industry has affected profitable growth. The way forward includes more consideration of corporations’ role in sustainability, climate challenges, and supporting employees through life during and after the pandemic. To achieve a sustainable competitive advantage in the post-pandemic world, companies must consider their overall model and participation in the marketplace.
“This approach implies not just a broader scope for the transformation but also a radical change in execution: consumer-goods companies must seed and foster their capabilities and empower and mobilize the whole organization to maintain a focus on unlocking a transformation’s full potential.” – McKinsey, “From Survival to Renewal At-Scale, Holistic Transformation in the Consumer Goods Industry.”
The research team suggests the key to next-generation transformation are the following four distinctive pillars:
- Purpose (why) and portfolio (where). Act as a compass to allow for the right trade-offs and decisions along the way. Consider category priorities, markets and channels, competitive advantages, the promise and positioning of the company’s brands, and new segments and business models.
- value-creation levers (what). Growth-focused domains include innovation and digital brand building; digital consumer engagement, digital route-to-market; and programmatic mergers, acquisitions, and divestitures (M&A&D).
- Operating model (how). Realign the operating model to reflect long-term sustainability requirements and transformation ambitions.
- Road map (when). Building blocks and significant interdependencies across functions and geographies. Value is present in the intersection between functions and their ability to move in a synchronized way to adapt to emerging trends.
“Leadership’s ability and courage to pursue bold top-line and bottom-line ambitions beyond the conventional playbooks was a core element of the transformation.” – McKinsey authors.
Indeed, courage is a necessary ingredient in this next phase for all corporations transforming. A bold, stakeholder-centric approach that targets the organization’s full potential and mobilizes the entire company in the transformation process is essential. But this next chapter holds the promise of a more connected, more in-step place in the global market where companies not only participate but thrive.
