Jack Welch wrote in Winning ‘The CEO job is about Strategy and People. Period’. I have been writing most of my previous articles on Strategy, time has come to focus on People and on Talent Management in particular.
Andy McAfee (the author of The Second Machine Age, Race Again The Machine) showed with the now famous story behind the invention of the chessboard (see video below) that the pace of changes is now accelerating exponentially and we have seen nothing yet as we are just entering in the second half of the chessboard. Exponential dynamics (e-commerce, social media, artificial intelligence, connected objects, 3D printing, block-chain, driverless vehicles…) are taking by storm all industries, including the FMCG industry.
Not only the pace of those changes is accelerating exponentially but we have now passed the point of disruption. Like Craig Mundies (Former Chief of Strategy and Research at Microsoft) puts it: ‘Disruption is when someone does something clever that makes you and your company look obsolete. Dislocation is when the whole environment is being altered so quickly that everyone starts to feel they can’t keep it up’.
‘Disruption is when someone does something clever that makes you and your company look obsolete. Dislocation is when the whole environment is being altered so quickly that everyone starts to feel they can’t keep it up’ Craig Mundies
If what Craig Mundies says is right:
Time will tell us. In the meantime, the implication for People and Talents are far reaching.
A study published in 2012 from the John M. Olin School of Business at Washington University estimates that 40% of today’s Fortune 500 companies on the S&P 500 will no longer exist in 10 years.
Here are few thoughts:
If there is one industry that has fresh, young, adaptable talents, it is the FMCG industry. A high percentage of the workforce is below 35. Most FMCG companies work systematically in a multifunctional way, encourage cross-functional assignments and send talents abroad to fast-track their development. Many FMCG companies over the last few years took inspiration within the FMCG industry (RB, 3G) and outside (mostly Silicon Valley companies) to become much more agile and entrepreneurial.
Yet, those are drops in the ocean in regard of the challenges ahead
Yet, those are are drops in the ocean in regard of the challenges ahead:
Some of the workforce will adapt successfully (and hopefully most) but some will not
Some of the workforce will adapt successfully (and hopefully most) but some will not. In this brave new world, FMCG companies will have to bring in new talents to steer the required change: leaders with a much greater diversity of background, experiences and leadership style. The leaders that will share most of the below traits will be the most in demand, they will:
2. Start with the ‘Why’ and give them the opportunity to ‘make a dent in the universe’ (Steve Jobs)
The talents that can make a real difference, those talents have plenty of choice, they do not wants jobs, they want to be given an opportunity to ‘make a dent in the universe’
The competition to attract those talents will only increase. Companies that will succeed to craft an inspiring yet authentic purpose that reconciles both present imperatives and future will have a decisive advantage in this talents war. It has to start with the ‘why’ and a Massive Transformative Purpose (MTP). The talents that can make a real difference, those talents have plenty of choice, they do not wants jobs, they want to be given an opportunity to ‘make a dent in the universe’. If you put yourself in your 20 something self, which of the three below organizations will you join?
– Nestle: Our mission of “Good Food, Good Life” is to provide consumers with the best tasting, most nutritious choices in a wide range of food and beverage categories and eating occasions, from morning to night
– Younique: Younique’s mission is to uplift, empower, validate, and ultimately build self-esteem in women around the world through high-quality products that encourage both inner and outer beauty and spiritual enlightenment while also providing opportunities for personal growth and financial reward
– Tesla purpose: Tesla’s mission is to accelerate the world’s transition to renewable energy
It all starts with the ‘Why’.
3. The ‘Retirement Village’ or the ‘Pirate Ship’?
I often hear FMCG leaders say ‘we cannot win the war for talents against some more exciting companies like Google, Apple, Tesla…’. Well, there are only very few industries that can truly touch and improve lives at scale like the FMCG industry. We do not have to lose against those companies on the war for talents. We just need to be as bold and as innovative.
We do not have to lose against those companies on the war for talents. We just need to be as bold and as innovative
A senior FMCG executive shared with me recently: ‘Some large FMCG companies have become like retirement villages, nothing happens there, the same people are doing the same thing at the same position for the last 15 years and generations of talented leaders are sacrified’. Steve Jobs used to write: ‘Why join the Navy if you can be a Pirate?’
There is nothing wrong to be the Navy but you can have also few Pirate ships. If you can show to the world that you lead (and you do not fear) the disruption, that in your company you are creating the future of the industry, that there are some places in your organizations where some pirates are also welcomed and valued… Of course, it does not have to be one extreme (‘the Retirement Village’) or the other (‘the Pirate Ship’). We cannot run a company only with Pirates. But today as an industry, don’t we think we need a bit more Pirate Ships to cope with the challenges we face? Don’t we think we need not only more Pirate Ships at the edge (business model innovation groups at the edge, incubators, entrepreneurial corporate venture capital funds) but now also at the centre of the organization to drive the required change at scale?
But today as an industry, don’t we think we need a bit more Pirate ships to cope with the challenges we face? Not only at the edge of the organization but also at the centre to drive the required change at scale?
Some leaders are already looking for a new breed of talent. One of the greatest mover and shaker of the FMCG industry, Mauro Porcini, SVP Design at PepsiCo declared recently ‘[We want] people who understand business; people who are real entrepreneurs, real innovators who, that if they didn’t work in a company, would start their own enterprise’
‘[We want] people who understand business; people who are real entrepreneurs, real innovators who, that if they didn’t work in a company, would start their own enterprise’ Mauro Porcini SVP Design PepsiCo
4. The end of the 100% promotion from within strategy
Let’s be clear, the promotion from within is and will remain the best way to build high-performing organizations for obvious reasons. The only difference will be that being a 100% promotion from within organization will not work anymore in the dislocation age. The pace of change will be such that it will be simply counter-effective for the overall organization.
5. The Learning & Development (L&D) tsunami or the era of the hyper personalized L&D plan
In the dislocation age, continuous education will become critical. More and more companies will create in-house universities and build strong partnership with education organizations. HR and Learning and Development functions will have to be strengthened and external resources (online courses, MOOC…) will have to be further leveraged. Employees will have hyper personalized training plan that fit perfectly with not only their job but also their strengths, weaknesses and areas of personal development. Peer-training or knowledge sharing will also be encouraged and facilitated at scale.
6. The importance to rebalance the mix of starter/scaler/optimizer
Rare are the talents that are truly great at two or even three of those tasks. Being now a mature industry, the FMCG industry (especially in developed countries) has a vast majority of optimizers with marginally some scalers and starters. It is critical to help optimizers to improve their starter and scaler skills. But most likely it will not be enough and FMCG companies will have to modify their standard hire profiles to rebalance their workforce mix. Do we think it will be easy to take a brand manager that would have worked for a decade on mature categories optimizing few basis points of revenue growth, margin, marketing ROI and then ask this person overnight to design a brand new consumer eco-system from scratch and to scale it up?
Do we think it will be easy to take a brand manager that would have worked for a decade on mature categories optimizing few basis points of revenue growth, margin, marketing ROI and then ask this person overnight to design a brand new consumer eco-system from scratch and to scale it up?
7.The rise of staff and assets on demand
In this new world, FMCG companies will increasingly use staff and assets on demand and the number of permanent internal workforce will shrink dramatically. Here is why:
Look at Younique, it has only few hundreds permanent employees, 200,000+ independent presenters paid only on a commission basis for $400mn yearly revenue and uses exclusively contract manufacturers. Its fixed costs amount to`less than 10-15% of its revenue whereas most traditional FMCG companies have 40%+ fixed costs. It is designed for exponential scale-up, it has the flexibilty to resist to any external shocks/changes of trends while being already profitable (cf. FMCG CEOs: 7 reasons why Coty acquired Younique or why the race is on to become an exponential organization)
8. The rise of the ‘Versatilist’ and the ‘Strategic hyper specialist’
In this brave new world, there will be mostly two alternatives with little middle-ground: FMCG organizations will employ Versatilists and ‘Strategic hyper Specialist’
In this brave new world, there will be mostly two alternatives with little middle-ground: FMCG organizations will employ Versatilists and ‘Strategic hyper Specicalist’.
In the age of dislocation, the Versatilist is the ultimate talent to hunt for companies
The above is not the future. It is the present already. All the FMCG Exponential Organizations (Dollar Shave Club, Honest Beauty, Beauty Counter, Glossier, Younique….) are already following partly the above model. The average turnover by employee in an Exponential FMCG Organization is $1.5m. In a traditional FMCG companies, it is $0.5m (source: 2016 financial reports analysis).
The above is not the future. It is the present already. Most of the FMCG Exponential Organizations (Dollar Shave Club, Honest Beauty, Beauty Counter, Glossier, Younique….) are already following the above model
As a consequence, it will not be surprising to see the total workforce permanently and directly employed by FMCG companies shrinking dramatically by 20-40% in the next decade.
As a consequence, it will not be surprising to see the total workforce of FMCG companies shrinking dramatically by 20-40% in the next decade
9. Soft skills versus hard knowledge – Be hungry, be foolish versus be entitled, respect our holy cows?
The focus will move away from hard knowledge to soft skills as general knowledge will increasingly become a commodity. The Versatilist and the ‘Strategic hyper specialist’ will take-over the ‘Generalist’ and the ‘Functional expert’
The focus will move away from hard knowledge to soft skills as general knowledge will increasingly become a commodity. The Versatilist and the ‘Strategic hyper specialist’ will take-over the ‘Generalist’ and the ‘Functional expert’. The ability to be a continuous learner will be a priceless asset. Companies will recruit more on attitude and soft skills than on educational background. The use of ‘blind CV’ where the name of the school is not mentioned will become the rule. Being ‘hungry and foolish’ will become increasingly important as large FMCG companies will seek to compete with nimble and agile competitors. Recruiters will be less and less tolerant towards graduates from top-schools that will display a sense of entitlement and will respect too much the corporate holy cows. Being positively critical and accepting to be put in competition with talents with no famous logos (schools, prestigious companies) but with big achievements on their CVs will be the new normal.
Being positively critical and accepting to be put in competition with talents with no famous logos (schools, prestigious companies) but with big achievements on their CVs will be the new normal
10. From command-and-control to enable-and-collaborate leadership
The organization design, the corporate values, the mission statement, the standard hire profiles and the incentive structure will have to evolve. FMCG companies will have to transition from a ‘command-and-control’ to an ‘enable-and-collaborate’ leadership. There will be no ‘one-size-fits-all’ approach. This brand new leadership will have to be co-created on a company basis. One thing is sure, not acting will not be anymore an option.
This brand new leadership will have to be co-created on a company basis. One thing is sure, not acting will not be anymore an option
Our responsibility as leaders in our industry is to:
Of course, it will not be easy. It will require courage and audacity. We will have to kill holy cows and take bold decisions. It is our exciting challenge for the years to come.
Of course, it will not be easy. It will require courage and audacity. We will have to kill holy cows and take bold decisions. It is our exciting challenge for the years to come
Frederic
If you are interested in hearing and discussing more on the above, you can reach out at frederic@fredericfernandezassociates.com
To attend one of my upcoming Senior Executive FMCG Conferences (each limited strictly to 20 attendees and exclusively reserved to senior FMCG executives on a pure first come/first serve basis), the attendance is free – upcoming topics/dates for Q1 2017 include:
Q1 2017 Topic: FMCG CEOs: Managing (finally) for growth or how to stop ‘shrinking to glory’
– Zurich, Friday, March 17th 2017 from 8 to 10 am at Hotel Grand Hyatt
– Geneva, Friday 24th 2017 from 8 to 10 am at Hotel Des Bergues Four Seasons
Frederic
About the author:
Frederic Fernandez is an expert and thought leader in the FMCG industry. He is the Managing Director and Partner of Frederic Fernandez & Associates a bespoke Strategy Consulting Firm exclusively focused on the FMCG industry. His focus areas are mainly in growth and profit turnaround, corporate strategy, direct-to-consumer and business model innovation in the FMCG industry. His passion is to help FMCG leaders co-creating the future of the industry and to develop, achieve and exceed the potential of their business. He spends his time advising Fortune 500 FMCG senior leaders globally. He is based in Zurich, Switzerland. He is also a sought-after speaker and speaks across the globe at trade associations and for corporate clients (CEO strategy meeting, yearly strategic reviews, top management events) about the FMCG industry. Before joining the world of management consulting, he worked with Fortune 500 companies like Procter & Gamble, Reckitt Benckiser, PriceWaterhouseCoopers and Societe Generale in leadership positions across Europe (France, UK, Nordics, Germany, Switzerland, Austria), Central Africa and India.
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