Egon Zehnder was privileged to be part of the 60th annual Consumer Goods Forum global summit on 15-17 June 2016. Held in Cape Town, South Africa, the summit provided a window onto the energy and opportunity of Africa—the world’s youngest continent and one of the fastest-growing consumer markets. For three days of lively debate on the future of the retail and consumer goods industries, the summit brought together CEOs and senior executives of major global firms such as Coca-Cola, Nestle, P&G, Tesco, Campbell’s Soup and Walmart—plus experts in fields ranging from digital, to consumer behavior, to sustainability.
Several leaders of Egon Zehnder’s global Consumer Practice were there. We co-hosted a breakfast discussion on CEO Succession with Gareth Ackerman, Vice Co-Chair of the Consumer Goods Forum and Chairman of Pick ‘n Pay, a leading South African retailer. And we held one-on-one meetings with a few dozen CEOs and senior executives from some of the largest and most respected companies in the consumer sector.
The one theme that shone through clearly from these conversations was that the consumer and retail landscape is undergoing profound disruption and rapid change—and that the industry’s future success factors will be quite different from those of the past.
To navigate that change and win in a new world, companies will need to invest more than ever in talent, and nurture a new generation of leadership. The CEO of one of the world’s largest consumer companies, speaking at the summit, summed it up perfectly: “Great talent trumps everything.”
Digital disruption: driving a new “speed agenda”
Digitization was the transformational trend under the spotlight at the summit. It is changing everything from customers’ expectations and shopping habits, to the competitive landscape, to companies’ internal operations and organizations. At the same time, social and mobile technologies are making corporate reputations much more fragile: a single food safety issue or customer service lapse can quickly go viral.
But as several speakers emphasized, it’s not enough for an incumbent retailer or consumer goods company to appoint a leading-edge Chief Digital Officer. Rather, CEOs and other executives must themselves develop a deep understanding of how the digital disruption—including social technologies, advanced analytics, and the Internet of Things—creates new opportunities and threats for their businesses.
Digital is also driving a new “speed agenda” in the industry—in everything from business model innovation, to new product launches, to geographic expansion strategies. As one CEO said at the summit: “Eighteen months is the new long term; the world is getting reinvented in shorter timeframes.”
While companies still need clear long-term visions, they must also become more nimble in taking short-term commercial decisions; three- to five-year strategic plans will become outdated very quickly. One presenter shared the provocative view that today’s corporate structures will struggle to drive innovation at the necessary pace—and will need to constantly acquire small businesses to keep disrupting themselves.
An equally profound trend highlighted at the summit is the burgeoning growth of consumer demand, and retail and consumer-goods ecosystems, in emerging markets. The youthful energy visible in Cape Town and Johannesburg reflected the rapid urbanization, population growth, and economic development underway across Africa. As South African Deputy President Cyril Ramaphosa emphasized at the summit, the continent includes seven of the ten fastest-growing economies in the world. Africa will soon have more large cities than Europe, and millions of households are entering the consuming class each year.
Along with other emerging regions such as Asia and Latin America, Africa will feature ever-larger in retail and consumer companies’ sales, supply chains, and talent pools. The implication for Western-headquartered firms is that they must adopt a much more global outlook. They must also think carefully both about how to tailor their offers to emerging market consumers, and how to integrate and motivate diverse young talent from these regions.
There are important implications for senior executives too. As one CEO reflected at the summit, his own international exposure had been critical to his effectiveness as a leader; without it, he said, his outlook would have been much too narrow. The same applies to company Boards: if they are to oversee truly global strategies, their members must be drawn from a more diverse set of geographies and life experiences.
Cultivating tomorrow’s leaders: why potential matters as much as experience
All this makes the job of leading a large retailer or consumer goods company much more complex—and means that companies must seek out and nurture a new generation of talent that is tech- savvy, customer-focused, culturally diverse, and fast to think, act and adapt.
Our recent work placing and supporting CEOs and executives in the sector suggests that a new lens is needed to pinpoint this talent: in a world characterized by rapid change, future leaders must be identified on the basis not just of their experience but of their future potential. The markers of potential are curiosity, insight, engagement, and determination.
As consumer and retail businesses grow their leadership talent, they will need to cultivate these qualities by giving high-potential managers broad exposure across functions, brands and geographies. To support the transition, they can bring in external voices—for example, by creating Digital Supervisory Boards that include leaders of successful start-ups and experts on digital technologies and customer experience design.
As our three days in Cape Town made clear, leading the consumer and retail firms of the future will be challenging—but the industry’s fast-changing landscape brings exciting opportunities too. To translate those opportunities into enduring value, companies need leaders with high levels of energy and imagination—to set bold visions, rethink their business models, unlock innovation at speed and scale, and inspire a new generation of consumers and talent.
Egon Zehnder’s Consumer Practice works with many of the world’s largest and most innovative consumer goods and retail companies, as well as family firms, start-ups, and private equity firms. We help place and develop CEOs and senior teams, and support our clients in finding and nurturing the talent needed to drive digital transformations. For more about our work and our insights, see /industries/consumer.