By Simpactful Partners, Heather Burgess, Marcy Selva, and Todd Ruberg
Return on Investment, the allocation of limited resources, and efficient ways of working are on the minds of most Commercial Leaders in 2024. We continue to see the challenges of Commercial Organizational Design resurface again and again for clients. Many of the former approaches to both structure and ways of working are no longer serving Commercial Leaders or their teams. This week, we paused to analyze the causes and how can effective leaders drive more efficiency in their businesses.
Key Drivers for Change
The consumer products industry is experiencing an unprecedented pace and magnitude of change. It is no wonder so many leaders are tempted to set and forget their organizational designs or feel paralyzed and unsure how best to drive change! A convergence of forces from many directions has quickly outdated historical approaches to organizational design:
- Channel Convergence – In the face of changing channel dynamics, shopper behaviors, and financial pressure, many retailers have deduplicated their scorecards, buying organizations, and decision-making across B&M and eCommerce. Traditional retailer and channel segmentation models (especially eCommerce teams) as well as sales planning processes must accommodate these changes.
- Retailer Media – The lines are blurring between shopper marketing, merchandising, and media as retailers look to harness, driving not only multi-functional budgeting questions and new integrated revenue growth drivers but evolving capability and collaboration needs. This change impacts Shopper Marketers, Media and Brand Marketers, Sales, and Agencies, who must all work together to ensure optimal investment plans & integrated execution.
- Supply Chain – Retailers are striving to achieve a delicate balance between lean inventory and flawless operations across multiple channels and fulfillment pathways. The result for brands is heightened requirements for demand planning, operational capabilities like labeling and EDI systems, and logistics. Brands must also have products and plans designed to win in Omnichannel executions.
- Data and AI-Driven Models – There has never been more data available, more ways to connect the business – or more expectations for brands to do so.
- New Channels – Evolving retailer strategies (such as the Dollar Channel shift into Food & Beverage) have opened new channel opportunities where brands can find shopper-consumer fit.
- New Competitors – Meanwhile, Challenger brands have developed savvy ways to upset the stability of long-standing category captains by using alternate incubation models, heightened margin offers, and foot traffic exclusivity to entice distribution and disproportionate retail support behind promises of category growth.
Organizational designs that are segmented based on retailer size, channel, or functional work are likely sub-optimal based on the requirements and emerging opportunities for brands today. Work processes, especially those that are not designed for fluid responsibility, are functionally-based or that use manual approval systems are often too inefficient. We commonly encounter client concerns over the engagement of the growing number of stakeholders in retailer annual negotiations and the ROI of Retailer Media vs other national Marketing or Merchandising choices. In addition to automated fines and fees, S&OP process gaps to meet Omnichannel needs and the ability to remain competitive as channel dynamics unfold. Suboptimal organizational design and workflow processes almost always drive these concerns.
The brands that adapt to operate efficiently and effectively will win in this environment because they will be able to serve consumers and retailers faster with stronger ROIs resulting in better financial performance. It can be challenging for internal resources to carve the headspace or to step away from functional siloes to work on organizational redesigns or new ways of working. This is required to gain the required high-level perspective to see alternative design and operating opportunities and to think ahead to new requirements on the horizon.
The Future: Common Commercial Function
Sales and Marketing will morph from isolated functional experts into “Collaborative Demand Drivers.” There will be one common digital/omni language with both organizations spending more time understanding critical upper and lower funnel planning capabilities. This will become more integrated and seamless than ever – especially within the digital space and over time, Sales and Marketing roles will be interchangeable and developed as a common commercial function.
Simpactful has helped numerous Consumer Product Companies (both large and small) rethink their organizational, decision-making, culture, and collaboration approaches to better meet the needs of the channel. The combination of our strong heritage in serving the Omnichannel and expertise across functions, categories, and retailers makes us uniquely suited to quickly assess organizations. Our CPG practitioners have the required commercial experience to consider not only organizational design strategies but to think with the execution and implementation needs to increase speed of implementation. Client work with annual benchmarking studies ensures we are in touch with emergent models and new ways of thinking.
Potential Future Growth
The days of “setting and forgetting” your organizational design, retailer segmentation model, and work process have passed. Brands must continually revisit these to allocate resources to growth opportunities, build retailer partnerships, and maximize financial returns. If you are uncertain whether your organization is structured to win, contact us. We believe there is no one organizational design model; Rather models must be tailored and can unlock improved financial performance.
Simpactful can help! To learn more about industry capabilities contact our team today at email@example.com or 925-234-6384.