During the past several tumultuous years, consumer companies have been forced to adapt at breakneck speed. While all companies have had to respond to changing customer preferences, consumer organizations arguably have felt these challenges more acutely. Dramatic spikes and troughs in demand, the mass adoption of digital channels, global supply chain challenges, and the inflationary environment have applied significant pressure on retailers and consumer goods companies.
These pressures are affecting all levels of an organization. The C-suite garners a lot of attention and credit when a company performs well, and the front line enjoys a certain visibility as the face of the organization. But management—the heart of the organization—has the burden of translating strategy into action and results. The “middle” of the consumer organization plays an important role: managers set the tone, gather customer insights, and represent the next generation of executive talent.
McKinsey’s 2022 Voice of Consumer Organizations Survey gathered input from 1,470 upper and middle managers at North American consumer companies to understand their points of view.1 Respondents shared where their company excelled and struggled as well as the capabilities needed to succeed in the coming years. Drawing on the findings from this survey, coupled with other McKinsey research on high-performing organizations, we found leading organizations excel in five areas. This focus offers a path forward for companies seeking to adapt to a shifting landscape.
The ‘middle’ of the consumer organization plays an important role: managers set the tone, gather customer insights, and represent the next generation of executive talent.
Reorganizations are notoriously tricky to execute, considering companies must manage many factors at the same time.
Taking a cue from high-performing companies
Consumer executives seeking to raise their organization’s game should take note of the common approaches leading companies pursue to improve results across these five areas.
Ensure strategy is translated throughout the organization. A clear strategic vision won’t be as effective unless it is translated into clear OKRs at the team and individual levels. Managers who prioritize this step can energize their functions and teams with well-defined targets.
Align resources with decision making closer to the consumer. Speed and responsiveness matter. High-performing companies vest teams with the necessary autonomy and authority to make decisions.
Reevaluate the operating model, embedding digital into the day-to-day business. The pace of change means companies must regularly assess their operating model and incorporate optimal ways of working. Priorities include process efficiency and clarity of roles. Organizations should push for simplicity, clarity, and accountability. In addition, digital must be “democratized” and embedded within the business.
Shape the capability program. To fill gaps in a strategic way, companies should identify the next-generation capabilities that matter and then create a multifaceted plan to develop them. This effort must go beyond simply redeploying existing talent. Managers should be encouraged to take a broader view of the capabilities that count (such as digital and analytics) and then receive support and training.
Get reorganizations right. Managers understand how a reorganization can enable corporate strategy, but companies need to embrace a “go big or go home” mindset and ensure this sweeping effort produces lasting change. In addition to emphasizing accountability for end-to-end implementation and change management, leading companies embed continuous improvement in the organization. To increase the odds of favorable outcomes, executives should model the behavior they want to instill throughout the organization and set appropriate timelines.
Managers are vital to the translation of business strategy into execution and results. What’s more, their experiences and insights highlight ways organizations can boost performance. Executives would do well to incorporate their voices into planning, operations, and reorganizations.