Growing in the next normal: How to determine the growth potential of your brand in a challenging business environment
Challenging the habits
The conventional view of grow is that future looks like the past and consumers are anyway hard to understand and predict. So, doing a grow forecasting to align resources and commercial plan should be done as always. In addition to that, the economic impact of the pandemic can be seen across sectors, but it may be most widely visible in the consumer goods sector making things unpredictable and business leaders should now be in reaction.
We disagree. We think in spite of tiny variations, consumer demand are perfectly predictable if we use the right model and we take into account the economical environment.
The secret is to have the right toolbox and to be clear on the “what for” question. The usage and outcome of forecasting models as well as techniques used depend on the actions that business leaders want to undertake. Short term resilience of preparing the long term turn around.
Too often, companies are confused. They spend a lot of money with traditional providers (IRI, Nielsen, etc…) and don’t leverage the value of Machine Learning and big data capable to design complex combinations and analyze what they should do to capture growth opportunities.
One consequence of that is that Executives spend 40% of their time making decisions, about the future and they tend to assess that most of it is poorly used.
Framing a new approach of forecasting based on Capacity to Win
At Pivot, based on practical case studies developed in CPG, we designed a new approach to build growth strategic plan with a three year forward-looking prospective view fuelled by data and artificial intelligence.
The strategic decision-making is broken down into three sub-questions that leaders should ask themselves to ensure efficient decision-making. It is summarized under the Assess, Plan, Attack framework®
- Assess : What is the landscape I’m playing in ?
- Plan : Where can I play in the next three years ?
- Attack : What are the consequences of my actions ?
When it comes to answering these questions, business leaders can be influenced with multiple cognitive bias (Confirmation Bias, Plan Continuation bias, Anchoring bias…). This is where data comes in play, as information set a non-biased common ground for discussion.
1 – What is the landscape I’m playing in?
The answer to this question, involves looking at the past and the present to better plan later. To help leaders, we developed two unique AI-driven frameworks that provides a 360-degree view on the past and contextual business performance.
- Me… : A consolidation of past strategic information about brand positioning amongst business categories, portfolio growth and the identification of drivers that played a key role in the past growth of the brands
- …In my environment A 360-degree dashboard type of view with selected information regarding competition, market, and macro-economic data.
2 – Where can I play in the next three to five years?
For most CPG corporations there are two main growth pockets:
- On their ‘home’ markets by boosting sales through better distribution, aggressive pricing and precision and digital marketing
- On new markets/segments by launching existing or new products in fast-growing categories.
Therefore Pivot & Co has designed an AI algorithm to estimate the Capacity to win® (CTW®)
Our algorithm involves more than 100 simulations using multiple and scale into a straightforward score from 1 to 100. This assesses the brand’s likelihood to win in a new market (CTW®)
Combined with the brand sales and margin forecasts based on machine learning, we create ideal and rationale conditions for leaders to seize what are the achievable opportunities in the mid-term horizon and therefore decide which options are worthwhile to pursue.
3 – What are the consequences of my actions?
Because, Business leaders often take decisions with a limited visibility on the consequences of their strategic choices, modelling the consequences and evaluate how one choice can impact the organization KPIs (Net Sales, Operation Margin, market demand, etc…) is evaluated based on machine learning algorithm and decision science design principles.
We are looking after
- ‘home’ markets: Expected Sales derived from an increase in Marketing Spend, distribution coverage modification and pricing adjustment
- New ‘markets’: Expected Sales (and/or margin) reached by the attack of a new market with the associated budget required to achieve the objective
New horizon for strategic planning
Beyond numbers, this new approach also requires companies to adopt a new way of working through agile, short bursts. In our experience, organizations benefit from establishing a re-plan war room and creating a dedicated, cross-functional team that sits together to decide the growth plan. The team should be comfortable making recommendations and decisions based on each brand capacity to win in a given market even and simulate the consequences of the choices before any move.