Commentary

SXSW: Supply-Chain Innovation In Era of Social Media Top-Of-Mind

As consumer purchasing behavior is driven more and more by personal values, as seen through sustainability and wellness trends, brands are evolving product and marketing practices to meet the needs of the modern consumer.

Organizational design is shifting among both Fortune 500 and startups alike in order to deliver innovation through agile product development cycles, which was a major topic among consumer packaged goods (CPG) and retail leaders speaking at SXSW.

Bonin Bough, founder of Bonin Ventures and ex C-suite member of CPG brands like Mondelez and PepsiCo, spoke at Microsoft’s Tech&Culture event on driving innovation at the corporate level. He succinctly explained: “Aspirations without allocations are meaningless.” Brands need to be approaching product innovation as its own P&L, not as a mere experiment.

Paul Dillinger, head of global product innovation at Levi Strauss, described the same sentiment during his fireside chat at the Innovation Mansion over the weekend. Developing sustainable offerings has been a consideration at the human resource level at Levi’s in order to grow teams dedicated to transforming the denim empire’s international supply chain.

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The path toward driving innovation revenues begins with an organizational people strategy that prioritizes diversity and inclusion. A recent study from Boston Consulting Group shows that companies with above-average diversity across migration, industry, career path, gender, education, and age have 19% higher innovation revenues on average. Building teams constructed of varying perspectives allows for more pathways into solving a problem or creating opportunity.

The takeaway from SXSW: invest in agile and diverse teams focused on meeting consumers’ evolving expectations.

Small consumer brands are entering markets previously monopolized by big-box retailers. They’re crafting brand narratives that address specific pain points of a niche market, all the while building production cycles that move at the speed of social media.

Up-and-coming CPG companies in the beverage category spoke on the topic of building a lifestyle brand for a digital-first consumer.  “Market the solution, not the ingredients,” Ben Witte, CEO of Recess, a CBD-infused sparkling water, explained on a panel at SXSW.

In order to capture the mindshare of the consumer, brands need to speak to the emotional association they’re building with their respective product, instead of the functional benefits. Consumers crave experiences over consumption.

“The ingredient list is everything. With food and personal care, the issue is what’s in the products, not what isn’t,” noted Allison Evans, co-founder of Branch Basics, which provides nontoxic cleaning products.

Evans also advocated for updating antiquated regulatory standards that allow toxic ingredients to make their way into products we use every day. She went on to explain, “The more we educate our buyers, the more we can see change through the power of the purse.”

With the pervasive use of social media, and access to information in lieu of regulatory transparency, consumers continue to expect innovation and demand quality. The future of CPG and retail will be led by those who are able to shorten production cycles, integrate product innovation as a key function within the workforce, and tell increasingly progressive and integrated brand stories.

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