NEW YORK, Dec. 8, 2021 /PRNewswire/ -- EY today announces the launch of Operating Model Transformation, a solution that helps consumer products (CP) companies reshape operating models. The solution is based on five integrated design elements to assess where a company is in its transformation journey and where it needs to be: dynamic ecosystems, digital DNA, talent flexibility, innovation platform and enduring purpose.
To stress-test the solution's framework, EY commissioned the Massachusetts Institute of Technology (MIT) Sloan Management Review Connections to conduct a series of interviews and oversee a global survey of 370 CP executives in 10 markets. The resulting EY Operating Model Transformation Survey explores key operational issues such as where companies' investment priorities lie, how far into their transformation journey they are, how capable they are of delivering on their current and future strategies, and what barriers they see to transformation.
Many underestimate the time needed to transform and value of partnerships
Changing consumer expectations, accelerating technological change, increased industry convergence and rising sustainability pressures are driving transformation in CP companies. While operational resilience and agility have become increasingly important over the past few decades to respond to these factors, the COVID-19 pandemic has accelerated the need to transform how CP companies operate.
The survey shows that companies will not be able to execute the change they need in the timelines they anticipate. While almost all respondents (98%) view operational transformation as a priority and believe they have the right capabilities in place (75%), close to half of respondents (46%) underestimate the timeframe necessary to transform. The survey also finds that CP companies are underestimating the value of partnerships. A large majority of respondents (90%) say they are currently not pursuing partnerships and prefer to go on the transformation journey alone, while 71% say they typically approach transformation by acquiring capabilities or investing in existing ones to drive change.
Everything is a priority
Fragmented demand, shrinking innovation cycles and increased market volatility are forcing CP companies to change their forecasting capabilities. They are no longer able to look ahead five years, and now say they only plan 18 to 24 months ahead. Shoppers make choices based on online reviews and content posted by social media influencers. Trends and demand can take off overnight, disrupting the pace of established business models.
Everything is a priority when it comes to operational transformation, showing there is no clear roadmap. Indeed, according to the survey, 79% of respondents agree that every operational area will be essential to future success. CP companies also seem to be facing internal challenges, with 63% of respondents expecting to see resistance to change in their existing company culture, as well as significant divergent internal strategic priorities.
Kristina Rogers, EY Global Consumer Leader, says:
"Consumers are moving on. They have built their own way forward and believe the way they shop has changed forever as a result of the COVID-19 pandemic, according to the EY Future Consumer Index. A leadership team that understands where the future consumer is heading can better identify their roadmap to success and the actions needed to get there."
The direct-to-consumer opportunity
Most CP companies (62%) identify direct-to-consumer efforts as essential to their future success. Furthermore, to get full value from their data, companies understand they need to integrate it across operations to gain insights, spot bottlenecks and maximize efficiency. Only 19% of respondents fully agree that their current data capabilities help them to create a single view of consumers, partners, suppliers, customers and business processes.
Steve Basili, EY Global Operating Model Transformation Leader, says:
"While the imperative to become future fit is clear, this is a race with no obvious finish line. Leaders must keep adapting their business priorities and strategies in a volatile market, where demand can take off in an instant or be slowed down by supply chain issues. Doing that requires a different kind of operating model: one that is both robust – so that the organization can be resilient and optimize for today's needs – and flexible, so that they're agile enough to respond to new opportunities and challenges as they arise."
The survey is available at ey.com/MITSMR3.
Notes to editors
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About the Operating Model Transformation survey
EY commissioned MIT SMR Connections to conduct a global online survey that drew responses from 370 leaders at consumer product (CP) companies, including top executives, department and business unit heads, directors and senior managers. Qualtrics fielded the survey in June and July 2021, in 10 markets: China, France, Germany, Italy, Japan, Saudi Arabia, Spain, the UAE, UK and US.
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