CEO View: Pardon My Disruption
16 July 2018 12:29pm
Embracing Augmented Decision Making to Drive CPG and Retail Growth in the Age of Disruption
By Andrew Appel, President and Chief Executive Officer of IRI
The CPG and retail industries have experienced unprecedented disruption in recent years. Iconic brands and retailers are yielding ever more market share to innovative new entrants, better equipped to capitalize on changing consumer preferences, and fueled by – rather than adjusting to – the explosive growth of e-commerce.
Evidence of this disruption is clear. Over the past five years, online sales have grown from 6% to 13% of total retail sales. And while the advertising industry at large grew by 4% last year, mobile advertising grew by 34%. Industry stakeholders are taking notice, and taking action to adapt to the rapid pace of change.
For example, traditional retailers like Target, Walmart and Kroger are all investing hundreds of millions to introduce omni-channel capabilities to encourage spending online and in-store, and in technology to enhance the in-store shopping experience. Similarly, M&A in the CPG industry is at an all-time high, as large manufacturers chase the growth driven by nimble startups with their pulse on the hottest trends and latest innovations.
These important actions, which have shifted the narrative from a story of the retail and CPG industry’s mere survival to the industry’s transformation, are the product of data-driven decisions built on months of rigorous analysis and resulting insights. As CEO of IRI, I know first-hand how deeply CPG companies and retailers are investing in their data and insights capabilities. They do it because they believe in insights professionals’ ability to help transform their business.
Insights professionals have earned that confidence. But at IRI, our success has always been driven by our determination to stay one step ahead of our clients. While the CPG and retail industries have long relied on troves of data to inform critical business decisions, the role of other insights professionals has not evolved as quickly as our capabilities have. That’s why the research, insights and analytics industry must disrupt itself. We can do this by leveraging sophisticated technology to institutionalize data as a decision tool and deliver actionable insights to the front-lines for decision makers in real time, enabling a practice known as augmented decision making. Rather than reporting on change, we need to drive it.
Undertaking a major disruptive shift like this may be simpler than we think. As we seek to move beyond delivering super precise, high quality insights, and work toward institutionalizing the use of data to augment the critical decision-making processes in the companies we support, we can borrow some key tactics from disruptive companies like Amazon and Google. Observing the titans of disruption, all of these companies exhibit similarities in the way they approach problems and, eventually, transform and dominate industries. They are wholeheartedly customer-centric, they move quickly, take risks, and leverage AI and Machine Learning to dramatically improve the experiences of their clients and customers. By emulating these key traits in our own industry, we can transform our role to drive even more incredible results for our companies and clients.
Speed to Decisions
In the age of disruption, a key factor of success in many industries like CPG and Retail will be speed. While it used to be that the big players beat the small, the fast now beat the slow. With a more disruptive approach to delivering actionable insights in real time, we can provide real-time pricing recommendations to ensure our clients capture the greatest value from each customer, implement analytics-enabled assortments that minimize waste, and recommend changes to an ad’s messaging mid-campaign to drive greater sales with a target segment. With this mentality, insights professionals can offer clients a true competitive advantage by building the tools that react quickly and reflexively to a change in the consumer mindset or competitive environment.
Risks That Drive Growth
As the consumer and retail landscapes continue their rapid transformation and speed to decision-making becomes increasingly important, insights professionals must encourage our clients that taking advantage of opportunities that become evident with enough data is more important than supporting a new business decision with conclusive data. Epic disruptors like Amazon and Google show us that risk-taking is a driver of growth, and risky decisions are reversible. Jeff Bezos was famously quoted saying he believes most decisions can be made with just 70% information. That’s because as data science and insights become increasingly focused on developing disruptive, highly automated, self-learning tools with more granular, precise decision capabilities, even riskier moves made on the front lines can be reversed and enhanced as real-time data informs and improves our insights. With capabilities like these, decision-makers can sleep soundly, even when taking risks to drive growth.
Augmented Decision Making
If we as an industry seek to enable our organizations to reach better decisions more quickly, and design tools that reverse, recalibrate, and improve over time, we must first increase our speed to insights. Today’s insights professionals are spending more time mining data for insights than they are putting tools and insights in the hands of decision-makers. However, technologies like AI and Machine Learning can take on the critical but time-intensive and tedious processes like forecasting and trendspotting, accelerate our speed to insights and allow our CPG and retail clients to identify and capitalize on opportunities with enhanced agility. Taking the examples of other disruptors, Amazon and Google use sophisticated, cutting-edge technology to accelerate their core processes and provide additional value to customers and partners.
Leaning into these advanced technologies may feel risky – many insights professionals may envision a universe where AI and machine learning tools put insights analysts out of work – but really, these tools open up exciting new opportunities. A disruptive insights and analysis team will manage the systems that provide intelligent business recommendations and prioritize data-driven initiatives for their clients using the innovative, human thinking that can’t be replaced by a computer. At IRI, we believe that embracing these tools will transform the role of research professionals from generating insights “on demand” for the millions of decision makers in their firms, to enabling, teaching and implementing tools that improve the speed, depth and accuracy of strategic and tactical business decisions. This disruptive shift will build the tools, algorithms, and platforms necessary for the sales person, brand manager, store owner and media buyer and others to make the optimal, data-informed decision they need to drive their growth.
A disrupted data and insights industry presents incredible opportunities for our companies or clients, and exciting new challenges for our teams. By leveraging sophisticated technologies like AI and Machine Learning, we are redefining our role from analysts to augmented decision makers – those who use advanced technology to assist in the development of data and insights-driven, actionable recommendations.
We know that for large retailers and CPG companies seeking to find new pockets of growth, exceptional speed to decisions and actions is essential to adapt to shifts in the age of disruption. As the role of insights professionals evolves to the implementers of augmented business decision making, we will be in the best position to address many problems our clients face. By reallocating our time and energy resources, and adopting the customer-centric mindset that the most disruptive companies exhibit, we will evolve from opining on the behavior of the past to creating opportunities of the future. Understanding that effective competition in the new CPG and retail world order will require an even faster embrace of technology and an increased attention to data as a decision tool, insights professionals in the market research industry can be the disruptors of the industries we support.