Whitepaper
Unleash the potential of your CPG Digital Transformation:
o9’s four-step health assessment and execution guide
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Introduction
A new year is upon us, and it’s time to renew the annual focus on our health. There is no better way to start 2023 than by focusing on the well-being of your organization’s digital transformation. Just as you wouldn’t start a training plan without assessing which areas need improvement, CPG organizations should try to understand any weaknesses in their current digital transformation plans so they can course-correct before iterating.
o9’s guide to assessing the health of your digital transformation introduces an easy-to-use methodology to help CPG organizations quickly identify where they may fall short in their digital transformations. CPG organizations can use the results of this assessment to ensure they have the right digital transformation strategy and course-correct any areas of weakness.
We have applied a body analogy to the different areas of digital transformation health. CPG organizations should find this helpful when carrying out a health check of their Digital Transformation. Four key areas are covered:
- Technology is the brain of an organization’s digital transformation and is the foundation for all other driving forces.
- The rhythm of progress and decision-making is the heart of an organization’s digital transformation. Firstly, organizations need a steady pace of progress in their digital transformation. Secondly, due to digital transformation, they should be able to make effective decisions at the optimal pace for their organization.
- Culture and behaviors are the organization’s muscle. Organizations need the right behaviors and culture to drive Digital Transformations forward. Employee support must be monitored to ensure that Digital Transformations stay on track.
- Processes are the bones that keep a digital transformation standing upright. It’s okay if they turn out to be broken at some point during the digital transformation. The key is that an organization can detect something wrong and adjust accordingly.
This whitepaper details these four pillars and how to assess your organization in each area. Each of the four sections will contain two questions, and you should give your organization a rating out of ten for each question, one being the lowest score and ten being the perfect score.
A score below ten in any given section means you should re-examine your digital transformation efforts in this area and seek to mitigate this specific area of weakness in your organization’s plans. After taking this assessment, we recommend checking our guide on executing a successful CPG digital transformation.
Agile and flexible technology: The brain behind your digital transformation
It’s challenging to analyze the success of a given digital transformation technology without understanding the specific use case. Instead of analyzing the technical merits of a given solution, this section seeks to help organizations understand if their technology is bringing sufficient value to their employees and is agile enough to stand the test of time.
By the time you get to the end of this section you should be able to answer the following questions and give your organization a rating out of ten for each question, one being the lowest score and ten being the perfect score.
- How would you rate your organization’s digital transformation technology adoption and usage over time?
- How do you rate your digital transformation technology stack in flexibility and extensibility?
Adoption and usage rates
It’s crucial for organizations to look at both the adoption and usage rates of their technology within the context of their specific implementation, and to analyze these metrics critically over time.
Client managers at o9 look at adoption and usage rate metrics and analyze them critically since it’s not one size fits all for organizations. Some organizations have specialized teams, meaning that usage rates of specific solutions should be high, but adoption rates may not need to be as high. The key questions are:
- Are adoption and usage rates moving in the right direction per the digital transformation strategy?
- Are the solutions being used by the right people at the right level?
- What barriers could my team potentially remove to increase adoption and usage?
By monitoring adoption and value realization earlier in the process, organizations can ensure they remain on track to achieve the key financial targets they set for their digital transformation.
Tech stack flexibility and extensibility
Tech stack flexibility and extensibilityWhen analyzing your tech stack extensibility, the main question is: Can the tech stack keep up with changes in your business/business model across both a short and long-term horizon?
In the short term, as organizations develop new insights into what is driving their business, they need to include new information in their decision-making processes. An organization’s tech stack needs to have the flexibility to build new relationships between data quickly and easily.
For example, organizations should be able to ingest new data sets rapidly and understand the impact of these data sets on existing assumptions or forecasts. Additionally, organizations should be able to quickly and easily change their forecasting level (a change from SKU level to Product Group level, for example) without it being a “mini-project.”
A key technology that enables this type of flexibility is Graph technology, which connects all kinds of data structures across varying levels of granularity for real-time propagation.
To learn more about Graph technology and how it can mitigate complexity for large CPG organizations, check out this o9 blog post.
In the medium to long-term horizon, an organization’s tech stack should be capable of adapting to changes in an organization’s business models and KPIs. For example, suppose a manufacturer of cleaning products changed the business model of one of its products to a circular business model. In that case, the tech stack should be capable of quickly adjusting to account for this change in product flow and adding additional KPIs such as Customer re-use rates.
Tech stack extensibility for CPG companies can be judged by two key metrics: the ease with which new data sets can be added and the ease with which new markets can implement the technology stack.
Ease of adding new data sets
Data scientists or citizen data scientists should easily be able to add new data sets to forecasts and models within the tech stack. One way to ensure this is by choosing a tech stack that offers native support to the two biggest data science platforms, R and Python. This gives data scientists access to the most extensive library of algorithms for Statistics, Simulation, ML, and Deep learning.
The o9 platform allows data scientists to copy- paste existing python/R models and see results within the o9 user interface. To learn more about flexible data science platforms, visit o9’s Data science Paas page.
Implementing the tech stack in new markets
Implementing the tech stack in new marketsAn organization’s tech stack should also be easily extensible to new markets or business units. If one business unit or market has implemented technology, it should take only weeks/months to onboard an additional market or business unit. Having a reference model for the technology implemented is critical, and o9 builds a reference model collection of libraries for their customers.
A vital feature of the o9 reference libraries is that incremental markets don’t have to implement all components of the reference model; they can mix and match as needed. This results in low-cost, quick deployments. Additionally, reference models should also be easy to add to and build on such that new features can quickly be added to the library by different markets.
The rhythm of progress and decision-making: The heart of a digital transformation
The heartbeat of an organization’s digital transformation represents the progress of the transformation and the speed at which it can make effective decisions. By the time you get to the end of this section you should be able to answer the following questions and give your organization a rating out of ten for each question, one being the lowest score and ten being the perfect score.
- Is your digital transformation progressing at the right pace? Is there incremental progress toward your goals?
- A successful digital transformation means organizations can make decisions more quickly and with more data at their fingertips. Is your organization more consistently able to make decisions rapidly that align with what the business needs and when it needs it?
The pace of digital transformation
There’s never a hard and fast rule surrounding how quickly elements of a digital transformation should be delivered. o9 aims to implement the first piece of technology that provides value to the organization within 2-3 months. The general goal after that is for o9 to deliver incremental technology and value to the organization every 2-3 months. We call these buckets of value “value drops.”
Dimitrios Pokas, Customer Success Manager at o9, notes, “Bite-size releases of technology are easier for the customer to learn, understand and adopt. Reaching the full potential of a digital transformation is a journey; it’s advisable to start by building trust with simple functionalities”.
Each value drop should be linked to a specific tangible impact for an end user. The value delivered could be simple, for example, reducing the number of clicks to reach a decision. It doesn’t have to be complex, but it should be related to the overall business case behind the digital transformation.
Although the value drops are the heartbeat of digital transformation, they also need to be supplemented by the right pace of decision-making enterprise-wide.
The pace of decision-making
The pace of decision-makingIdeally, as an organization’s digital transformation progresses, it will be able to make decisions more quickly and effectively. Less time should be spent crunching and aligning numbers across disparate systems, and the correct data should be readily available to all. Meetings should end up focused on decision-making as opposed to alignment. Eventually, the time spent in meetings should decrease.
When tracking the pace of decision-making, organizations are encouraged to track the number of meetings needed to execute vital organizational decisions, such as aligning on the monthly business plan or deciding which opportunities to execute as part of Gap closure initiatives.
Organizations should see the number of meetings/time spent in meetings decrease over time as their digital transformation progresses and see the nature of these meetings change from exchanging information and status to actual decision-making.
Now, holistic health comes into play. Implementing improved scenario planning technology without contributing to decision-making processes is not enough. Digital twin technology is often implemented to enhance scenario planning and organizational decision-making.
Therefore, organizations should ensure that crucial organizational meetings include live scenario planning so meeting participants can view the cross-functional implication of potential decisions in real time. This process should enable more timely and less siloed decision-making as functions can view a decision’s end-to-end impact and consider all the relevant factors in real time.
Culture and behavior: The muscle that propels organizations forward in digital transformations
“Culture eats strategy for breakfast” were the famous words of Peter Drucker, one of the most widely-known and influential thinkers on management. Executing a digital transformation strategy without the correct culture and subsequent behavior is impossible.
There are always endless questions to be answered regarding culture and behavior. This section focuses on unpacking the two questions that most effectively indicate the overall health of organizational culture concerning a CPG digital transformation.
- Can your employees clearly articulate the “What’s in it for me“ of the digital transformation?
- Are there Change-makers or coaches at every level of the organization who are tapped into employee sentiment and can influence the organization?
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What’s in it for me?
Leaders in change management may be familiar with the Prosci ADKAR model, which is the critical framework for leaders trying to drive a step change in digital transformation and encourage employee adoption of new tools and ways of working.
The hardest initial step in this process is creating the desire for employees to participate and support the change.
To create this desire to participate in the change, each employee must understand “What’s in it for me?” Organizations will find employees embracing change when there is a clear vision of how the Digital Transformation will affect and benefit them. Managers across the organization are responsible for ensuring this is understood so that each employee is inherently motivated to participate and (hopefully) be enthusiastic about driving the change.
For a deep dive into understanding how employees perceive change during a digital transformation, check out the “Building the Future” episode of the Masters of Digital Transformation podcast.
Influential change-makers at every level of the organization
Once you clear the hurdle of employees wanting to participate in the change, it is the job of change-makers to educate employees on how to implement the necessary changes in their day-to-day job.
Beyond just a technology implementation team, there needs to be a team of coaches or change-makers at every level, training employees and driving adoption. A CPG company that executed successful digital transformation had two dedicated teams:
- The product-specific team focused on the technical implementation
- A deployment team whose sole responsibility was to drive deployment and adoption of the digital transformation tech stack
Beyond training and learning activities, to ensure employees can implement the necessary changes, these change-makers need to help employees tackle any unforeseen issues regarding the implementation. Gauge employee sentiment by asking the change-makers if they know how the relevant employees feel about the digital transformation. Communication is vital. Additionally, it may be worth asking if they can influence the organization sufficiently.
For example, if the change-maker gathers employee feedback regarding the digital transformation program, indicating a change is required, are they empowered to implement it? Finally, these change-makers must be in place for a sufficient time after the initial technology implementation and continue monitoring adoption and usage.
Processes: The bones that keep a digital transformation standing upright
Successful processes are indeed the bones of any digital transformation. With efficient and well-thought-through processes for rolling out technology and change management, a digital transformation at a large CPG company is well- equipped to succeed.
To understand the health of the processes that support an organization’s digital transformation, ask yourself two essential questions:
- If adoption and value realization were to deviate from the plan, would the organization be able to identify and mitigate it within current processes?
- Is there sufficient flexibility within current processes so users can make simple changes without going up a long chain of command?
To help you answer these questions and rate your organization out of ten, read on.
Processes that detect real digital transformation risks
The most significant risk to an organization’s digital transformation is the lack of technology adoption preventing organizations from realizing the necessary value. As well as tracking technical milestones, deployment teams must closely monitor adoption and value realization.
It’s worth understanding if your organization can quickly identify lower-than-expected adoption or value realization metrics. Regular feedback sessions should be taking place with users to understand the root causes of adoption and value realization KPIs.
If an underlying risk is identified, organizations should have mitigation processes to course-correct following this user feedback. Course correction means teams must be open to changes in the product roadmap or iterations of the training and learning modules already created. CPG organizations must see these iteration processes as a positive aspect. Agility is not just for software; it must apply to processes too.
Sufficient flexibility within current processes to enable the necessary user personalization
Sufficient flexibility within current processes to enable the necessary user personalizationJust as your tech platform needs to be sufficiently flexible, processes such as configurations and accesses must be flexible enough to ensure usability. Questions worth asking include:
- If users wanted to make simple configuration changes, would they have to go up a chain of command?
- Can users modify elements in standard dashboards without going through a lengthy process? Next-generation solutions should allow end-users to easily change workflows, access rights, and dashboards.
- For more technical teams, can data scientists quickly add new data sets or choose the optimal forecast models without going through a lengthy approval process?
Data scientists have found success with o9’s flexible tournamenting functionality. This provides data scientists with the option to select a specific forecast based on different models available, meaning data scientists can choose the optimal model for the situation at hand.
Conclusion
A successful CPG digital transformation requires a flexible and extensible tech stack that is rolled out with optimal adoption and usage. An organization also needs to progress through the digital transformation at an optimal pace and begin making more effective decisions due to the transformation. Technology and decision-making will only fall short without the right culture and behavior to drive change at every level of the organization. Robust processes should detect any risks to your digital transformation and allow for flexibility.
With this white paper, we have sought to help CPG companies ask themselves the right questions to understand the overall health of their digital transformation. The analogy to the human body has helped us think holistically about digital transformations and more easily pinpoint areas of potential weakness.
We encourage you to go through each of the four sections and rate your organization by asking yourself the key questions we listed and elaborated. We hope you find this helpful. For more guidance on executing a successful digital transformation focused on the four holistic pillars, please check out our o9 guide to executing a successful digital transformation or request a demo of our platform with a deployment expert.
To learn how to put the four pillars into practice at your organization and how other CPG industry leaders have successfully executed their digital transformations, download o9’s free guide for CPG companies.
