Very large multi-national product companies need to find creative ways to enjoy the benefits of scale while remaining agile. This is especially true in developing markets where competitors can move very quickly with few of the obstacles that big companies face. Business leaders have long been intrigued with the idea of reducing hierarchy, putting greater emphasis on networks, and empowering decisions closer to the market. But tangible examples of these new ways of working are few and far between. When it does occur, it is usually the result of creative, collaborative personalities that come together to make magic at just the right time. Agility and scale rarely co-exist in the design of the organizational operating model.
The global/local tension
Many companies have a mix of global, regional, and local brands. These businesses must nurture local innovation and brand building, while gaining greater leverage from their assets in global, or at least, trans-national brands. In foods, beverages, health, beauty, and apparel local variations really do matter. Global brands (and aspiring global brands) often represent only a portion of the company’s growth potential. An over-reliance on inflexible organizational models when establishing centralized brand, product, or category management teams can be downright destructive, exacerbating global/local conflicts.
We are very enthusiastic about a model that is unfolding in our work with one large global consumer packaged goods company, which we will call BrandCo. The company is pioneering some interesting organization design activity that does indeed rely more on networks and less on hierarchy across the global, regional, and market continuum.
An analysis of the company’s position across an expansive geographic reach, four major categories, and a dozen global brands revealed the challenge of attempting to govern high degrees of variation in both brand maturity and the state of market development. These variations require a nuanced view of global vs. local roles in both the creative process and the launching of new initiatives.
The scope of the portfolio had led to much internal, costly, and unrewarded complexity in BrandCo. The time and energy wasted in trying to negotiate roles and decision rights within the matrix, where the center and the regions battle over limited resources and zero-sum power-sharing formulas, had to stop. Attempts at activating a council of central and local marketers was an ad hoc solution and decision rights remained murky.
A new definition of ‘center-led’
A design team of marketers, R&D leaders, and other functions from around the world determined that there were four key roles to be played in any product innovation or brand-building initiative. These four roles serve as the basis for differentiating responsibilities between the global center and the regional operating units. Most importantly, they can be configured into purpose-built networks based on the context of each initiative.
The network concept is illustrated below with the roles that the global center, regions, and local markets might play for a given initiative:
In most cases, global brand standards are governed from the center, in BrandCo, but often the development of brand communications and new product initiatives needs to be performed in regions, based on competence centers, market and brand maturity. Regions then, in turn, decide which local markets provide the best test grounds for new concepts, and usually decide which of their local markets would receive and launch this new ‘content,’ all linked to a strategic growth plan, developed jointly by the extended category team (again, think network).
Market conditions drive role definition
High variability in market development and brand maturity drives a different sort among these four roles for each major initiative. The key insight is that to leverage the company’s collective marketing, insights and R&D resources, it is important to network regions and the center together, but to do so around a contracted set of roles specific to a given initiative. In other words, design the organizational model around the work in a very agile manner, reflecting continuous shifts in the competitive challenges for each brand in each local market. The launch of a breakthrough innovation can handled differently than the refresh of a regional brand, with each moving at the right speed.
The network forms a robust extended category team that works together to define who will play which of the four roles as new product or brand-building ideas are generated and developed. The team manages a shared agenda. In that sense it is center-led, but it is not strictly directed from the center.
The BrandCo organization design team began to test the model by defining who would play each of the four roles across a diverse set of nearly 30 brand-building and product innovation initiatives. The roles did indeed vary, based on 1) the state of maturity of the brands, 2) development of the markets, and 3) the presence of a critical mass of R&D and brand resources located in different parts of the world. These three criteria guided the allocation for the four broad roles and decision rights for the work.
The concept seems almost obvious. So why is it so hard to create networked, agile teams in large, global product companies? Three enablers are critical, and often overlooked.
• Agree on the big opportunities. A robust portfolio management process underlies the network model. Enterprise leadership has to make choices across investment possibilities. This doesn’t mean top-down decision making, as the analysis and option generation has to take place at the region/market interface. But, every company will be faced with too many opportunities. The strategic trade-offs have to be made at the global level so that the right mix of global, regional, and local initiatives are selected.
• Common methods and tools. A systemic approach is needed to deploy brand strategies and to commercialize new product ideas across regions. A strong center-led approach is necessary to bring leverage to both the opportunity and the solution. This allows for local market visibility into the global menu and improves the consistency and quality of local portfolio analysis. Getting this balance is not easy, but the upside comes when local insights and agility are linked to global consistency and brand power.
• Infrastructure to support collaboration. The inherent tension between regional P&L needs and longer-term, global strategies must be managed, especially when new product creation may actually have a short-term, dilutive effect on regional profitability. Funding processes may need to be redesigned to move resources to bigger bets. New metrics and incentives may be required to make collaboration rational for local managers. Performance management systems have to be able to accommodate multiple sources of feedback, including peers. Finance and IT systems have to support consistent analysis across organizational boundaries.
Category management in the global, multi-brand, fast-moving company is an excellent opportunity to bring the concepts of a networked organization to life. A dynamic, interconnected network is far more resilient, flexible, and responsive than a centralized hub-and-spoke set up. While the design concept may be new to many traditional companies, the keys to success are not: well designed roles, enabling processes, and a leadership team that works together to set a clear agenda.