Can conservative FMCG cultures adapt to digital?

One of the satisfying things about editing Market Leader is the increasing number of submissions I receive, some of which can be published as they stand, others need some editing and others may not be right for the journal but spark off ideas that become the foundation of another article.  

One of the latter arrived before Christmas and I’ve been in correspondence trying to convince the author to abandon his original piece (which was about the origins and size of the digital consumer market - relevant of course, but no really new thoughts contained in it). He touched on what I think is a different but very interesting line of thought. The author distinguished between what he described as ‘low interest’ products and brands – meaning the essential everyday FMCG marketed by international giants, in contrast to the digital ‘high interest’ brands (ignoring, for the purpose of the argument, the traditionally defined high interest sectors such as  luxuries, big ticket brands like cars eject).

These big FMCG markets are increasingly saturated with relatively low growth whereas, of course, the market for digital brands could be thought to be in its infancy.  What I thought was an interesting line of argument is that although these two sectors don’t compete for the consumer’s attention/money, the companies in all marketing sectors are competing for staff.

Essentially, the argument is this: FMCG marketers are facing saturation and so their growth will depend on the markets they find in the developing world and how well they keep their premium brands premium in the face of such continuous and hard discounting.

But they have other problems that the digital world has thrown up which are twofold: how to incorporate digital into marketing strategies long accustomed to TV only; and  how to incorporate the talents of the tech world into product innovation.  

This leads to an interesting implication, which is to do with the kind of people they will be able to recruit. Once upon a time, the top graduates went to FMCG. This is hasn’t been the case for a long time, but the relatively recent lure of the finance world and consultancy is minimal compared with the lure of tech companies and tech start-ups. Graduates want to be part of the tech world. In future this will be even more the case, since everyone is growing up digital and the quirky, eccentric techie stereotype will be less prominent when everyone knows how to do it.

Which leads to another point which has to do with culture. FMCG companies have essentially conservative cultures – silos and  hierarchies – and can often be fearful. It is inevitable that they will tend to recruit in their own image - overly conservative people. The cultures of the digital giants (and indeed, start-ups) are entirely the opposite. Freewheeling, inventive, curious and fun. What FMCG companies need to do is to find ways of incorporating these energies into their world.

The Unilever Foundry is the most recent example of a virtual network of tech start-ups that link with Unilever in a very exciting ways. Other companies may well be doing the same or thinking about it.  FMCG companies have been trying to harness innovation skills for years – usually not very successfully largely because of the dead weight of the core conservative culture. With more digitally equipped people gradually working their way into management, it should be possible to incorporate the skills and the culture of the tech world that goes along with it.

In the next issue of Market Leader we have a fascinating article about the potential application of the ‘Internet of Things’ to FMCG (by another author). But FMCG cultures will have to really re-think their conservative approach in order to make this work and survive in the future.

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