The innovation challenge in consumer goods

Consumer goods companies are at a critical crossroads. Traditional categories are maturing, and breakthrough product innovation remains elusive. Meanwhile, consumers are becoming more discerning, demanding solutions that address holistic human needs rather than incremental product improvements. The industry's response has been sluggish: 59% of consumer goods executives report it takes a year or more to adapt to changing consumer demands. Outdated product innovation processes and functional silos mean companies face increasing difficulties in both identifying relevant innovation and scaling at speed. To overcome this, companies need to think beyond product updates—they must rethink their entire value chain.

A new paradigm for innovation

To address these challenges, leading companies are reinventing their value chains through four interconnected mega processes. Building on the strategic foundations laid by "Insight to plan," the second mega process, "Innovate to scale" marks a fundamental shift in how consumer goods companies approach innovation. This process leverages insights from the first mega process to fuel the development of new growth spaces, while seamlessly integrating to bring the opportunity to life in market through "Engage to advocate" and "Plan to deliver."

By combining emerging technologies with new ways of working, "Innovate to scale" transforms the entire innovation process, creating a more agile, proactive system that not only addresses immediate market needs but also anticipates future market needs. This holistic approach ensures that innovation isn't just faster but iterative and predictive—in essence, moving from a slow and linear stage-gate process to ongoing innovation.

At its core, Innovate to scale is a highly adaptive system. It uses AI to create “synthetic consumers”, mining external and proprietary insights to identify unmet fast-moving consumer needs and new demand spaces. It incorporates in-silico R&D for accelerated ingredient discovery, product formulation and design, significantly reducing the need for physical prototyping. Synthetic data also allows companies to quickly test and refine new product concepts with digital twins of consumers, saving valuable time and resources.

This mega process strengthens the connection between strategic planning and new product development (NPD). Market insights and consumer data from continuous strategic planning flow directly into NPD teams, ensuring that the latest consumer modeling actively informs product concepts. Integration with marketing further enriches this process, as real-time feedback is looped back into product development, enabling more tailored offerings. Seamless coordination with the full supply chain enables supplier insights to drive not just operational efficiency, but also new market possibilities—for example, by bringing the newest ingredient innovations or material science directly into the product development process.

Numbers that prove the impact

In our experience with clients, the implementation of an Innovate to scale process is already yielding significant results. Companies are seeing a 25-50% faster time to market, an 80% reduction in data processing time and a 40% improvement in the speed at which new products and services reach consumers.

For example, let’s consider a food manufacturer planning to launch a new line of plant-based meat alternatives. Traditionally, this process might take 18-24 months. With an Innovate to scale approach, however, the timeline is dramatically shortened:

• AI-powered trend analysis identifies a growing consumer interest in mushroom-based proteins.
  
  
• In-silico R&D rapidly tests various mushroom species and processing techniques, narrowing down options in weeks rather than months.
  
  
• Digital twins of consumers provide quick feedback on texture and packaging preferences.
  
  
• Integrated planning ensures production capacity aligns with projected demand.
  
  
• Virtual prototyping and testing reduce physical sample production by 70%.  

As a result, the company brings its new mushroom-based line to market in just eight months, capturing an emerging trend before competitors can react.

This hypothetical scenario is already becoming reality in the industry. A global confectionery company, for instance, has implemented new multi-physics simulation technologies to design and prototype packaging innovations. This approach has reduced development time by up to 40% and eliminated almost 250 tons of plastic from the testing process while minimizing the need for extensive physical testing.

Real-time innovation, real-time value creation

This approach not only dramatically reduces time-to-market, allowing companies to capitalize on emerging trends, but also minimizes waste through lower product fail rates and reduced ecological impact from testing. What’s more, it ensures that companies can respond to fast-changing consumer trends while improving their cost-efficiency and sustainability—as the linkage through supply chain allows companies to better optimize for both financial return and carbon-to-serve metrics. In essence, an Innovate to scale approach transforms the innovation process from a time-consuming, resource-intensive endeavor into a dynamic, responsive and value-generating engine for consumer goods companies.

Looking ahead: A strategic imperative for consumer goods innovation

For companies willing to embrace this change, the rewards will be immense. Innovate to scale represents not just a paradigm shift in consumer goods innovation, but a necessity for survival in an increasingly competitive landscape. By leveraging advanced technologies and fostering cross-functional collaboration, this mega process addresses longstanding industry challenges while opening new avenues for growth and efficiency.

AI is reshaping the consumer goods industry at an unprecedented pace. Will your company lead the charge or risk being left behind?

Connect with Karen Fang Grant to explore tailored strategies to overcome your specific challenges, identify high-impact opportunities and chart a clear path towards a more agile, innovative and consumer-centric future for your business.