The imperative to act now – why corporates must prioritise innovation.
The Fourth Industrial Revolution – a term coined by the World Economic Forum in 2016 to describe the paradigm shift in the way we live, work and relate to each other – is well underway. Across the retail and consumer industry, businesses have already begun to witness the disruptive impact that individual emerging technologies – AI, robotics, augmented reality, the Internet of Things – can have. This is only the beginning however, as the next decade will see several of these technologies converge, and in doing so create new business models leading to further dislocation of every consumer market. The impact of these innovations is unpredictable as the speed of the next generation of technological advancement continues to accelerate.
In this increasingly complex and rapidly evolving world, innovation – whether incremental or disruptive – will determine the future success of any corporation. Navigation through the labyrinth of disruptive business models, seismic changes in consumer behaviour and rapid advances in technologies requires a bold vision and extreme agility across an organisation. The most successful will be those that make decisions, allocate resources and create value at an unprecedented speed and scale.
Despite this, innovation remains a challenging topic for many of the leading global corporates. On one hand, business leaders tend to recognise the importance of innovation and in some cases invest heavily into it, but on the other, very few are satisfied with the return on this investment.
Businesses that are struggling today are often characterised by an existing strategy and organisational structure that lacks the agility to mobilise the innovative technology, capability and talent needed to address these challenges. Set against this context and considering accelerated digital adoption by consumers of all ages and demographics as a result of Covid-19, there is a renewed imperative to act now. Simply put, the winners in the 21st Century will embrace change, rather than fight it.
At True, we are fortunate to see first-hand several examples of global corporates that are successfully achieving this and have identified six key themes which we believe are critical to survive, adapt and grow in the retail and consumer sector today:
- Leadership: Industry leaders who are bold, face into the challenges ahead and sufficiently focus on the longer-term future
- Customer obsessed: A continuous flow of external data, insight and provocation to understand the rapid evolution of consumer needs and behaviour as the pace of structural change accelerates
- Digital at core: Prioritising the understanding and use of technology and data across every aspect of the organisation
- Strategic alignment: Embedding innovation as a core competency rather than a side investment (also recognising it as an investment, like R&D, rather than a P&L ‘cost’)
- Capability development: Transitioning from “own & build” to “partner & collaborate”
- The role for M&A: Investing in key technologies and emerging brands to drive growth
The True Innovation Platform for the Retail and Consumer Sector
As well as investment activities, True advises many of the leading corporates across the Consumer sector – including 7-Eleven, Johnson & Johnson, John Lewis Partnership, M&S, Morrisons, Primark, Shell and TJX – to help navigate the opportunities and challenges ahead. True’s differentiated model leverages three underlying elements that combine to provide a unique perspective on the future of the sector:
- Sector specialism: True represents a network of investors, portfolio companies, early stage businesses, corporates and individuals, all of whom are focused on the future of the retail and consumer sector
- A view across the entire capital spectrum: True’s perspective – as investors and operators in the sector – is taken from the broadest possible range of businesses, from smallest startup to largest corporate, including two specialist funds investing in businesses that capitalise on consumer behaviour change and advances in technology
- Global innovation flow: 3000+ innovation businesses assessed each year, drawing on strategic partnerships with key global innovation hubs
There are four key pillars to the True innovation platform, each representing distinct approaches to innovation. These are set out in summary below:
- Invest: Leveraging True’s skillsets, experience and deal flow as an investor in the consumer sector can be achieved via investment advisory services, deal flow filtering, corporate venture capital support, fund participation (at early stage and/or private equity level) or via the creation of bespoke investment vehicles.
- Develop: Accessing True’s expertise at the intersection of consumer behavioural change and technological development in order to build innovation strategy frameworks, create and scale new business models and engage in digital product and service development.
- Educate: Providing insight from True’s position as investors and innovation Partners across the capital spectrum and across geographies and sub-sectors to input into and accelerate corporate strategy from ideation to implementation.
- Adopt: Delivering highly curated and relevant innovation flow to accelerate digital and technology strategy. This can include a range of engagement models from traditional vendoring, through partnership/joint venture development to equity participation.