People
The role of the chief growth officer (CGO) has become a hallmark of consumer products (CP) companies attempting to reignite growth since it first appeared in the mid-2010s. This role was created to set up a single point of accountability for driving the topline and to ensure that unlocking near-term performance was balanced with the need of seeding future growth. However, the role has faced challenges to fulfill its mandate, and must evolve to drive tangible, outsized impact. But how?
CGO: the origin story
The dawn of the digital era has disrupted the environment in which CP companies operate. It has created new ways of engaging with consumers, promoting brands, taking products to market, and handling operations. Barriers to entry have been lowered, sources of advantage become obsolete, and the old tricks of the trade to drive sales have become less effective. Those dynamics have favored smaller players that, collectively, have captured billions of dollars of share every year from large CP companies.
CP companies had to find the potential in digital technology, leverage analytics to find hidden pockets of growth, and gain exposure to fast-growing product categories through strategies like in-house innovation, mergers and acquisitions, partnerships, and more. For that, CP companies didn’t need a functional “marketing” specialist, but rather a cross-functional leader with deep business acumen who could promote a multifaceted growth agenda, drive alignment across multiple stakeholders, and deliver sustained revenue impact.
The scope of the CGO role can vary significantly, but often includes strategy, insights and analytics, digital, brand marketing, marketing communications, innovation, and/or research and development. Whether responsibility for other commercial levers—such as price and revenue management, trade promotions management, and e-commerce—falls within the CGO’s purview will differ from business to business.
Challenges in fulfilling the CGO’s mandate
Some of the pioneers in instituting the CGO role in the mid-2010s include Mondelez, Kellogg’s, Constellation Brands, and Conagra Brands. Other CP companies also embraced the role throughout the late-2010s, including Hershey’s, Colgate-Palmolive, Kimberly-Clark, and Mars Wrigley.
Despite the pervasiveness of CGOs, the challenge to drive sustained growth continues. In 2020, for example, although many large CP companies have posted record pandemic-induced sales growth, smaller players still gained share—according to IRI, of the industry’s $933 billion of total U.S. sales in measured channels, large CP companies lost 1.3 share points (or $12.1 billion) to smaller players.
That begs the question: have CGOs been effective in fulfilling their growth mandates?
The head-scratching continues when you consider that a powerhouse like Coca-Cola rolled back its CGO role, originally created in 2017, and reinstituted the CMO in 2019 upon the CGO’s retirement.
Although there is no conclusive evidence one way or another, it is unquestionable that CGOs have been challenged. In our experience, three of the common roadblocks are:
- Inherent complexity – CGOs are expected to drive a multi-pronged growth agenda that spans different time horizons and pulls on multiple levers, in complex organizations that operate in multiple geographies, with multiple business units, across multiple categories, and with multiple brands.
- Lack of “teeth” – CGOs are often seen as “outsiders” to the operation, without P&L ownership and decision-making authority. Many CGOs have struggled, in part, due to their inability to rally stakeholders behind an overriding growth agenda.
- Measuring impact – Revenue growth is easy to measure, but it is a lot trickier to establish cause-effect relationships between sales lift and management decisions or actions. This “attributability issue” makes it harder for CGOs to measure their direct impact in driving growth. It also makes it more difficult to create variable compensation mechanisms that are both attractive to CGOs and equitable relative to those of other C-suite executives.
Evolving the CGO role
There is no real sign that CGOs have lost their relevance. As recently as 2022, other CP giants, including Anheuser-Busch InBev and Tyson Foods, have added high-profile CGOs to their C-suite. However, driving sustainable growth in a large, complex business is not as simple as retitling an existing or establishing a new role. For CGOs to succeed, the role will have to evolve in the following ways:
- Align operating model and governance – CGOs will continue to struggle where the operating model and governance have not been recalibrated to enable and support the company’s growth ambitions, including redefining decision rights, resetting performance goals, and realigning incentives.
- Ensure ability to execute – CP companies must ensure that the broader organization is fully capable of executing the growth agenda. That means ensuring that they are properly staffed and funded, have the right skills and competencies, and are aware of and committed to what is expected of them.
- Adopt growth management discipline – With rare exceptions, CP companies still lack the ability to manage growth with the rigor and discipline used for managing cost reduction and productivity programs, including key performance indicators, routine reporting, management review cadence, and value tracking mechanisms.
- Link growth to shareholder value – Despite the clear revenue growth mandate, CGOs must evolve to consider the impact of growth initiatives in driving shareholder value, by factoring in the return on invested capital and leveraging economic profit (e.g., economic value added) in their financial modeling.
The CGO role is still relatively new within corporate America and has the potential of having a profound impact on shifting the growth trajectory for CP companies. But the role must continue to evolve to address existing challenges and position it to fulfill its ambitious growth mandate.
Read the PDF version here.
