On January 13th, our weekly episode of Emissary Live covered all things CPG. We sat down with Mike Martiny, the former CIO of General Mills, to discuss his tips for sellers targetting CPG firms in 2020. You can listen to the full episode, here.
Three takeaways from the interview:
- Most CPGs will be spending 2-5% of revenue on technology since they’re focused on physical products. It will be in the hundreds of millions rather than billions. Because of this, every technology dollar matters. If you’re targeting a CPG firm, have a very well-constructed, very clear value proposition with a high likelihood of execution.
- At any CPG of scale, there are going to be three priorities: the first two are accelerating organic sales and maintaining margins. These two often swap in priority. The third is specific to the company and its unique business objectives.
- The two biggest mistakes you can make when pitching CPG:
- Not understanding the culture of the company when it comes to decision-making.
- Not understanding the business process when it comes to business outcomes.
CPG Interview Highlights
Mike, why don’t we start with a bit of background in your experience within the CPG industry and your time with General Mills?
Sure thing. I’m the retired CIO of General Mills and I also lead a global shared services organization. I spent 26 years at General Mills, and 34 in CPG at Kraft, Pillsbury, and General Mills. Most of my background is formally in supply chain, engineering, and manufacturing, but along the way, I picked up enough technology to be on the succession plan as CIO. I was promoted to CIO at General Mills 2008 and held out until I retired it out in 2018. General Mills is a great organization with amazing people and amazing products that people love every day.
Given that most of our listeners are enterprise sales teams, what should technology solution providers keep in mind when approaching CPG in 2020?
Well, certainly, General Mills and others in the space have immense data capabilities. It’s the organizational focus that’s important. One of the things that’s very clear about CPG is the framework on spending. If you’re a bank, healthcare insurance, or SAAS, technology spend is anywhere from 15% to 30% of global revenues.
CPG is very different. CPG is a lot like retail in that the product is still a physical product. It’s Honey Nut Cheerios. It’s Yoplait Yogurt. It’s Nature Valley granola bars. The raw materials, manufacturing, and distribution make up the majority of spend. Technology spend in CPG is not going to be 15-25%, it’s going to be more like 2-5%. Even for multibillion-dollar companies like General Mills, IT spend is going to be hundreds of millions per year, not billions per year.
The way to get into a CPG, therefore, is to have a very well constructed, very clear, and very high probability ROI.
Are there any technologies that you think are on everybody’s minds within CPG right now and that’s not likely to change for 2020?
At traditional large global CPG firms, you’ll find that if there are three priorities. The first two are accelerating organic sales and maintaining strong margins. And they may flip in priority, but they’re never not going to be numbers one and two. Then, there’s usually a third that has something to do with the specifics of that company and its goals, whether that’s cash management cycle, geographic expansion, etc.
Related to CPG, are there any consistent mistakes that you saw technology teams make?
Yeah, there are typically two mistakes that I see. One is to not understanding the culture of the company when it comes to making choices. The second is not understanding how the business outcome is created in the actual business process.
Different companies have very different models for how spending decisions are created and approved. If you assume that all technology spend has to go through the CIO and don’t know that the CIO is a highly aligned business partner, not a technology spender, then you’re missing an opportunity to make a big change. You have to know the company you’re approaching and you have to literally ask, okay, who even creates the choices to be made?
At some CPG firms, all of the choices get made at the business team level or the brand team level and the CIO enables that spend through his or her allocation of human capital, not financial capital. In other firms, they have the responsibility of not only creating but bringing new things for other groups they’ve consumed. Then, the third is the scenario where the CIO has very little responsibility for new spending and has most of his or her time spent on existing spend and maintenance and availability and uptime and in those companies, all of the creative stuff happens at a business or a product team level.
So, it’s important to know those two things. How a company creates the choices to be made and how a company makes those choices within a fiscal year and who leads that process.