Wednesday, May 5, 2010

FEI2010 – Establishing Successful Business Models, The Amway Transformation

C. Engdahl reporting from FEI2010

Establishing Successful Business Models: The Amway Transformation
FEI2010 Presenter: Candace S. Matthews, CMO Amway

When it comes to business models, Amway is quite intriguing. But when I think of CPG companies, Amway isn’t at the forefront of my mind. It should be though. It’s a huge, globally distributed organization. In a presentation titled “Driving Transformative Growth Through Innovation”, Amway CMO Candace S. Matthews highlighted the company’s history while outlining some recent challenges that prompted the organization to transform its approach to innovation.

Despite, or perhaps because of, its historical success, Amway in recent years began to think and act differently as an organization. About five years ago the company had begun to settle into what Ms Matthews described as “maintenance mode.” Growth was still solid, yet was coming largely from international expansion rather than product and brand innovation. Because of the solid growth however, the mentality had largely been “why take risks?”

Amway’s approach to innovation has recently dramatically changed. There is new vigor and commitment throughout the organization. Innovation is no longer something concocted and set forth by isolated individuals within the organization, but rather infused into overall corporate objectives and expected universally throughout the organization.

Some specific steps taken recently that demonstrate this innovation transformation include:

1) The acquisition of top knowledge workers from outside the traditional Amway organization. About 30 or so Director-level personnel have recently joined the organization in the areas of Marketing, R&D, and Finance. They’ve come from top CPG companies throughout the world.

2) A new culture of engagement. Amway has taken the innovation message aggressively to its employees and created new performance competencies to complement this effort.

3) Leveraging a new brand identity. Amway recognized that it had barely tapped its brand identity. They had been focused historically on channel relationships and distributors rather than creating a customer-centric brand. More effort is being put forth to create and strengthen a globally consistent brand.

Ms. Matthews presented a variety of new products and initiatives being implemented by Amway. Some exciting stuff. Appears their transformation is working.

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