What’s at Stake if You Fail to Harness Digital Disruption


Executive leaders across consumer products industries are under increasing pressure to better manage issues such as product quality, regulatory compliance, and safety. Failing to do so can have disastrous consequences.

In early 2022, for example, a subsidiary of multinational pharmaceutical and consumer goods company Johnson & Johnson declared Chapter 11 bankruptcy as part of an effort to settle thousands of lawsuits related to alleged contamination of J&J’s talc-based products. 

At about the same time, Abbott Nutrition voluntarily recalled several brands of its baby formula after four infants were hospitalized with bacterial infections. One infant subsequently died, and the product recall led to a nationwide shortage of baby formula that lasted for months. Abbott was forced to issue another recall for a different issue in October 2022. 

Managing product issues is a challenge that gets more complicated by the day. Even when handled quickly, these issues can significantly impact a company’s bottom line and reputation far into the future. Unfortunately, companies often lack visibility into emerging product quality or safety issues or rely on outdated, disconnected tools that cannot provide the visibility that modern organizations need to remain competitive.

Many companies were making the move to digital tools to manage those issues even before COVID-19 swept across the world. The pandemic only accelerated this shift. Instead of a process that previously might have taken years, companies are now undergoing a digital transformation in months. 

Digital transformation has become a top priority for boards of directors, who are putting more and more pressure on senior management to develop a granular understanding of their company’s opportunities and leverage the digitalization of their business to deliver new sources of revenue and retain their competitive edge.

The current state of digitalization among regulated industries

According to a survey conducted by Tech Pro Research, 70% of companies either have a digital transformation strategy in place or are working on one. If your company isn’t implementing a digital transformation, its long-term viability is in jeopardy.

But what is digital transformation? According to Veeva SVP & General Manager Frank Defesche, digital transformation is the planned and strategic journey that an organization takes using technology to gain a competitive advantage by increasing efficiency and productivity.

Businesses around the globe are digitizing their front and back-end operations to support growth, meet stakeholder expectations, respond to external forces, and alleviate internal pressures. Part of that process requires overcoming comfort with the status quo, reliance on “tribal knowledge,” and fear of professional obsolescence on the part of managers.

“There is no area in any company that is immune, in my view, from possibilities and opportunities and challenges and threats coming from digital capabilities.” shared Filippo Catalano, Chief Information and Digitisation Officer, Reckitt. 

Cloud adoption is a critical enabler of business transformation. Cyberattacks are accelerating across supply chains, and security must be a key component of any digital transformation. Cloud solutions address cyber security concerns by ensuring software is kept up-to-date, with the latest security patches installed.

Additionally, the workforce is changing drastically. Worker resignations in service, manufacturing, shipping, and front-line jobs, along with reshuffling in corporate jobs, are putting pressure on organizations to rethink the way they engage employees. Empowering employees with modern systems that help enhance productivity increases employee satisfaction and leads to a more loyal workforce.

External factors and developments are also affecting companies on their path to digital transformation, even as they have little or no ability to influence them. These trends and challenges, which are critical for leaders to anticipate impacting their plans, include:

  • Sustainability - Pressure is mounting for transparency about sustainability across the product lifecycle.
  • Inflation - Price increases and volatility challenge companies’ ability to delight customers and can hamper profitability.
  • Consumer behavior and expectations - As behaviors and expectations change, companies must continually update their understanding of consumers.
  • Regulatory pressure - The increasing complexity of regulations – especially around compliance – makes compliance ever more challenging.
  • Supply chain issues - A perfect storm of intersecting factors over the past several years has meant massive supply chain disruptions.

Without a plan to address these issues, a business will find itself rapidly losing ground to its competitors.


Your business is at risk of failure

Considering the challenges businesses face today, failure to welcome a digital transformation opens the door to a variety of issues that could cripple a business. When your competitors are adopting the digital tools that enable them to spot threats and opportunities in near-real time, relying on antiquated systems that may take weeks or months to deliver insight, if they do so at all, is a recipe for disaster. 

The risk of maintaining yesterday’s business practices 

Regulated businesses face risks from both internal and external challenges, and the impact of those risks can be significant.

Internally, issues that can affect businesses include difficulty attracting and retaining valued staff, increased costs due to inflation, the dangers of security breaches, a limited ability to demonstrate sustainability, and trouble overcoming regulatory compliance hurdles. Externally, risks include a damaged brand and reputation, disappointed customers, supply chain disruptions, natural disasters, and public health crises. Falling victim to these risks can lead directly to lost market share and declining revenue.

Business leaders need to ask themselves how prepared they are to manage those risks over the next two to three years and how well prepared they are compared to their competitors, who are facing many of the same issues.

Those who fail to digitize their processes will find themselves unable to adapt in times of uncertainty.

Avoid disruption to your business 

Although the risks are many for those who fail to undertake the digitalization of their business, those who do choose to take action have several opportunities at their fingertips.

“You have to be ready to disrupt or be disrupted,” says Vinod Galani, Digital Transformation Strategist with JP Morgan Chase & Co.

But how does digital technology help reduce business risk? One of the main benefits of digitalization is that it allows companies to avoid disruption by:

Building resilience

Companies have the agility they need to respond quickly when disruptions occur, allowing them to better manage unexpected shocks. Consumer-goods companies can build resilience in their supply chains by creating end-to-end transparency, improving communication and collaboration, embracing e-commerce, and building talent.

Driving better business outcomes

Digital transformation creates efficiencies in a company’s day-to-day operations, allowing them to minimize costs and allocate human resources to focus on higher-value work, while at the same time opening the door to new business opportunities. A 2021 Boston Consulting Group survey found that companies that had undergone a digital transformation “reported a 21% EBIT increase in the businesses within the scope of the transformation compared with only a 10% increase on average for those companies that did not.”

Advancing their reputation

The reputational harm that can result from a failure to act on threats is obvious, but the reputational benefits that can be achieved by organizations that digitally transform are often overlooked. Investing in a digital transformation can build trust and strengthen relationships with employees, partners, potential hires, regulatory authorities, and consumers. Organizations seeking to manage their brand reputation should make transformation efforts an integral part of the process.

Making sustainability transparent

Consumers are increasingly factoring in a company’s sustainability efforts into their purchasing decisions, but building awareness of those efforts requires making data available and making impacts transparent. “I think generally consumers want to do good, but I also think that they are challenged on what good looks like,” Anders Lund, Executive Vice President - Consumer Biosolutions, Novozymes said. “Sustainability has become a really important driver, but I think the industry… [is] obligated to explain what products are and what the benefits are in a way that actually is meaningful to consumers.”

Companies must develop a cradle-to-grave view of their products, from the origin of all materials, ingredients, and components to consumption and recycling or disposal. Achieving that view requires digitalization. Sustainability reports need to be backed up with data so they can withstand the scrutiny of an audit.

“At the end of the day, the responsibility for making an end product sustainable is shared amongst the entire ecosystem that is contributing to the creation of that product,” Alberto Prado, Head of R&D Digital and Partnerships, Unilever said. “The only way to get there is by building partnerships and transparency.”

Streamlining regulatory processes

Digital transformation can help a company more easily achieve regulatory compliance by making data more available and processes more transparent. The efficiencies achieved by that transformation can reduce the back-and-forth with regulators when it comes to a new product, speeding up time to market.

Understand your stakes

Companies need to understand that the competition includes new, disruptive entrants that create their own set of challenges for businesses undertaking digital transformation. Unfortunately, in the digital age, it’s riskier to not move forward. Those who ignore digital transformation will see their market share slowly erode, and to try and recover amid disaster will likely end up in failure.

Digital native vs. late adopters 

Legacy companies aren’t the only players that need to digitally transform. Those so-called digital natives that were considered disruptors a decade ago are no longer the new kids on the block.

Progress marches on, and both these younger companies and 100-year-old giants must evolve or risk falling behind. New, innovative companies are popping up all the time, and no industry is exempt.

To compete with the modern disruptors that aren’t bogged down by legacy systems, overhead, or cultural resistance to change, requires efficiency, a deep understanding of your customers’ needs and motivators, and near-real-time information to execute rapidly.  As difficult as it may be for business leaders to accept, risk aversion is a big problem when competing against the new digital native competitors.

Developing a digital strategy

We’re in the age of digitalization, and executives and boards of directors in every sector are thinking about what their organizations need to do to succeed in the digital future. A sound digital strategy that reaches into the organization to areas including quality, regulatory, and safety will enable organizations in the consumer products value chain to establish a single source of truth that will help those organizations thrive.

Solutions such as Veeva’s enable leaders to protect their brands, raise the industry bar, and advance their reputation among consumers, employees, global regulatory bodies, suppliers, and manufacturers by making trust core to a company’s digital transformation strategies. Veeva can help build and maintain a competitive lead through a commitment to continuous innovation, and by shifting market share in your favor with the ability to respond to industry trends and consumer behaviors faster.

For more information on how Veeva can help your organization with its digital transformation strategy, reach out to one of our experts.


veeva logo