Amid China's economic slowdown, fragmented consumer demand, the impact of online e-commerce, and a squeeze-style competitive market, the traditional channel model in the FMCG industry is under pressure, with sales generally hitting bottlenecks. Against this backdrop, New Distribution, in collaboration with Professor Gao Song from the Business School of East China University of Science and Technology, launched the 'Gao Song · Channel Empowerment' column to explore new channel models, strategies, and methods for FMCG manufacturers and distributors in the new era. As market demand changes and competition intensifies, FMCG brand owners are generally facing growth bottlenecks. How to create a new growth engine and chart a second growth curve is a key concern for the entire industry. This column proposes that 'channel empowerment' transformation is the core methodology for brand owners' next round of growth dividends. Specifically, it proposes a front, middle, and back office model for brand owners' marketing organization transformation, as well as innovative methods for co-building a marketing front office with distributors. However, any great transformation encounters many difficulties and obstacles. How can brand owners overcome them and design a transformation roadmap? △ Three-tier model diagram in the FMCG field -01- Four Mountains Blocking the Path of Transformation 1. No Benchmark Model Although the agile organization transformation of front, middle, and back offices is a trend, and models like Huawei's Iron Triangle have succeeded, there are no successful precedents or mature models to learn from in the FMCG industry. △ Huawei Iron Triangle model diagram Marketing Director Lao Cao, who wants to explore a new model, needs to explore new structures for marketing organizations and channels, new responsibilities and collaborative relationships for city managers and distributors, the main tasks and processes of empowered channel organization operations, and organizational assessment and incentive mechanisms. Lao Cao feels like he is in a foggy night, leading his team forward without a map, feeling uneasy and uncertain. 2. Shift in Role Thinking In the traditional pyramid organizational structure, a top-down control model is adopted. In this management model, top management holds absolute power, middle management is the control hub, and frontline staff are merely executors. Organizational operations rely on top-down push. Everyone faces upward, obeys orders from above, and ignores the voices of distributors and consumers. The empowered channel organization transformation changes the traditional top-down control model, shifting from an up-down structure to a front-back structure. Its essence is customer-centricity, granting decision-making power to the front office that hears the gunfire, and organizational operations rely on a front-to-back pull model. The front, middle, and back offices are not hierarchical but collaborative, serving customers together. The successful operation of the new organization requires all employees and distributors to deeply understand these changes and undergo role and mindset shifts.
Headquarters managers: How to shift from controllers to mentors and coaches, providing service and support to the front office? City managers: How to shift from passive executors to proactive operators of the local market? Distributors: Can they shift from warehousing, distribution, order, and capital functions to market planners, terminal enablers, and consumer operators? Clearly, these role and mindset shifts are not easy. 3. Insufficient Frontline Capability Another difficulty in empowered channel organization transformation is insufficient frontline capability. When decision-making power is granted to the front office, if frontline capability is insufficient, it can lead to chaos once power is delegated. The core of an empowered organization is the front-office small team, akin to U.S. special forces squads, requiring composite capabilities from intelligence, IT, weapons, combat, to communication. In empowered channel organization transformation, the joint business entity is the front-office small team, which needs to take on the roles of local market planner, decision-maker, and promoter, requiring capabilities traditionally held by headquarters marketing departments. First, market planning and strategy capabilities, including market research and insight, market strategy planning, strategy implementation, sales promotion, product expertise, and terminal advisory consulting capabilities; Second, front, middle, and back office collaboration capabilities, including communication and coordination, internal resource acquisition and integration, and organizational promotion capabilities. These capabilities are clearly lacking among original frontline sales staff and distributors. 4. Lack of Consensus The biggest difficulty in organizational transformation is reaching consensus. Within X brand, there is controversy over the front, middle, and back office empowered channel transformation. Top management views are inconsistent. Only with the strong support of CEO Wang did Marketing Director Lao Cao receive full authorization to drive the transformation. However, Lao Cao has just taken office and has not yet established authority within the organization. If the transformation encounters any setbacks, it is easy to face skepticism and fail. Only a few believe because they see; most see because they believe. -02- Basic Approach to Empowered Channel Transformation Just as Lao Cao was puzzled, he suddenly remembered attending a forum where he heard a speech by Professor Li, a well-known marketing expert from a prestigious university, which inspired him. So, Lao Cao visited Professor Li specifically, hoping to get his help. Professor Li, who comes from a corporate executive and entrepreneurial background, focuses on research on empowered marketing organizations. Lao Cao had an in-depth conversation with Professor Li and set the basic tone for the empowered channel transformation. 1. Trial and Error and Iteration Professor Li believes that empowered channel organization transformation is an innovative exploration in the FMCG industry. Without mature models to reference, it is necessary to trial and error and iterate in practice, taking small steps without stopping. It is not about achieving everything at once or rolling out comprehensively, but gradually optimizing and forming during practical exploration. 2. Adapting to New Roles in Practice Role and mindset shifts are difficult to achieve through reasoning alone; they must be learned and adapted through actual practice. Therefore, it is necessary to adopt a project-based approach, use a new channel organization model, create real scenarios, and achieve role and mindset shifts in the process of creating performance. 3. Combining Training with Combat In real project scenarios, it is necessary to teach frontline teams and distributors methodologies on how to plan local markets, diagnose business, and organize and mobilize, and let frontline teams apply what they learn immediately, learning command and combat methods in actual operations. In addition, changing performance assessment and incentive mechanisms, policy guidance, shifting from upward to forward, and directing the organization's most talented people to the front office are also effective ways to address frontline capability gaps. 4. Creating Benchmarks Reaching organizational consensus and building strong momentum for transformation are key to success. Since most people believe because they see, it is necessary to establish benchmark markets and successful cases during the transformation process, using small victories to stimulate energy and gain broad support and recognition within the organization. -03- The Birth of X Brand's 'Distributor Excellence in Business' Project Based on the above principles, Marketing Director Lao Cao and Professor Li planned the Excellence in Business project, centered on improving distributor performance. The goal is to drive empowered channel transformation through project implementation. The main principles and content of this project are as follows. 1. Aiming to Improve Distributor Business Quality System thinking requires not only comprehensive thinking but also the ability to identify key nodes in complex systems. A breakthrough at one point can achieve overall improvement. Lao Cao and Professor Li believe that the key to empowered channel transformation is the distributor link. Distributors not making money and having low cooperation are core issues that X brand urgently needs to change. By aiming to improve distributor business quality, it is possible to maximize distributor support. If distributor performance improves, X brand's marketing performance will grow, which will also gain support from the company and frontline sales. By aiming to improve distributor performance, it can serve as a traction to drive the formation of an empowered channel organization mechanism through the joint business entity. 2. Three Major Improvement Systems: Business Diagnosis, Business Planning, and Business Implementation Improving distributor business quality requires specific methodology support, mainly in three aspects. 1) Distributor Health Check System Business diagnosis system: The premise for improving distributor business is accurate diagnosis. Only by prescribing the right medicine and solutions based on specific symptoms and problems can performance be effectively improved. Business diagnosis requires tools and methods. Professor Li, based on real distributor operating scenarios and using the DuPont analysis method, extracted 23 key operating indicators to build a distributor business diagnosis system. 2) Distributor Business Martial Arts Manual Business planning system: Distributor business improvement requires specific strategy and method guidance. Based on distributor operating characteristics and extensive preliminary research and consulting work, Professor Li developed the 'Three Elements and Six Parts' model for distributor operations, combined with benchmark distributor cases and experiences, to form a learnable distributor business martial arts manual. 3) Joint Implementation of the Joint Business Entity Business implementation system: Business implementation is led by the joint business entity composed of city managers and distributors. The 20-30 joint business entities participating in the project identify breakthrough points based on health check results, plan their own improvement plans and solutions based on the learned martial arts manual, and implement them over 6-8 months, with review and feedback during the process. A support front office composed of market, product, channel, and finance functions serves and supports frontline operations, providing artillery support. The provincial general manager serves as the first responsible person, organizing and driving the implementation of the entire project. The marketing headquarters, HR department, and Professor Li's team form the project command and empowerment team, teaching knowledge and tools, planning operational standards, evaluating the project, and extracting and refining the empowered channel organization operation mechanism. Build a project implementation performance mechanism. Directly link city managers' annual performance assessments to the project. Link distributor performance target assessments to marketing resource investment. Ensure active participation from distributors and city managers. Extended Reading:
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