AI, Clean Data, and New Flavors: McCormick’s Digital Playbook with CIDO Guy Peri | Technovation 966

We pride ourselves in leading in flavor and predicting future flavor forecasts. And so for us to be effective and continue to be a leader in the market, we try our best to predict what's coming, then bring those flavors into our products and then serve consumers with those flavors.

Great to be with you, Peter. Thank you so much.

Yeah, McCormick is a 135-year-old company. And we are a global leader in flavor. And really well positioned in flavor both in our consumer business, which serves 150 countries around the world, and in our flavor solutions business, which flavors a lot of other brands around the world. We like to say that we flavor every sip at every bite across channels in and away from home and in every occasion. So we're really passionate about flavor. Some of the brands that we have in our portfolio may be familiar to many of us. McCormick obviously is one of the brands. In Europe we have Bahin and Ukro, which are very famous and popular brands, and then Frank's RedHot, Cholula, French's, Old Bay. So phenomenal brands, iconic in many parts of the world.

Yeah, so my span of control and responsibilities are really developing and leading the implementation of our enterprise digital transformation strategy. And that is everything from the foundational tech that we run our company by, which includes the infrastructure, all of the cloud capabilities, ERP, etc., to the data platforms and AI capabilities that we use in the company, all the way to the transformation initiatives that we have across every part of our company. So a fairly large remit, with of course cybersecurity wrapping around that entire responsibility.

Sure. So let's start with the McCormick business strategy. Our digital transformation is anchored right to it. So our business strategy, we have a strategic roadmap and driving growth and performance and accelerating digital transformation is the core part of that roadmap. So we're very connected to serving consumers, customers, employees through digital. And the elements of the digital strategy are kind of four-fold. One is driving demand creation. So that is how do we meet consumers where they are and provide them the right targeted media and content to inform them about our brands and help them through their path to purchase. So that's one pillar. Another one is accelerating product innovation. So how do we leverage digital and AI to get insights on trends in the flavor space and bring those products to market in an accelerated way. A third area is how do we optimize our retail execution. For us, the store environment both online and offline is critical, and so how do we provide a delightful experience there. And then the fourth area is around operational efficiency. So how do we leverage digital and AI to optimize not only how we buy our ingredients as a flavor company. Raw materials is everything for us. So sourcing those raw materials, making sure we have highest quality that we put through our brands is important. So we leverage digital and AI heavily in that space, as well as operational efficiency on our plant floor and doing a lot of smart manufacturing and smart forecasting is core to our strategy. So those are the key domains that we're focusing on.

Yeah. So we are all in service to consumers, customers, employees. That's the core to what our McCormick strategy is centered on and it's definitely the core to what digital and our analytic strategy is centered on. And digital allows us to have such a close proximity to what's on consumers' minds. And we leverage the digital thread that we get through social and through other means and our first party data to truly understand consumers at a much deeper level than we were able to historically. And then that translates into delightful and superior products that then hopefully serve our customers efficiently and effectively throughout our supply chain. And so one of the things I forgot to mention in the opening on McCormick is we pride ourselves in leading in flavor and predicting future flavor forecasts. And so for us to be effective and continue to be a leader in the market, we try our best to predict what's coming, then bring those flavors into our products and then serve consumers with those flavors. So we have an annual flavor forecast that we publish every year. We just published our 25th flavor forecast. We've been doing it since 2000. To give you a couple examples of flavors that we predicted, pumpkin pie spice, we predicted that one, chipotle, Korean barbecue, which is one of my favorites, and then spicy, which is combination of sweet and spicy flavors, which has been awesome. And this year's prediction is a amaro. It's a South American spice that we believe is going to go massively large. And it's a combination of fruity, tropical notes, and a little bit of heat. I've had it. It's amazing. And so we expect that over the next couple years that might become mainstream. So you know, I mentioned all that because in order to get that kind of insight we need incredibly detailed data on trends, on geographic preferences, and all those digital capabilities I mentioned help us inform our predictions.

Yeah, this is absolutely a multi-disciplinary sport. And so R&D, marketing, innovation teams, we have culinary chefs who are full-time experts on creating dishes and testing them with consumers. And so these insights come from all those teams around the world. We have about 40 years of sensory science data that we pull into our qualitative and quantitative research, including on the ground research. And then we leverage our social listening tools and search engine optimization trends and many more tools that help us triangulate all these data points. And it's a fascinating process and I'm more and more impressed every time I see it in action and then also see the actual accuracy of these predictions coming to life.

Sure. So as the first chief data analytics officer at P&G in 2015, I've learned three things. I was in that role for six years. And it was phenomenal learning and I feel really blessed to have had that experience. And I take these three things with me to McCormick and they're very much alive and well in our current strategy. The first one is anchored on business value. There's a lot of things we can do in digital data and analytics. There's only a few things that are material. And so really focusing on the few things that really matter is kind of step one in our journey. And I've learned this both from some successes but many failures in my journey. So a lot of these insights are linked to those experiences. So value creation is the first thing. The second thing is the strategic nature of data. A lot of people like to talk about AI, Gen AI and Agentic, and I'm one of those individuals. However, there's none of that without quality data. And so being intentional on data strategies, being intentional on all things data management in terms of quality, reliability, bias, all of those things that are associated with modeling the data is super important. It may not be the sexiest of topics, but mission critical for us to operationalize data in an enterprise. And the third and final learning is process integration. So this is as much about operating model transformation as it is about data analytics and digital. And our strategy is very much people, process, and then technical and digital. And I think the final leg of that three-legged stool is about 20% of the transformation. 80% is about transforming work processes, upskilling the organization to work in a new way, rewarding them differently, and growing career paths where people that are applying digital and analytic capabilities are rewarded and working in a new way in the future. So we're working on all of those three legs and I'm bringing a lot of those learnings from P&G.

Yeah, I think what we do in any enterprise including McCormick really doesn't change at the end of the day. We're here to serve consumers and customers. So that's what doesn't change. Pretty much everything about how we do that changes with digital and AI. And so what we're trying to do, and we talk about this often in the management committee and operating committee that I'm part of, is really finding how do we transform work, upskill individuals to be successful in that new world, and then catch them doing it right and put a big spotlight on them, reward them, bring them to the global town halls, have them describe their from-to experience, and then recognize them. And that's how cultures are shifted. When people see individuals who used to work one way apply a different approach with digital analytics and then talk about how their life is different and how they're driving better outcomes as a result of that application, that's how cultures over time change. And so we're still very much on that journey at McCormick, but we have a lot of great examples of where that's already been operationalized and making a big difference.

Yeah. So current capabilities in place that I'm really excited about and really proud of what McCormick has done is the predictive analytic capabilities that we have. We've applied a lot of that to how we predict our procurement and our raw material pricing. So we're able to, with the 30 years of procurement data that we have plus a lot of external signals, fairly accurately predict price points of our raw materials. And for a company like us, that's mission critical to be able to understand where those curves are going. And so we do a lot of prediction in sourcing and procurement. We're doing a lot of prediction in how we think about forecasting, whether it's demand planning, supply planning or financial planning. We're on that journey. But being able to more effectively predict the demand signal and then how that affects our overall operation is another great example. And then lastly, our product formulation. So we're using a lot of modeling to enable our development of products and formulations and frankly recipes, and then being able to substitute out different ingredients at a fraction of the time it used to take us to do that. AI is enabling all that. So really exciting capability that is already being operationalized. And the things that I'm most excited about going forward is Agentic. I think it's going to be a really powerful capability, kind of the next generation of automation and RPA in my view. And looking at how do the agents all work with each other and what is the new role of the human talent in an organization in working and co-working with these agents. And so I'm really excited about that. I'm going to school learning as much as I can on those topics and we'll be experimenting with that at McCormick.

Yeah, I think there's kind of two levels of interactions. First, the more transactional work that we all do will likely be fully automated and Agentic will take care of most of that on its own. So the future workforce will be upskilled to not only work well with agents and make sure the right data and the algorithms are operating properly. I think the future of every role will be a citizen data scientist that's a financial planner or a citizen data scientist that's a demand planner. And they will be working with algorithms as a co-pilot to help them get their work done. And instead of doing a lot of muscle in doing the forecasting that many of us do today, including ourselves, it will be doing a lot of working on the exceptions and making sure that the algorithms remain unbiased, are fed proper data, and are operating effectively. And so there's a different set of skills that we're going to be focusing on upskilling our talent on. But it's really exciting. I'm really excited about what that future could look like and how the company will operate differently through these capabilities.

Yeah, I think technology has been more and more democratized not only from a consumer perspective. All of us have our smartphones and we have expectations of technology that we simply didn't have in the past because it wasn't as accessible, all the way to AI being accessible with the GPT capabilities. And that's just going to continue. And so you no longer need a PhD in data science to work with AI models. And that for me is super exciting. So most of the time I spend, while we're building our IT and strategic IT skills in McCormick, I spend a lot of time on how do we build the business skills in the digital fluency space and how do we help everyone become more fluent in how to leverage some of these skills. And I think there's two insights I've gotten. One is the tools themselves have to be designed to be consumer-friendly or what I call Apple simple. And the more simpler we design the tools, the easier it will be to adopt, right? So that's the first pretty obvious insight. But sometimes, and I'll speak for myself, sometimes the tools we think are easy to use are not. They're very technically designed versus end user designed. And we need to make sure we're user centric in our design. And the second thing is there'll just be base skill sets that are going to be required that everyone, no matter what role you have in the enterprise, will need to have. And so I've done some benchmarking with other companies and I've really been inspired by the idea that everybody needs to understand what is a basic machine learning model. Everyone needs to understand how data is fed into a machine learning model, how predictions are made. Just the basics of how digital works is going to be a common understanding of every role because those tools will be applied to pretty much every role in the enterprise.

Yeah, before I joined I was a big Lawry's fan. Still am. I didn't even realize Lawry's was owned by McCormick. I was delighted to find that out. And then we love Frank's RedHot and Cholula. It's kind of a tossup depending on what I'm eating on those two. And then some of these future flavors that I've been able to test with our culinary staff are just phenomenal. I can't wait till they bottle them up and allow me to purchase them in store because they're just phenomenal. So the cool thing about McCormick, because we have so many different line extensions and so many leading edge flavor extensions, it's kind of an endless list of favorites. And right when I get to one favorite, I find another one. So it's been fun.

Yeah. As I reflect on my P&G time, first of all, I feel blessed. I've had the 28 years experience, a great company and an amazing space to learn. And I have a number of colleagues who are also CIDOs at other companies and we stay very connected. And as we talk about what is the formula that we were exposed to at P&G that helped us become CIOs of our respective organizations, there was kind of three things. One is we started with a business. As early as 1999, I remember talking about our GBS, our global business services, was all about transforming the way business is done. And we were always about being business leaders first that brought strong technology and analytics expertise to the table. And we never reversed that. And that's something that I think was built into our DNA. The second thing is we were able to experiment a lot and we failed a lot, but we learned through those failures. And so we had a really nice platform from which to learn. And the third is we were able to implement capabilities at scale. Doing a pilot is easy. Scaling and operationalizing it and addressing all the things, Peter, that you mentioned around people and process and culture, that is where the challenge is. And being able to do that at scale multiple times and having many at bats at doing that, I think really shapes one's professional's career. And so again, very blessed to have had that experience. And all of those experiences are directly applicable to McCormick. And me and my team are busy at work applying those.

Yeah, I think the Agentic agenda we touched on a bit. I think that's going to be a big important trend. I also think the idea of IoT will continue. So the number of sensors that we have not only in our manufacturing lines, which is much more mature with robotics and sensors online, but also in our products. We're going to have smarter and smarter products that will help us better serve consumers and personalize experiences to levels that we've never been able to personalize before because the data streams will be flowing. So those are all very exciting areas that we're also experimenting in. And then the third area is with those capabilities, transform business models. I think we're going to be able to create completely new business models that monetize a lot of those capabilities and create new revenue streams that could be exciting for enterprises. So really a lot of exciting opportunities ahead.

Yeah, I'm rereading a book called Competing in the Age of AI. Karim Lakhani wrote it, a professor at Harvard, and Marco Iansiti, his colleague. I read it a number of years ago when it was released and Brendan, our CEO, just bought a copy of that for our management committee and operating committee, our leadership of McCormick. So I'm rereading it just to make sure I'm up to speed on the latest. And I find it's a really good book that brings very practical use cases and studies and shows how a lot of these capabilities are applied for really tangible outcomes.

Thank you for having me. It's been my pleasure.