This post is part of our Big Ideas series, a column highlighting the innovative thinking and thought leadership at IIeX events around the world. Sjoerd Koornstra will be speaking at IIeX Europe 2019 in Amsterdam. If you liked this article, you’ll LOVE IIeX Europe. Click here to learn more.
In the last years several studies and articles appeared about a strategic, independent operating CI (Consumer Insights) Departments which are reporting to the board. CI operates as business partner and is foresight oriented. At the same time we notice that the CI-departments are disappearing as well that the role of CI is waning. In this article we will describe more in-depth these two phenomena and come up with a solution how to overcome or avoid a worsening situation by the introduction of an “augmented intelligence” driven organization.
CI permanently under a critical radar
Since its introduction, CI has been often under a critical view. The following two famous examples are supporting this. The first often is from Henry Ford: “If I had asked people what they wanted, they would have said: faster horses”. This is one of the misunderstandings that consumers will tell you the marketing/business solutions. Consumers can express what they want and their needs and what is wrong with the current related offers. We should have interpreted this as consumers want to have a faster mode of transportation with the same freedom and flexibility as horses. The second example is the US presidential election prediction in 1936. Literary Digest predicted that Franklin D. Roosevelt would not win but in reality won all but two states. At the time, wealthier homes were more likely to have telephones, and wealthier people were more likely to support the opponent. Recently the Brexit and US presidential election polls have not been spot on. This created doubts about the added value of CI which I have seen also present amongst marketers and advertising agencies.
Consumer Insights Function is key!
The last years several studies and articles concerning the importance of a strategic Insights function have been published. Insights2020, a study conducted by Kantar Vermeer, found that the main driving factor for customer-centric growth is the firm’s insights engine, embodied in its insights and analytics function. In a September 2016 HBR article is described how Unilever has implemented this insights engine as a best practice. Superior insights groups sit decisively outside marketing and other functions and often report to someone in the C-suite. The i2020 research shows that insights leaders in overperforming organizations report to these senior executives more than twice as often as their counterparts in underperforming organizations do. This reporting structure makes the CI-function a fully independent function with direct lines to the CEO. In this position, CI can be objective, collaborate on an equal footing with other functions, and challenge or even set the direction of functional and organizational projects and strategy.
A study conducted in 2015 by BCG, Cambiar and Yale University re-examines the role and management of Consumer Insights in major corporations and was a follow up from the 2009 BCG’s article “The Consumer’s Voice – Can your Company Hear it?”. A distinction is made in between four stages: 1. Traditional Market Research provider, 2. Business Contributor, 3. Strategic Insight Partner and 4. Source of Competitive Advantage. In stage 3 CI functions have routine access to the executive team through advisory status or standing content sessions. In stage 4 the leader is full-fledged member of the executive team. The stages 3 and 4 CI functions make a real difference to business outcome. They have impact and that impact is positive whether it be measured in terms of financial performance, revenue growth or competitive advantage.
Consumer Insights are key! But why are Consumer Insights Departments disappearing?
All companies are preaching that they are consumer-centric. Listening to their consumers is the most important business driver. This is recently confirmed by the PWC study “What the Top Innovators Get Right”. All of the survey respondents value deep customer and consumer insights in their innovation programs. They ranked consumer and client insights as the most important capability during the ideation stage.
But when consumer insights are the most important business driver and a strategic CI function adds business value, why do we see that CI-departments are under pressure?
- The growing power of digital marketing/e-commerce departments within companies. These digital departments started some years ago in especially FMCG-companies as separate units. They were used to operate independently with no formal line to marketing or collaboration with CI. They were e.g. developing their own tag lines and did some A/B testing. These departments have gradually been integrated within marketing teams but separated way of working from CI continued. Often social media monitoring is their responsibility as well
- Increase of available data sources which are owned by other departments. CI is not the first window for information anymore.
- The upheaval of more agile business project management and the application of design thinking, working with scrums and sprints which require fast decision making and more frequent decision moments. This implies shorter and faster feedback, in which often marketing is doing also the CI-role. The central CI-function is in several companies eliminated and CI is disappearing or split up over different (often temporary) project teams. With the consequence that there is not a responsible any more who has the overview and information might already be available but not known.
- The managers with market research reservations have taken the opportunity of the above mentioned points to downgrade the CI-departments.
How to overcome the CI-department is not disappearing? Augmented Intelligence!
- Shape an infrastructure which enables exploiting what already is known. This contains a knowledge management structure (research repository) as well data household structure in which all the marketing information sources are accessible.
- Collaboration with other departments to exploit relevant databases that they “own”. CI needs to convince that with their skills these sources are better exploited in the favour of the business. This will be more smooth when the next point has been implemented.
- Be able to connect the dots between different sources and generate business recommendations. The data sources that have become available are too much to be analysed (and especially interlinked) any more by human beings. Automated analysis is needed. Artificial Intelligence can support us in this area. This will generate augmented intelligence which is Artificial Intelligence combined with the human intelligence. AI will support the analysis, will generate insights and content, but the human intelligence is needed to provide the relevant business context. An interesting read in this area is the book “AI for Marketing and Product Innovation: Powerful New Tools for Predicting Trends, Connecting with Customers, and Closing Sales” by A. K. Pradeep, Andrew Appel, Stan Sthanunathan. The book has been illustrated by Stan Sthanunathan in interviews at Greenbook, NewMR and RBDR. The book is available in US and about to arrive in the other continents. This book will make you understand AI and ML technology in layman’s terms and how to apply to become an “augmented intelligence” driven organization. The CI-department is in the leading seat since it will be able to exploit the available information sources in a fast and cheap way. It will be cost effective as well avoiding “unnecessary research”. AI can also be useful in predicting or anticipating upcoming trends. These aspects will all be indispensable in agile innovation projects.