Does research and information matter to business?

15/ 02/ 2014

In my experience - and that of many strategy practitioners…

Yet…

“In the new era, big data will power consumer products and services.”, Analytics 3.0, HBR, December 2013, pp65 – 72.

“Data creativity” is mentioned as an important driver of success.Google & Amazon use data to enable consumers to make fast decisions.

We are told that better information enables companies to make better decisions – there is empiric evidence for that.

Yet, “The people creating data have little understanding of how others in the organisation use that information…. The solution is not better technology; it’s better communication between the creators of data and the users,…”, Data’s

Credibility Problem, BHR, December 2013, pp84 – 88.

So why is it not used more often - or better? If yes, why are some countries like China using successive product prototypes to “launch and refine” products - instead of

researching them?

In my mind,

analytics are as important as creativity in business.

Kotler

“It is more important to do what is strategically right than what is immediately profitable.”

“Marketing is becoming a battle based more on information than on sales power.”

The better you understand your market and its opportunities, the better you will be able to apply creativity. These two

elements are the linchpins of marketing: know what to do, then do it better than anyone out there… whereas insights

enable you to do the “right thing”, creativity makes you do it the “right way”.

Why does an organisation need information?

• Information is required in a business for three main reasons:1. To identify market, competitive and consumer gaps/ opportunities the company can

profitable fill – this involves both internal and external information sources; 2. To evaluate and monitor company progress according to these objectives – this involves

understanding the role of internal data as well as external data in monitoring and managing the company;

3. To reduce the risk involved in decision making for the executive – from knowing where the sources of profit lie, to producing the right marketing material, to pursuing the right target segments and value propositions, to knowing what actions worked and what does not. • Although no amount of information can eliminate business risk entirely, being informed is

imperative to success today. • Not being properly informed, means decisions will be made anecdotally, or dependent upon

individual opinions. In my experience, the opinions of most executives are suspect! • This is dangerous in business, as not everyone will always have the right opinions. • Information assists in balancing real insights with so-called “gut-feel”.

• The better the information within the business within these areas, the more objective the business decision-making process will be and the less likely it is that competitors will catch the company off-guard.

• Yet, the value and use of information in a company, depends upon a supportive ecosystem. Many organisations are “closed systems”.

Why do many companies spend a fortune on research, yet it is never used?

The statistics are frightening:• In surveys from SA to the US, it is stated that upwards of 90% of research reports are never

used.• In most large companies, the same research is often conducted by different departments,

most of them unaware it already exists elsewhere within their company.• Most companies do not use their own internal data, even if they have the people and

technology to use it. To this day, many banks do not know how profitable any given client is!• I recently had a senior executive of a very large multinational company tell me that his SA

operation spends upward of US$3million per annum on consumer research, yet he cannot remember when last anyone made a decision based upon it. He stated that most executives do not even know what is being researched!

• Despite having been involved in many consumer segmentation studies, I can maybe think of three companies that have ever used the data properly.

• This is as true for other types of research… unless the company is a global multinational with a history of research protocols… and then research is often used as a crutch instead of a strategic tool for decision making. Many global multinational companies research SO MUCH, that they lose the competitive advantage a new innovation gave them at inception.

Why do we not analise and use research properly?

• Multivariate statistics, hardly ever understood, let alone used. That makes the talk about “big data” very suspect, my feeling is that it will become another “buzz-word”, despite the fundamental importance of it to business. Yet, at least we now have a debate about information in companies again - for years it was dormant.

• Big data analytics, hardly ever used: – Not because the people and techniques are not available, because business does not know what to do with it –

or do not attach enough importance to it. – Often the “business eco-system” does not know what to do with information. Despite tomes being written about

information systems in companies, information as decision support is still in its infancy in most. – Yet, there will be companies that use it well. But like with bank information systems, CRM programs and many

other initiatives in marketing and business over the years, its use will be limited to a few visionary companies willing to adapt how they operate to incorporate the impact of big data.

– Most banks and telecommunications companies still do not have a “single view” of a client, despite the topic of relationship management and pricing being 40 years old.

• We are also obsessed with the past as researchers, not as much with the future, hence we are often viewed as dragging a company back, instead of pushing it forward.– To me, it is because we view the role of research wrongly, we are so concerned about scientific accuracy, that we

ignore the importance of experimentation, qualitative research and informal techniques. We even forget the importance of desk research. Research should be an enabler of creativity, not a deterrent.

• Trend analysts have also taken over from researchers, sadly. As has strategists, that use their data, but reduced the analysts to nothing more than data generators.

Why is research not at the executive table?

• In most companies, research and information is hardly re-presented at a senior level.

• It is often mediated through many levels of management, many of whom have no understanding of what the role of research is and what it can do for a business. Because information also yields a degree of power, it is often discounted or even ignored. It is a political tool for some executives.

• This makes it difficult to be noticed at executive level, more so when findings contradict convention.

• Yet, no company can operate without financial information - which is historic, yet it seldom uses research, which is an indicator of its future!

If yes, why are most researchers comfortable to remain analysts and scared to make decisions?

• In fact, most of us enjoy sitting behind the desk. We believe that is our job. • Many are still methodology obsessed.• Large, multinational research companies and management consultancies are more

interested in selling their own proprietary methodologies (for obscene amounts of money), than in solving client problems.

• Most researchers are very uncomfortable to use internal data. Why? • Most researchers cannot think holistically, they need to start connecting the dots

from multiple layers of information. If they do not, the IT people will. • Research is populated by an over-supply of analysts and an under-supply of

conceptual and creative thinkers. • In my experience, even a sense of urgency lacks in most researchers (do we remain

academics at heart?).

The status of data and information in companies, is largely a function of corporate culture.

As researchers, we are also too blinded by science that we no longer have any common sense.

• Akia Morita, founder of Sony, a keen observer of people, leveraging his insights to become a genius of product innovation.

• Steve Jobs, Apple – does research have to be empirical, can it not be the observation of people connected with insight into the ability of technology?

• Our own Sol Kerzner, despite market potential research “proving” there is no market for Sun City at the time - he famously dismissed it – to create an iconic destination in the eighties and early nineties.

• There are many such examples. Multinationals have often lost a competitive advantage because their validation research took too long.

As researchers, we do not realise that to get results, you have to be human first.

• Many researchers believe marketers must come to them - that will never happen, unless a marketer really understands the value of research – and they are very rare.

• You have to make yourself indispensable! That requires being visible, likeable, out there.• It requires you being there where decisions are made, not forcefully, but subtly. Making sure

the right audiences have and understand the information they need when they need it. • But in an organisation, you are an executive first, then a researcher. Like an accountant is also

an advisor, not just a number cruncher. • In my experience, few disciplines are able to make you as strong on executive insight, as

understanding research, markets, consumers and brands. It enables you to handle any problem, because you are able to dissect it down to its fundamentals.

Yet, there are positive signs…

• The debates between IT and marketing is heating up.• The declining credibility of marketing and the general questioning of marketing

results. Too much flash, too little substance. Research can help. • Increased competition at a global level… more companies, from more

territories, fighting for less business.• Declining margins in most industries, making it imperative that better decisions

are made. • The rise of so-called “big data”.• A re-discovery of research and analytical methodologies.• Convergence of IT and marketing, sadly, from the side of IT. IT is winning this

war, not marketing.

What has to change.

• Understand the business, its strategy and its objectives.• Understand the role of marketing within that.• Understand what information is required to support that.• Stop being an analyst - but understand how to use analytics right.• Ways of working.• Attitude – they wont come to you, you need to go to them. • How we translate data into decision support.• Be at the right place at the right time. Walk the corridors.• Create networks. • Make sure you view information from what it means about solving problems, not

just what it says.

Some examples I was involved with recently.

• Decision criteria. Why one market lagged another. • A brand decline, when it started and what drove its decline. • Dissect a brand diagnostically to identify its lag factors (where does the problem

lie?).• A large sponsorship brand, which team/ event sponsorships drive the desired

brand attributes? What can be culled?

A typology I often use to define what types of information is required by companies.

The strategic marketing process and its components.

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Situational analysis of• Markets, sizes, growth rates, drivers, inhibitors• Customers, needs, segments.• Market demands, PESTLE.• Competitors, capabilities, Strengths, Weaknesses, Perceptions.• Relative won brand strength and position. • Internal (staff) and supplier environments

Implementa-tion & control of marketing

strategies

Meyer & Lane (Eds). 2009. Strategic Planning and the Marketing Process, Oxford University Press, S.A. ISBN 978 0 19598 7065; page 17 Fig. 1.5

The types of information or research.

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Situational analysis of•Customers•Market demands•Competitors•Macro environment•Internal environment

Implementa-tion & control of marketing

strategies

Meyer & Lane (Eds). 2009. Strategic Planning and the Marketing Process, Oxford University Press, S.A. ISBN 978 0 19598 7065; page 17 Fig. 1.5

Environmental analysis;

Competitive analysis;Company

Capabilities;Industry trends

Customer needs& distinctive

segments;Value proposition

development and testing

Customer satisfaction;

Brand health;Business

performance;Customer churnand the reasons

for that

Advertising and product concept

developmentresearch;Concept

evaluation;Advertising pre-

and post-testing

Strategic and tactical information.

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Situational analysis of•Customers•Market demands•Competitors•Macro environment•Internal environment

Implementa-tion & control of marketing

strategies

Meyer & Lane (Eds). 2009. Strategic Planning and the Marketing Process, Oxford University Press, S.A. ISBN 978 0 19598 7065; page 17 Fig. 1.5

The areas that are generally referred to as “strategic marketing information”

What is referred to as

“tactical marketing”

“Monitoring and control” isseen strategic

marketing processes

A useful example of the most commonly-used metrics as identified in a US survey of marketers.

Firms using measures (per cent)

Rated top for assessing performance (per cent)

Awareness of brand or specific value proposition 78 2

Market share (volume or value) – by market, segment or value proposition

78 36

Relative price (what you pay for what you get and how that stacks-up against rivals)

70 37

Complaints from customers (dissatisfaction level)

69 45

Consumer satisfaction 68 46

Distribution/availability (of network/ airtime/ products and services)

66 48

Total number of customers – or by segment 65 40

Perceived quality/esteem of products/ services 64 35

Loyalty/retention (or churn levels) 64 67

Relative perceived quality (of products/ services)

62 62

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Meyer & Lane (Eds). 2009. Strategic Planning and the Marketing Process, Oxford University Press, S.A. ISBN 978 0 19598 7065; page 321 Fig. 10.1

Compare the difference between

that people measure and consider important!

Although brand awareness is an

important measure, it is not a sufficient

indicator of success.

Questions, discussion.