Transformation is Not an Option
We're counting down the Top 10 posts of 2011 on "Innovation Evolved". Originally published November 14, here's #6 on the countdown.
Stan Sthanunathan, vice president of marketing strategy and insights for Coca-Cola, discussed the need for research transformation at the University of Georgia’s celebration of the 25th anniversary of the founding of The Coca-Cola Center for Marketing Studies and the 30th anniversary of the first graduating class of the Terry MMR (Masters of Marketing Research) program.
“The 21st century has been incredible. The first 10 years have had more changes than we can cope with. In this kind of rapidly changing environment, there is a strong case for action—if we don’t change, we will have a problem.” Major brands – whether Facebook, YouTube or Coca-Cola – cannot take their past greatness for granted: “Change or perish is the new mantra.” Brand creation cycles are getting much shorter: the Interbrand Best Global Brands shows Google now the top 4 brand in the world. Coca-Cola remains the number one brand, but competition is close behind. “With change not an option, acting or not is a choice,” said Stan. “The unfortunate reality is if you don’t act you are at risk of perishing.”
Is the research industry changing fast enough to become change agents in business? “No!” Stan says. Too much money is spent on “rear view research”; it makes up to 80% of research budgets. Understanding what happened in the past helps understand mistakes, but report cards and brand trackers take incredible time and energy, often devoted to data quality and rationalization. Research has defined its role in Coca-Cola as “providing inspiration and provocation to drive transformational change”.
How can research agencies and insight departments work together to transform research? Clients must “anticipate and meet the needs of our customer and consumers in the most sustainable and profitable way”. If Coca-Cola had listened to consumers’ biggest need 125 years ago, the company probably would have gone into the business of making water filters not cola.
How do we transform? “First, we need a change of mindset,” said Stan. “It’s not about following the change as quickly as possible, it’s about helping companies to shape the change. Large companies have a responsibility to shape the change, not just respond to change.” Research departments must therefore shift from providing insights to provoking transformation. Departments must shift from focusing on technical challenges and better mousetraps to focusing on ROI, better execution and value creation. They must shift from quantifying the expected to listening for the unexpected.
The second change required by the industry, according to Stan, is “we need to become more innovative in our approaches”. Focus groups and surveys are the visible tip of the iceberg. “We don’t know what we don’t know, and we don’t know how to know what we don’t know!” Researchers need techniques that observe, listen, synthesize and deduce in ways we haven’t in the past.
These two changes are necessary but not enough to provide further growth. Research as an industry needs:
- To embrace technology, quickly. “Our track record is not great. The face of change for us is putting paper questionnaires online.”
- To embrace risk. Too often, research mitigates risk for the business: researchers look for problems instead of opportunities.
- To encourage our clients to dream. Encourage clients to internalize their dreams to shape reality.
- To experiment. Insight departments need to set aside some money for experiments, realizing that 9 out of 10 experiments will fail. “Do we have the guts to create a hall of shame?” Coke’s CEO and CMO each say that it is okay to fail once, publicize it and learn from it.
- To focus on business outcomes. “Never assume that you’re job is over when you deliver the report. That’s when you work actually begins. It’s a different paradigm to make people take action, to shake them until their teeth rattle.” Think relationships not transactions.
- To focus on talent acquisition. “The research industry is very dependent on the quality of the people.” The top recruiters in business schools are McKinsey, Goldman Sachs, Bain, Booz, Google and AT Kearney—“what can we do to attract the best and the brightest?”
- To shift resources. Move from 80% on “rear view” research to 50% on “forward looking” insights. Can you make your rear view research point to the future?
- To leverage creativity. “We often have workshops rather than presentations.” To make data real, provide experiential and immersive experiences.
- To become proactive. Coca-Cola encourages its research department to “outsource process and in-source thinking”. This frees up time to be more proactive: “Process never brings glory. Process is table-stakes.”
- To question conventional wisdom. Re-examine why you are doing what you are doing.
“We need to make this profession something that inspires and provokes people to take big action,” Stan said. “If we can’t drive change, who can?”