Segmentation: both clarity and myopia

McKinsey have been sending around a thought piece on a different way of segmenting for electric car manufacturers. It reinforces a point that we have wrestled with so often, that segmentation is truly a double edged sword - a powerful one, but no less double-edge for being so.
The McKinsey example is a simple one, but there are probably parallels to be found wherever segmentation is used. They start with observing that electric carmakers currently segment their potential audience to identify segments such as the environmentally conscious, the technically enamoured etc. This makes good intuitive sense. But they then go on to suggest a different way of looking at things, which a) makes lots of sense, and b) would so easily be missed by thinking only in terms of the normal segmentation. They make the simple point that you can segment by the type of usage the car has (especially in 2 car families, where there is a greater distinction between the ways that the cars are used). Where this becomes more than just an interesting observation, is that designing and positioning cars against different usage types leads to very significant differences in manufacturing cost and marketing focus.

The solution: use segmentation; but don't worship any single one - it may be the best way of seeing things given the objective against which it was originally developed…but seeing things so clearly in that way only, encourages blindness to other perspectives. Insight comes from looking for different ways to segment; not just always going deeper within the same boundaries.

That article can be found at https://www.mckinseyquarterly.com/Automotive/Strategy_Analysis/A_new_segmentation_for_electric_vehicles_2464

Inaudible Communication

Here's a thought about just what it takes to get though to people with communications.
Let's start with a couple of seemingly reasonable assumptions:
1. the news that, after years of underinvestment, billions more pounds would be spent on hospitals and schools would register in the public mind.
2. If you had managed to achieve PR coverage for your message that had you prominently covered on the front pages of every newspaper and TV news for days on end, you'd expect to be noticed.

But I've just been reading Daniel Finkelstein in The Times. He recalled a time from shortly after Labour's 1997 landslide, when the media was hanging on to the new Chancellor's (Mr G. Brown) every word about the new billions on vital projects. Wanting to see evidence for the inevitable seismic shift in people's awareness of this important issue, he commissioned some research. And here's the thing; it all hardly registered at all; people just hadn't noticed.

He also quoted Michael Ashcroft writing about the Conservative campaign for the election of 2005. In the final run up to polling day, and despite huge media coverage, awareness of "the central campaign messages of cleaner hospitals and school discipline peaked at 1 per cent". Yes, one per cent.

So, of course we can respond to this with observations that people are not as engaged in politics as the media likes to think. But just look at the media coverage they're getting. Look at the issues mentioned. And however low down in the publics interest level they are, are people really so much more interested in what a loaf of bread has to say, or a fizzy drink, or…almost anything that plays an ephemeral role in a life of almost continuous consumption?

Must be a hard job if one's brand is not as significant to people as hospitals and schools, and one's budget will not achieve blanket coverage for days on end. How do these marketing people do it?

link to the Daniel Finkelstein article http://www.timesonline.co.uk/tol/comment/columnists/daniel_finkelstein/article6920714.ece

Fast and cheap

The truth is that the future may well be a lot faster and cheaper than anyone thought. Even while the traditional research agencies look nostalgically at 10’s of thousands of research studies costing $20,000 each – without telling anyone, stakeholders in business are voting with their feet and aligning themselves with the giants of the technology world away from the traditional market research world. Cheap, off the peg tools, practically unlimited “right-minded” consumers, and unimaginable directness are available like never before to help shape the brands and businesses of the future.

Halloween Shocker

A recent survey of Fortune 500 and Global 500 businesses revealed that 66 percent of senior executives believe Innovation is a top-three strategic priority.That means a scary 34% of senior executives just don’t get it. They are frightened off by the thought that “innovation” is people working together to develop and implement new, irresistible ideas that create value. They are terrified of their own people expressing their maximum creative potential.

That’s a real horror!

Why disrupt?

By definition it's almost impossible for a team to keep generating fresh new perspectives to existing innovation challenges and opportunities. Over time, the team starts to think alike and embed certain ‘sacred cows’ or assumptions in everything they do. Every innovation team at some stage needs to break out again to avoid bashing into the greatest barrier to innovation – too much existing knowledge.

The next billion customers

If there is one company that leads the way in Open Innovation and co-creation it is P&G. It’s former CEO calls himself the Chief Innovation Officer, inspires its employees, sits in innovation reviews and even wrote a book about it. P&G tells people that many products have been ‘proudly developed elsewhere’ and sets its target to 50% for innovations coming from outside the P&G business units. Connect & Develop is their program and it has been running since 2002.

In future, as P&G creates products and services for the next one billion consumers, the targets get tougher to achieve and processes that have worked up until now will have to be reviewed afresh.

The 'BOGOF' of Strategic Innovation

Doing great Strategic Innovation work in businesses can give significant organisational benefits too

Everyone loves a Buy One Get One Free. And with too little budget chasing too many worthy initiatives, this may be worth checking out.

Having invoked the language of sales promotion, forgive us if this now sounds like one of those spiels from an extended advertorial typical of the TV channels at the more distant end of the media galaxy, but here goes…
Would you like to achieve all these things and gain the admiration of your organisation?* Embed a visceral consumer understanding into the organisation that brings clarity and insight to every consumer-related issue people consider?* Excite more people in the organisation about delighting their ultimate ‘boss’, the consumer?* Engage more people in identifying the consumer-based opportunities for innovation and growth?* …and still achieve your project-specific innovation, concept development, or consumer insight objectives?Well, please read on...

'HR'Benefits from 'Marketing' projects
Despite the difficulties in embedding a culture of ‘consumer-centricity’, our work with a number of hard-bitten multi-nationals has shown that it is extremely achievable. This is not some new product we’ve dreamt up, but rather just recognition of the organisational benefits we’ve already witnessed as we’ve been bringing consumers closer in to some of the innovation processes we’ve been involved in.
In other words, as we’ve been focused on project deliverables, we’ve found that the way we’ve been achieving them has delivered additional, possibly even greater, benefits for the organisation itself.It’s like a Buy One, Get One Free.
Whilst many companies already talk about being ‘consumer-centric’, or words to that effect, the reality is often that, beyond the research department, that connection is very distant, or reduced to a set of statistics or bullet points.
The New Consumer Connection makes it real
To break down the barriers that often exist between a company and its potential consumer base, involves getting out and meeting some of those consumers in rich, inspiring ways that build up deep, intuitive understanding and lasting appreciation. The ulterior purpose is exploring new consumer-based opportunities for the company (e.g. new products and services), inspired by getting to know real people (‘consumers’) directly.
But one intangible ‘barrier’ that sometimes exists is an orthodoxy that consumer interactions must only happen through a market researcher. Like the priesthood in many ancient religions, it is felt that only they can speak directly to the oracle. There are very many occasions when this is absolutely correct; whether for reasons of expertise or practicality. But where this principle is applied universally, it has the unintended consequence of distancing the people inside the organisation from the people outside the organisation that they all rely on; those ‘consumers’ become atomistic statistics or data points. Instead, by seeing and feeling your ‘consumers’ as the fascinating, complex, people they really are, you unlock their potential to inspire you and your colleagues.
Making it Happen
Principle 1 – Beyond ‘marketing’There are two reasons for arguing that bringing consumers into the heart of the people in the organisation should not be limited to marketing people. Firstly, it is the common purpose of serving consumers or customers that should unite an organisation and melt away silos. The last thing that should happen for the health of an organisation is for ‘consumers’ to be the sole preserve of marketing. The second reason is that we have found that the broader perspective brought by a multi-disciplinary team is far more powerful for projects set up around an innovation objective where a keen understanding of the capabilities of the organisation helps in identifying new competitive space that works for both consumers and the company/brand.
Principle 2 – The Project is a ‘Trojan Horse’ for the HR benefits of embedding consumer-centricity in the hearts of the peopleWe’ve found that bringing people into direct contact with consumers works so much better if there is a clear business purpose to it that’s much more tangible than just ‘getting close’, ‘culture change’ etc. People may not really (deep down) buy into the notion that aren’t already ‘sufficiently’ consumer-centric, or that they are in need of ‘culture-changing’ – but they absolutely can buy in to some relevant business objective such as identifying innovation opportunities, or building a deep understanding of the target audience. The team members then approach the whole thing with more commitment and purpose and in so doing, build a strong consumer perspective.
The ‘consumer-centricity’ then becomes an outcome of the team’s involvement, rather than the overt purpose of it. And of course, you get double value: a valuable project (and we would argue in many cases, a more valuable one than if it was subcontracted out to a research company) and a hugely enhanced level of consumer empathy that lives on with each team member.
Principle 3 – Each consumer interaction is a mini ‘event’The team’s involvement with consumers should be richer and more purposeful than just going to their home for a chat. These interactions benefit hugely from detailed planning such as developing scrapbooks for consumers to fill out in advance, and creating ‘exercises’ for them to do together. This means that when they do come face to face, those interactions are really rich, insightful, inspiring….and memorable!
Principle 4 – Consumers can be alliesOnce the relationship has begun with that first meeting, there is great benefit to be gained by making more of it. For example, the team may meet up with consumers at the beginning of the project, where the focus is really on understanding the daily context, priorities etc of the consumer. Later on, once we have developed some basic ideas, we can meet up with those same consumers to share our thoughts and get valuable developmental input early on.
Shaping a programme
Whilst no two programmes are, or should be, exactly the same, this provides a basic structure:a) Create and focus the multi-disciplinary team; drawing people from across the organisation and focusing them on a ‘project objective’ such as developing new consumer-relevant products or servicesb) Consumer Immersion – getting under the real skin of the consumer; getting to know them as real people and not just in their role as ‘consumers of our products’.c) Structured group analysis workshop to crystallise insightful understanding of consumers (this should be much more than just a ‘what did we learn?’ chat)d) Opportunity hypothesis sessione) Idea/Concept development (quite simple/basic at this point)f) Sharing and building ideas with the same team of consumersg) Group conclusions and opportunity definition
Even this structure can play out in many ways. For example, the Consumer Immersions could be a standalone stage that takes place over a few days. Alternatively, at the other end of the spectrum, we have run sessions which effectively crunch together stages b – e in hours rather than weeks. Both were very successful in their own way, but the different approaches were designed in response to different objectives at the time.
Conclusion
Strategic Innovation projects represent a great opportunity to achieve far more for the organisation. They can be a ‘Trojan Horse’ to inspire, engage, and motivate people from many disciplines. The early-phase approach can embed visceral consumer understanding in the hearts and minds of a broader team, rather than just leave a shadow of it in PowerPoint documents created by external research companies.Added to this, the innovation project itself benefits from the many organisational perspectives represented, and their engagement spawns better ideas and a can-do attitude. Extracting so much value from a single project is always a good thing. In these times, it’s an option that can’t be ignored