Building an Insights Engine
Operational skill used to confer long-term advantage. If you had leaner manufacturing, made higher-quality products, or had superior distribution, you could outrun competitors. But today those capabilities are table stakes. The new source of competitive advantage is customer centricity: deeply understanding your customers’ needs and fulfilling them better than anyone else.
You need data to accomplish this. Yet having troves of data is of little value in and of itself. What increasingly separates the winners from the losers is the ability to transform data into insights about consumers’ motivations and to turn those insights into strategy. This alchemy requires innovative organizational capabilities that, collectively, we call the “insights engine.”
The vital role of the insights engine was revealed in a global market-research study led last year by the strategy consultancy Kantar Vermeer. The study, called Insights2020 (i2020), involved interviews and surveys of more than 10,000 business practitioners worldwide. Of the factors that were found to drive customer-centric growth, none mattered more than a firm’s insights engine, embodied in its insights and analytics function. (While these go by many names—including “I&A,” “consumer and market insights,” and “customer intelligence”—for simplicity we refer to them as insights functions here.)
In this article we describe the elements of the insights engine and show how it works at consumer goods giant Unilever. The firm’s 400-plus brands, which include Dove, Knorr, and Axe, generated $60 billion in revenue in 2015, propelling underlying sales growth of 4.1% for the year. Performance at that level requires the full engagement of the company’s 169,000 employees, who span functions from supply chain and R&D to marketing and finance. But as we’ll show, it’s the insights engine, manifested in the firm’s Consumer and Market Insights (CMI) group, that underpins Unilever’s customer-centric strategy.
A New Strategy
When Unilever released its first-quarter results in April 2016, CFO Graeme Pitkethly, addressing analysts, announced a major new initiative to shift resources to local markets around the world. He noted that consumers are increasingly seeking brands and products that align with their cultural identity and lifestyle. The result is that local firms, particularly in emerging markets, are growing fast and strengthening their competitive positions. The new program, he explained, would clarify accountability and make Unilever’s marketing teams more agile both globally and locally.
Country business heads had recognized the rising popularity of local brands, and the implications were being discussed separately at many levels across the firm. A presentation to the operating board by CMI’s head, coauthor Stan Sthanunathan, drew on this intelligence and on CMI’s own review of what was happening. Sthanunathan walked the board members through an analysis of why local brands were growing, what threat this posed, and how Unilever could compete. The presentation focused attention, catalyzed the conversation about strategy, and ultimately led to changes in both organization and mindset.
Unilever’s new initiative showcases the type of high-level advisory role that leading insights functions are increasingly taking. A decade ago, this sort of strategic involvement by a customer intelligence operation was almost unheard of. The market research department typically was a reactive service unit reporting to the marketing function, fielding marketing requests, and producing performance management reports. Over time, however, market research departments have been shifting from merely supplying data to interpreting it—distilling insights about consumers’ motivations and needs on the basis of their behavior.
Driven by the imperative to become customer-centric, leading firms are now completing the transformation of market research groups into true insights engines with a fundamentally strategic role. At Unilever, CMI’s prominently communicated mission is “to inspire and provoke to enable transformational action.” Note that the word “insight” is missing—intentionally. That’s because insights merely provide a means to the desired end: action that drives business growth.
In the text that follows, we describe 10 characteristics of superior insights engines, gleaned from the i2020 research and our experience at Unilever. We divide these into two broad groups:operational characteristics, such as functional independence and experimental orientation, and people characteristics, such as business acumen and well-balanced analytic and creative thinking styles.
Operational Characteristics
Seven of the key characteristics relate to the way insights engines operate.
Data synthesis
Until recently, large firms had an advantage over smaller rivals simply because of the scale of their market research capability. Today research that once took months and cost millions can be done for a fraction of that price and in mere days. What matters now is not so much the quantity of data a firm can amass but its ability to connect the dots and extract value from the information. This capability differentiates successful organizations from less successful ones: According to the i2020 research, 67% of the executives at overperforming firms (those that outpaced competitors in revenue growth) said that their company was skilled at linking disparate data sources, whereas only 34% of the executives at underperformers made the same claim.
Integrated planning
For most companies, the business- and brand-planning cycle is the driving force behind strategy development and execution. This is where decisions are made about where to play and how to win. And it’s here that resource allocation and budgeting are formalized and performance is monitored against goals. If insights groups are to help drive strategy, their activities must be aligned during the planning cycle with those of strategic planning, marketing, finance, sales, and other functions. That’s why substantially more overperforming firms than underperforming ones (61% versus 46%) include insights leaders at all key stages of the planning cycle. We find that insights-function involvement in the cycle varies by industry; it’s especially strong in retail.
Here’s how CMI participates in the planning cycle: “Where to play?”is fundamentally a question of where to direct growth investments—in existing, adjacent, or new markets. To help determine this, CMI uses a bespoke software tool called Growth Scout, which mines millions of data points on consumer demand across demographics, regions, and countries to quantify the potential value of deeper category or brand penetration. A typical application might be to gauge the impact of, say, increasing the penetration of shower gels by 10% in Thai markets. The results could help Unilever prioritize growth opportunities and decide where it could most profitably invest additional marketing or product-development resources. Recently, the CMI home-care team used Growth Scout to uncover potentially lucrative new markets for Unilever detergent brands by identifying demographic segments with weak penetration.
Once decisions have been made about where to play, another custom-built software tool, called Growth Cockpit, helps guide “How to win?” strategies. The tool provides a one-screen overview of a brand’s performance in a market relative to the category. By rapidly building a visual picture of how the brand compares on a host of metrics—market share, penetration, pricing, media spending, and more—it points managers to growth opportunities.
Additionally, CMI employs other tools to help answer questions about which product benefits marketing should emphasize, which ads are most effective, what marketing budget allocations will yield the highest return on investment, and what pricing is optimal. CMI then plays a central role in tracking the performance of marketing initiatives against targets and advising on tactical adjustments that may improve performance.
Collaboration
The i2020 study found that on average, 69% of respondents from overperforming firms said they work closely with other functions and customers, compared with just 52% of those in underperforming companies. This emphasis on collaboration is evident particularly among tech start-ups, but we’re also seeing it among giants such as Alibaba and Google, and it’s certainly the norm at Unilever and other large CPG firms.
In traditional market-research functions, the emphasis isn’t so much on collaboration as on being an effective service provider. Insights functions like CMI have a distinctly different role that emphasizes shared goals and partnerships. We saw this in CMI’s work with IT to create “smart” information-sharing platforms, like PeopleWorld, that anyone at Unilever can use. Similarly, CMI consciously collaborated with marketing, shedding its image as a “policeman” monitoring performance and instead coming to be seen as a helpful partner in creating effective communications.
More broadly, CMI’s structural alignment with the rest of the organization and its integration into the planning cycle create natural channels for often-daily collaboration. For example, CMI’s organizational structure includes teams that focus on personal care, home care, foods, and refreshments, and the team leaders are colocated with the presidents of the same product categories in the broader organization. This helps ensure that when the strategy discussion turns to, say, expanding a personal-care brand into a new market, CMI and other functions are participating in conversations together and working as partners. Being held accountable for business results also provides an incentive for CMI to collaborate with all commercially oriented teams, since that is the best way to influence the key performance indicators for each team’s operations.
It’s understood across the firm that insights can come from anyone at any time. Therefore, CMI encourages every employee to engage with customers to gain insights about their needs and the role of Unilever products in their lives, and it provides tools to help. Through a program called People Voice, for example, all employees, from factory workers in Asia to members of global brand teams and up to the CEO, can connect directly with customers at events with themes such as “sustainability” and “shopper experience.” Another option is for employees to use an “always-on” platform, provided through a start-up called Discuss.io, to arrange virtual meetings with consumers anywhere. A typical request might be: “I want to meet a South African soup lover next week at 4 pm.” The employee then gets an automated calendar invite to a live video chat. Some category presidents use the platform to engage with people in a country they plan to visit, asking about their needs and exploring opportunities for Unilever. This helps the presidents focus their conversations with local managers when they arrive.
To record their insights, employees use an in-house app that captures their observations from live chats or other consumer interactions. For example, an employee might note that people she talked with in Algeria equated “sustainability” with water conservation. Such notes, stories, pictures, and videos of employees’ communications are stored centrally and analyzed by CMI, which uses video mining and other technologies to identify behavioral patterns across regions and groups and to generate insights about consumer needs. For instance, reports from employee visits to customers’ kitchens in China revealed that because of high heat and tight space, grease buildup on surfaces is a common problem. Brand teams are now trying to determine what product innovations and messaging can help provide a solution.
About 30,000 people participate in People Voice programs annually. In addition to helping Unilever understand consumers’ needs, the programs reinforce the idea that it’s everyone’s job to uncover insights—a challenge that motivates and engages employees at every level.
Experimentation
Overperforming companies are three times as likely as underperformers to embrace a culture of experimentation, the i2020 research shows (40% versus 13%), and B2B firms in general are more experimental than B2C companies. Unilever is an exception in the B2C world, having formalized experimentation in a variety of ways, most visibly in its 2014 launch of the Foundry. Originally a marketing-technology start-up incubator, the Foundry has since expanded to include hackathons, a collaboration platform for addressing sustainability issues, another platform that sources and gives prizes for creative marketing concepts, and a mentoring program that connects start-ups with Unilever experts who advise on product and brand development and marketing strategy. Much of the Foundry’s work revolves around the “challenges” it posts on its site—requests for proposals to address a specific problem, such as consumers’ quandaries over what to cook for dinner or how to live a more sustainable lifestyle
Under the Foundry’s aegis, CMI’s Shark Tank initiative applies a technique borrowed from the CNBC show of the same name. A dozen or so start-ups pitch new technologies to a CMI executive team. Each has five minutes to tell its story, followed by five minutes of Q&A. After the presentations, the team votes on which ideas to pilot and which to reject. Since its inception two years ago, Shark Tank has screened more than 650 technologies, piloted more than 175, and scaled up 37.
technologies to a CMI executive team. Each has five minutes to tell its story, followed by five minutes of Q&A. After the presentations, the team votes on which ideas to pilot and which to reject. Since its inception two years ago, Shark Tank has screened more than 650 technologies, piloted more than 175, and scaled up 37.
One of the start-ups brought in was Discuss.io, the online consumer-connection video platform. Another was weseethrough, which uses wearable technology to observe what consumers actually do—which is often not what they claim to do. Test subjects for weseethrough wear Google Glass while engaging in routine tasks, such as cleaning, cooking, or shopping. The company then analyzes the video captured by the headsets to discern behaviors that consumers themselves may be unaware of. For example, people may think it takes longer to clean the living room than the bathroom, but in fact the reverse is true. Insights like that have helped Unilever adapt its portfolio of products to address consumers’ unarticulated cleaning needs.
Forward-looking orientation
To get a handle on the future, market researchers traditionally focused on the past. They might have reviewed a project launch months after the fact, for instance. Most firms today have shifted substantial attention to studying the present, monitoring consumers in real time to anticipate what they’ll do next. The most sophisticated practitioners—those with insights engines like CMI—take the next step, using predictive analytics and other technologies, along with new organizational structures, to both anticipate and influence behavior. Though overperformers currently aren’t far ahead of underperformers in this regard (32% versus 28%), the i2020 research suggests that the gap is widening, and we expect the trend to continue.
Consider how CMI worked with Google and Razorfish to develop a program that leveraged real-time media monitoring to anticipate hairstyle trends and shape demand for related products. Unilever is one of the largest players in the global hair-care market, with brands including Suave and TRESemmé, but like its competitors, it had struggled to differentiate itself. Using a custom tool to analyze hair-related Google searches (there are about a billion a month), the program identifies styling trends and rapidly creates how-to videos featuring (but not directly promoting) Unilever products on a YouTube channel called All Things Hair. There visitors can browse by hair type and buy relevant Unilever products. Now live in 10 markets, All Things Hair has had more than 125 million views since its launch in 2013, and the research shows that it’s three times as likely to drive purchases as conventional advertising is.
At a broader level, CMI created a team called Human and Cultural Futures (HCF), dedicated to imagining the future, examining developments in key regions, and exploring the implications for strategy. The team has identified certain societal, technological, environmental, political, and economic pressures, or “macro forces,” that are shaping the world—including a shift of economic and technological growth to the East (India and China) and South (Africa and South America), and growing environmental stress. Among its programs, HCF runs cultural awareness workshops and prompts brand and category teams to discuss how various macro forces might affect both consumers and Unilever. In one conversation about increased mortality among children under five, the Lifebuoy soap brand team zeroed in on data showing that over 40% of the deaths occur among infants less than a month old, and many could be prevented with handwashing. This has led to a sweeping handwashing education program that has changed the behavior of 337 million people in 28 countries. In villages in India, mothers reported that the incidence of diarrhea in family members dropped from 36% in 2013 to 5% in 2014.
Affinity for action
The most influential insights functions focus as much on strategy as on data. Indeed, i2020 found that 79% of insights functions at overperforming companies participated in strategic decision making at all levels of the organization, compared with just 47% at underperforming companies.
CMI’s action orientation manifests itself in two broad ways: in its specific recommendations to other functions and in the recruitment and training of “action-oriented” employees.
Insights teams must think holistically, exercising creative and analytic skills.
Look, for example, at CMI’s engagement with marketing regarding market development. CMI pointed out the large “size of the prize” that Unilever stood to gain by expanding the markets it operated in. Company leaders acknowledged this as the firm’s biggest growth opportunity. CMI helped break the challenge into three parts—generating more product users, more usage, and more benefits for users—and then helped identify ways to attack those challenges. For instance, in the area of more usage, CMI suggested that promoting nighttime use of toothbrushes and toothpaste could boost business growth and tie in with Unilever’s social mission of improving oral hygiene. CMI facilitated a workshop that highlighted the importance of dads in teaching their children to brush. That resulted in a marketing campaign with a song encouraging kids to brush at night as a way to have fun and bond with their fathers.
On the staffing side, from top to bottom, CMI invests in development programs designed to expand people’s capabilities beyond the expected functional skills (research and analysis) to “action” skills—communicating, persuading, facilitating, leading. The idea is to help employees become better at turning insights into business results, whether by conceiving of a new business opportunity or by selling it within the organization.
People Characteristics
The operational characteristics that distinguish superior insights engines are complemented by three traits characterizing the people who are part of them.
Whole-brain mindset
For an insights engine to be collaborative, experimental, and so on, it needs a culture that breaks from the past. Historically, the members of insights organizations focused on analytics. That left-brain orientation served them well, but today’s insights teams must think holistically, exercising creative, right-brain skills as well.
High-performing organizations are particularly adept at integrating the two types of approaches; far more respondents from overperformers than from underperformers agreed that their insights functions were skilled at whole-brain thinking (71% versus 42%). Achieving balance between right- and left-brain thinking requires a two-pronged effort: recruiting whole-brain talent and encouraging the mindset across the existing organization. Few people are purely right- or left-brained. But organizational work often favors analytical thinking, so conscious efforts to unleash people’s creative side are particularly vital.
One approach that CMI uses is Upping Your Elvis workshops, run by a company of the same name. The energetic and interactive training pushes people out of their default thinking styles and gets them to engage in creative problem solving with colleagues they might not normally connect with. A recent workshop, for example, brought together people from marketing, R&D, CMI, and other areas and asked them to brainstorm ways to boost hair-conditioner sales in Southeast Asia. Their insight was that consumers were reluctant to risk buying a product when they weren’t sure of its benefits. This led to the idea of launching an inexpensive trial-size packet.
In other CMI workshops, the focus is on linking data about markets and brand performance to the actual consumer experience. Marketers, R&D staff, and others in the organization will go to people’s homes to wash clothes or cook a meal, seeing first-hand how users engage with Unilever products. Workshop participants also connect directly with both loyal and lapsed customers and hear outside speakers present case studies on customer engagement. And they join in ideation sessions with colleagues across functions to imagine new growth programs and develop detailed action plans.
In all cases, employees leave these workshops with new collaboration tools, and they become role models and evangelists for whole-brain thinking.
Business focus
Historically, organizations’ right-brain thinkers—marketing creative teams, for example—have not naturally focused on the business side. But i2020 found that respondents from high-performing firms were much more likely than those from low-performing firms to believe that their insights functions were business-focused (75% versus 50%).
At Unilever, CMI has implemented an array of programs to build business acumen. Recall that the vision of the CMI team is “to inspire and provoke to enable transformational action.” CMI sees developing insights as a means to an end—customer-centric business growth. To reinforce the connection between insights and growth, staff bonuses are linked to the wider business unit performance. This creates shared accountability with other functions, encourages CMI teams to take responsibility for growth, and motivates them to go the extra mile. Teams are trained to think outside their traditional areas through “CMI Academy” courses on topics such as finance for nonfinance managers and effective business partnering. As a result of these and other programs, teams now instinctively consider the business impact of their work and of every recommendation they make.
Storytelling
The i2020 research imparts a final lesson about what makes for a strong insights engine: good storytelling. At overperforming firms, 61% of surveyed executives agreed that people in their insights functions were skilled at conveying their messages through engaging narratives; at underperforming firms, only 37% agreed.
At Unilever, CMI has embraced storytelling. Traditionally its presentations were data-intensive, built on the assumption that a fact-filled talk would be more persuasive than a fact-based one with less data and more narrative. Although data has its place, CMI has moved away from charts and tables and toward provocative storytelling, embracing an ethos of “Show, don’t tell.” Increasingly, CMI is making its points with memorable TED-style talks and other experiential approaches.
For example, early in the business-planning cycle, CMI does market-by-market presentations to leadership and staff, including the heads of Unilever’s personal care, foods, and other categories. These describe global demographic, consumption, and other trends that are relevant to each category. Rather than bludgeon audiences with data, the presentations include compelling imagery and vignettes to advance a story line that has implications for strategy.
CMI has moved away from charts and tables and toward provocative storytelling.
For an initiative targeting senior citizens, the CMI team found a novel way to bring the experience of older consumers to life. Instead of simply reporting how seniors struggle with products, CMI had marketing executives don old-age simulation equipment and then try to read labels and handle Unilever products such as shampoo. Encumbered by gear that reduced their mobility and vision, the marketers gained a real appreciation for the obstacles the elderly face. One outcome of the event is newly designed ice cream packaging that’s easier to read.
Much of what insights engines at any firm do is gather and analyze data. But today that is the minimum needed for success. Being able to translate this capability into customer-centric growth is what distinguishes winners from losers. The insights engine is critical to this process—in fact, it’s the most important driver identified by the i2020 research. But by itself, even the most advanced insights engine can’t make a firm customer-centric. That requires leadership from the top to ensure that every function, from R&D to marketing to CMI itself, maintains a singular focus on understanding and meeting consumers’ fundamental needs.
From Harvard Business Review
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