The innovative force of insight networks

According to the Economist there is no dispute that innovation is vital to business and that ideas are the “most important business investment today”. Organisations have become highly aware that in order to grow and remain competitive, they need ongoing sources of insight to generate ideas and bring the best to market.

Traditional insight techniques such as quantitative market surveys, focus groups and even simulated test markets have long been criticised for gathering incomplete or undifferentiated information and increasing the likelihood of prematurely eliminating potential breakthrough ideas or adopting incremental ones.

Due to advances in our understanding, including the insights of neuroscience, research techniques have evolved greatly to address these issues. Ethnographic or anthropological research approaches, such as in-context interviewing and observations, focus on understanding the unconscious mind and help organisations develop a deeper understanding of the motivations that shape consumer behaviour.

Dictionary.com defines a network as an extended group of people with similar interests who interact and remain in informal contact for mutual assistance or support. Insight networks, both internal and external, provide powerful opportunities for organisations to spot trends, gather information and co-create and test solutions.

External networks as sources of insight

Organisations can look outside their own boundaries to external networks to gain better access to ideas, knowledge, and technology than they would have if they relied solely on their own resources.

External insight networks can involve a few, hundreds or even thousands of participants from diverse settings. From the development of motorcycles in China to thousands of people creating virtual investment portfolios, the top performing ones forming the bases of a mutual fund for meritocracy.com that outperforms the S&P 500 index, to networks of sports enthusiasts perfecting techniques required to ride 60-foot plus waves. The game is using it to connect more rapidly and effectively with others in the creation of new knowledge.

Consumer networks in the form of panels of users and opinion leaders are increasingly used to contribute ideas to organisations, and, as a result, participants buy more of the brands being discussed.

Blogs and online chatrooms host vibrant, multi-media consumer discussions and the relationship with participants can be ongoing with no clear end, while allowing regular analysis of their input.

Rather than simply having consumers fill out a survey, Teen favourite television network the N is challenging teens to test their trend knowledge and promotional skills with a new online game called Trendetta. Players have to choose fashion styles, celebrities, musicians and general trends that they believe will have significance in the future and then promote their favourites using virtual marketing. The game is a smart way to both get to know consumers while engaging them in the actual brand.

Interaction with consumer networks is not confined to the Internet. Public areas and even retail environments can provide relevant environments for consumer network interaction.

Nike marketers, armed with shoe prototypes, visit inner city neighbourhoods in urban areas to interact directly with their target consumers. The company borrows much of its style, attitude and imagery directly from these consumers while at the same time gauging their reactions and building buzz around upcoming products. Besides showcasing Apple hardware and software at a number of flagship Apple Stores, these shrines to creativity offer in-store workshops and presentations helping customers make the most of Apple's latest content creation applications.

Business partner networks represent another powerful source of insight. Manufacturers, upstream suppliers and downstream retailers should learn to collaborate on the basis of shared insights since their data sets are complementary. Sharing insights can yield powerful results for both parties.

Aluminium manufacturer Alcoa realised this when one of its cardboard suppliers shared its research findings about the way consumers replace soda in its refrigerators. The supplier observed that consumers store most sodas at home in pantries and have only a few cold ones in refrigerators which limited consumption. Alcoa then pitched a new refrigerator-friendly package, the ‘Fridgepack' that fits in refrigerators more easily, to Coca-Cola. A proposal that contributed to a 10% increase in Coke's sales during the three months after the package was introduced.

Internal networks as sources of insight

Internal networks enable staff to work across functions to gather common sets of information from the field to generate insight. Most organisations aren't designed to obtain data at points where consumer segments, channels and products intersect, nor have they defined an approach for combining insights across brands, channels, products and regions. As a result each group looks for and generates different, often unrelated data with no realised business benefit.

Organisations can integrate data, generate insights and convert them into effective operational strategies by sharing information from diverse sources. Working across functions can improve a whole company's ability to make decisions.

By combining loyalty card data on what customers were buying at Tesco with survey research on what customers were not buying, Tesco found that, in some formats, young mothers bought fewer baby products in its stores because they trusted pharmacies more. As a result, Tesco launched BabyClub to provide expert advice and targeted coupons. Its share of baby product sales in the UK grew from 16% in 2000 to 24% in 2003.

Networking can transform insight generation as we know it and change the way we invent and compete. By building networks and fostering crucial internal and external connections, collaboration has the power to kick-start business growth and revitalise ailing innovation engines.

References:

Attention and Marketing in context. Scientific overview, Nilewide. February 2007.
Capitalising on customer insights. John E. Forsyth, Nicolo Galante and Todd Guild, McKinsey Quarterly, 2006, number 3.
Creation nets: Getting the most from open innovation. John Seely Brown and John Hagel III. McKinsey Quarterly, 2006, number 2.
From push to pull: The next frontier of innovation. John Seely Brown and John Hagel III, McKinsey Quarterly, 2005, number 3.
Generation C. Trendwatching.com.
Observe, don't ask. Research by Marketing Evolution and Procter & Gamble, Nilewide, March 2007.
Postmodern Marketing or PoMo. Stephen Brown. Nilewide, November 2006.
Profiting from Proliferation. Sean R. Collins, Peter W Dahlstrom and Marc Singer, McKinsey Quarterly, June 2006.
Reinventing innovation at consumer goods companies. McKinsey Quarterly, November, 2006.
Searching for Connections. Opinion of innovation academic Clayton Christensen and colleagues. Nilewide. April 2007.
What makes collaboration work? Scientific overview, Nilewide, February 2007.