Gartner Interview with Ravi Dhar

November 29, 2011

Are There Any Customer Insight "Holy Grails"?

Ken McGee (Gartner): Are you working on customer insight projects that really represent the "Holy Grail" for decoding customer "wants and changes"?

Dr. Ravi Dhar (Dhar): One of the Holy Grails is what Steve Jobs was innately known for - the preferences people already have but cannot articulate, identify or know that they even have.


Nobody told Jobs that they wanted a touch-type interface on a smartphone. In fact, if you did research, most people would have told you, "I'm happy with my Blackberry." So it's not just that people don’t want it, it’s that they would actually tell you the opposite of what they really preferred.

The question I get most often is - is there a systematic way to identify preferences people do not know they have? We are doing some early research on this, but it is definitely a "Holy Grail".  There’s really no substitution for a rigorous approach.


Yale University's Center for Customer Insights


Gartner: Why was Yale University's "Center for Customer Insights" created?


Dhar: We partner with global leaders to develop and test new theories that advance the frontiers of knowledge of evolving customer behavior. What that means in practice is we help companies leverage customer insights for the near and far term. 


Major companies have so many suppliers and vendors of market research as well as consulting companies. There's no shortage of that.

But what they find is that these organizations are not good at telling client companies how to handle changes that are taking place, how to leverage those changes and what new things are taking place. So that's why it's very important for us to work with companies whose people are intellectually curious and who try to understand what information means, how information is changing their business and how to leverage those changes.


I think what Center participants get from partnering with us is learning what's cutting edge, what's new and how to think about what's new. What we get from them is the real world, really important questions that keep them up at night.


Gartner Comments: Yale's Center for Customer Insights (YCCI) was created in 2006 by founding director, Professor Ravi Dhar. YCCI's literature states: "The Yale Center for Customer Insights is a forum for generating fresh insights into how consumer mindset and behavior is evolving due to technology, globalization, and other changes in the consumer environment." The Center sponsors primary research projects suggested by 1) sponsoring industry partners, 2) Center Fellows, or 3) corporate and foundation affiliates. YCCI also sponsors a number of conferences and events on matters to gain a far better understanding into changing customer behaviors.


The Challenges Of Using Consulting And Consumer Market Research Companies



Gartner: Why aren't companies getting these insights from consulting and market research companies?


Dhar: Traditionally new knowledge and theories were transferred from universities to the businesses by market research firms, but that model’s broken. The best talent is no longer as attracted to this industry. It could be because of the compensation structure, but it's probably a fair point that if you look at the best undergraduates or graduates, how many of them are attracted to jobs in that industry, the answers is probably very few. There are many other jobs that they would take before those. 


The Quality and Capabilities of Current Customer Insight Information


McGee: How would you best describe the current state of being able to decode what is happening, and then to what is the current state of being able to predict what will happen?


Dhar: If you ask, how good is the state of the industry in predicting, it's not very good. So often some call it the Center for Customer Hindsights. Some of the best companies in this business tell me they are very good at auditing. So when we launch a program, six months later we can tell you everything about that program and why it happened. But that doesn't help us predict what will happen the next time.


You also asked about the prediction part. The foresight part is obviously challenging still. I know one senior executive who was the head of market research, spending hundreds and hundreds of millions of dollars, who went into a business unit line function of running marketing. So I asked him, "How much of the research that you were doing and generating and providing to the business units, is useful, now that you're on the other side? He told me, Close to zero.

I have had this conversation with many CMOs now: What does your head of research do that is helpful to grow the company? And the answer is always, "Very little."


McGee: So the state of being able to predict is not good. What is the current state of understanding what's happening now, and being able to answer why people buying or not buying cars now?


Dhar: As for what is happening in the immediate future, I would say it's somewhat reasonable. What's not reasonable is not knowing what to do about it? I also think the competitive advantage of knowing customer demand is moving away from both academia and individual companies to places like the Googles and the Facebooks of the world. They have so much on what people are doing they can be pretty good leading indicators of the next three, six months. With the right, rigorous analysis, the data reveals changes in consumer behaviors that can be used to understand what are the barriers and motivators to behavior, and, to an extent, what will likely happen in the longer time horizon.


Skills Needed By Future Marketing and Market Research Professionals


McGee: We've spoken with people in various analysis related professions who believe "critical thinking" is not adequately taught in secondary schools or at undergraduate or graduate levels. Do you agree?


Dhar: Yes. Here at Yale we have a course called Problem Framing. The essence of the course is around critical thinking. Rather than thinking about how to solve their problem, we teach how to identify a problem, determine the problem's basis and how to frame it.


So part of the challenge is how to teach students how to connect the dots. As my dean likes to say, how do you help companies see around the corners, right? And the real question is, can you teach those skills? Some of us like to believe yes.


McGee: So, what are the skills, the methodologies, the dependencies, etc. that will be needed to properly decode, analyze customer insight and yield conclusions? Again, let's break this question up into two parts: understanding what is happening now, and what is needed to predict the future?


Dhar: When I talk to companies I ask, "What training and skills do you think new marketing people will need?" They state they don't need people with five years in market real estate or statistics. Further, they say they want "broader people who have strong interdisciplinary backgrounds who know some psychology, some economics, some sociology, some understanding of statistics."


And that's pretty uniform, from some of the best companies in financial services to packaged goods; they all tell me they want eclectic people. We don't want people who are too highly specialized. The business people don't think the people in research understand their business, so there's a disconnect.


McGee: What will be the best educational backgrounds for marketing and market research professionals to have in the future?


Dhar: It's too early yet, but I think people will be inclined to have a more eclectic education.


McGee: So more liberal art backgrounds?


Dhar: Yes, exactly. I think learning how to leverage your liberal arts, broad background to connect to business questions leads to a potential competitive advantage.


McGee: But should a person interested in the future of marketing but who has a liberal arts degree from 10, 15, 20 years ago, get statistics or technical training under their belt? Similarly should technically oriented people take liberal arts courses?


Dhar: Correct. Yeah. You certainly need a mixture of skills, because if you're pure liberal arts, you still need to understand what the source of the data is and what to do with the data.


McGee: What else do CMOs want from new undergrad or graduate marketing students?


Dhar: First, they want people who know how to communicate clearly. That hasn't changed. Next they want people who know how to deal with complexity, but they don't want complex solutions. They want simplicity from complexity. Third is they want people with a good understanding of how technology is changing marketing, because your customers are now doing stuff with technology that they didn't do 20 years ago, and you really need to understand that. Finally, the other thing that they really want is people who have a global viewpoint, not a U.S.-centric viewpoint, because there are just so many interesting and different things that are happening across the world.


Which Companies Are Getting Customer Insights Right?

McGee: Do you find there are companies that just excel at what needs to be done and which are leading the pack?


Dhar: There's no doubt that Procter & Gamble is a learning organization; they're always trying to find out what's happening, what does it mean, how do I learn it. They'll do it slowly in their own time, but they're continuously learning.


And I would also certainly add two other companies in two different industries. I would put IBM in there. They are also moving the model towards going away from the CIO and towards the CMO and the CEO, and driving the growth of the company. Thus, predictive analytics is being used not just for back office functions but for front office consumer facing functions.


And a third one is Visa. Fascinating things are happening in the payment space with the introduction of new devices and capabilities leading them to constantly reevaluate payment behaviors, information overload, mobility and global access.


McGee: We touched on the degree to which CMOs are content with the graduates that are coming out of marketing schools. Similar to the corporate question, are there universities that are putting graduates into the real world who seem to be training and preparing students very effectively?


Dhar: We hope we are doing some of that. Wharton is doing something, and I think a little bit more focused than us on the customer analytics part of it - whereas we think, that's just a piece of the insights, and analytics is one way to get it. But there are many many ways to get that insight more holistically, is important. It's a big part of the emphasis at Yale School of Management to produce holistic thinkers grounded in a solid understanding of the complex realities of ever changing marketplace.


McGee: Your meteorological colleagues know they have the wherewithal to identify precisely what's happening today, and they're pretty good at saying what will happen over the next week, predicting forecasts. They're pretty good.


Customer Insight Predictions

McGee: Do you have predictions of when we will be able to know exactly why changes in customer trends are happening today? Or when we will be able to predict with a high degree of certainty, when changes in customer trends will occur in the future?

Dhar: Probably not, because the nature of the influences on a consumer are so may and so many different at different points in time, that's got to be very hard to do.

McGee: Meteorologists will tell you the same thing.

Dhar: Yes, but individuals don't have that stable pattern. The same person who buys the store brand also buys the high-end brand. A person who buys from the GAP, might also buy from Barneys, and so on. And so there are a lot of these interesting differences.

I don't think we should be directly in the prediction business of the trend. I think somebody else can do that. But being able to answer "what new trends mean for me?", or "how do I take advantage of new trends", or "what opportunities do these trends create?" are the big things that marketing people will be expected to answer.