At the closing session of ESOMAR's 59th annual congress, an international jury announced that a paper by three Australians (‘The heart transplant - consumers at the heart of your business' by Kristin Hickey and Derek Leddie of The Leading Edge and David Jenkinson of Fosters Group Australia,) had won the inaugural award for the best paper presented at an ESOMAR event during 2005 and 2006.

Kristin first introduced her paper on consumer-centric approaches at the 2005 ESOMAR Congress by likening the marketing industry's preoccupation with brands to a worn out, struggling heart - and suggesting that a new consumer centric vision for businesses offered the equivalent of a heart transplant, promising a new life of vitality and growth.

Every year, The Leading Edge (TLE) interviews its clients, including CEOs, marketing directors and consumer insight directors. Derek and Kristin noticed that while clients in the Australian market have traditionally been techniques focused - excited and passionate about buzz words such as semiotics, ethnography, hierarchical Bayes or web-based capabilities - in the past two years senior managers have been talking instead about bringing consumers to the heart of their businesses.

‘Until now there has still been a lot of bottom line growth through consolidation and cost cutting measures,' says Kristin. ‘Now businesses have got to a stage where there's an emphasis on organic growth.

‘There are three key reasons why managers see consumer-centricity as a source of sustainable competitive advantage. Firstly, it allows an organisation to get much closer to the consumer, thereby increasing the relevance of innovation, communications or other marketing. Secondly, it provides an element of consistent objectivity within a business. No longer are there push-and-pull effects between various departments based on opinions or differing priorities, as consumer insight and feedback provide incontestable direction. Thirdly, consumer-centricity can be seen as a significant source of bargaining power with trade or retailers, particularly in situations where this bargaining power is being diminished through severe price competition or shelf space pressure.'

Changing views of brands and consumers
In the traditional view of a brand, a company's functional structure underpins how the business operates and the brand and its consumers are seen as the domain of the marketing function. In a consumer-centric organisation, the consumer is seen as the key to success and the brand represents any interaction the business has with the consumer (see figures A and B above). But according to Kristin, the journey from one model to the other is rarely simple, easy or fast because of the structural and cultural change required to support the new business model.

The paper explores six barriers to the adoption of a consumer centric vision within an organisation. They include lack of understanding of consumer-centricity, the scope of the change required, inability to ‘visualise' the vision, absence of a clear critical path, lack of processes and personnel and the absence of affordable business partners with the relevant expertise and appropriate business models. To deal with these barriers, TLE has developed a five step process for a gradual consumer-centric revolution and in the paper it illustrates how the five steps were used with Fosters Group.

Transforming Fosters Group to a consumer centric organisation
‘The business situation when we first embarked on consumer-centricity conversations with Fosters Group, can best be described as "geared for change",' says Kristin. ‘The virtual duopolistic structure of the Australian brewing market had shed all excess costs, streamlining manufacturing and distribution to a point where further cost savings were negligible.

‘The only source of sustainable advantage that the CEO could foresee was the development of a superior business perspective - a model, structure and associated processes that would deliver a unique and consumer-focused perspective to the business. The impetus for change was strong and a strong part of the vision of CEO John Murphy who personally briefed us in this challenge.'

When TLE embarked on the project with Fosters Group, over 80 percent of all archived research projects were brand-focused.

‘To say the business was brand-centric was an understatement,' says Kristin. ‘The company was so myopic in its brand focus that it was missing significant growth opportunities and often marketing a range of brands within its portfolio to the same consumer segment on virtually identical platforms.'

After two years, the focus on the consumer started to permeate the Fosters Group business. The role of insights and innovations has been elevated to a position on the senior leadership team, working closely with the CEO and senior business strategists. The division itself has expanded with a full-time change management focus, employing analysts and strategic planners to ensure that internal competencies are developed, and consumer insights are integrated in the day-to-day planning activities of the category teams. Awareness of these changes has been heightened by the separate branding of the group as ‘i-Nova'.

‘One of the key changes has been realigning decision-making power with the i-Nova group instead of with the brand or category managers,' says Kristin. ‘Research is guided by the insights and innovations team, reducing investment "wastage" and enforcing the need for clear insights where they may be lacking.

‘This, combined with a new focus on consumer immersion at the beginning of brand or category projects, has heightened the importance of the consumer in the minds of the marketing and sales teams.'

Organisational change for the research partner
It wasn't only Fosters Group that had to make major organisational changes. TLE also went through a process of transformation.

‘We began the journey in a somewhat naïve way - particularly in our underestimation of the degree of structural and cultural change required to truly translate a customer-centric vision into a reality,' says Kristin. ‘We believed we could help Fosters Group make this type of change without systemic changes to our own business model as a consumer insights specialist.

The key challenge a research partner faces in this endeavour, is that whilst the skill sets required are not that different from those associated with leading consultancies (professional facilitation, creativity, research rigour, etc), the business model to leverage these skills looks remarkably different. To bring about the integration of these new skills and new applications of existing skills, we employed a new structural design, involving a specialist team of "value architects" within the business who work towards building business value through the application of non-research skills to existing and new clients.

‘The key to the success of this business unit has been a matrix structure where traditional research consultants continue to "own" the client relationship, freeing up the value architects to work across clients on specialised projects. By working with the research consultants, the value architect's time can be dedicated to the non-research demands. At the same time, researchers are continuously exposed to these new skills and gradually can adopt them.'

Buoyancy a cause for concern
‘Businesses are already increasing their expenditure on consumer insights, which is creating provisional buoyancy in the research industry,' says Kristin. ‘However on closer inspection, this buoyancy should be a significant cause for concern. Our industry holds itself up as the expert in the field of consumer insights - yet to date we have failed to provide strong, compelling leadership for businesses searching for consumer-centricity.

‘More importantly, the competitive situation has changed - management consultants, marketing consultants, branding specialists and advertising agencies have begun encroaching on our space, fuelled by the unfulfilled needs of our clients and the relative sluggishness of the industry in delivering to this need.

‘Further investment in research alone will not deliver to this need. We must extend and expand our skills as researchers and adapt our business models to truly deliver to this vision.

‘Whilst the case study outlined is still very much a work in progress, it has been invaluable in helping us truly understand both the business impact of changing a brand-centric business into a consumer-centric one, and the necessary changes required in our own business model to facilitate this type of long-term cultural change.'

By Jesse Blackadder, editor, Research News, based on the paper ‘The heart transplant - consumers at the heart of your business' by Kristin Hickey and Derek Leddie of The Leading Edge and David Jenkinson of Fosters Group. For more information about this paper please email Deanna Edwards: deannae@theleadingedge.com.au

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