Anticipating Consumer Desires – The Future Of The Corporation

Every business entity desiring growth, whether it provides services or products, must engage in research and development (R & D) activities.  Businesses that don’t expose themselves to the common symptoms of corporate stagnation eventually leading to disappearance, menial survival, or, if lucky, flat revenues.

We all know that, in business, change is constant, and for corporate leaders to maintain their position, they themselves must change.  Hence the vast inflows of cash into corporate R & D activities.

Complementing this law of change is a conducive corporate environment in which we live and operate, both combining to provide even the smallest corporate player the opportunity to grow into a business heavy-hitter, and facilitate the churn of the Business Titan wheel.

Consider  WhatsApp, now a leading strategic play in Facebook’s arsenal of offerings to its members.  What started as an idea of ex Yahoo employee Jan Koum to combine the ease of international text messaging with updated “statuses” is expected to become (according to Facebook) a leading catalyst of personal and corporate communication around the globe.  The brilliance of this and many other innovations driving companies lies in the creativity and ingenuity of the champions that spawn them.

The WhatsApp example and may others like it define raw R & D; no methodology followed to excrete it – just a desire to create, and- eventually-monetize.  If anything, these inventors are inspired by the environments around them and what they believe to be achievable.

However, this natural process has, for the benefit of corporate growth and a desire to maximize potential, been enhanced via the collection and utilization of data to streamline the R & D effort and scale the corporation, to varying degrees to success.

Data, and the information and insights gleaned from it, have popularly been used to qualify an idea and enable an assessment of its “viability” to determine chances of success.  But slow down…attempts to apply statistical and measurable formulae to something innately creative don’t always result in a successful outcome (ie: spontaneous growth, fun at work, a vesting sense of creating something important).

Obviously both creative and measurable contributions to strategy have merits, but they need to be reconciled and amalgamated in a harmonious manner to result in maximum positive results.  Such is the ongoing exercise of turning data insights into profits.

We see data and the insights derived from it playing an increasing role in facilitating corporate growth over what Albert V. Bruno describes as a corporation’s four-stage marketing development process.[1]  As the corporation moves along in that marketing process, the effort of anticipating consumer needs remains constant, but the collection of and insights derived from data become increasingly important catalysts for recognizing those needs and desires.  Bruno, a professor or marketing at the University of Santa Clara’s School of Business in Santa Clara, California, and his associates Tyzoon T. Tyebjee and Shelby H. McIntyre identify these four stages as follows:

Stage 1: Entrepreneurial Marketing

Stage 2: Opportunistic Marketing

Stage 3:  Responsive Marketing

Stage 4: Diversified Marketing

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In the first stage, startup founders are fully engaged in the idea driving the business.  The concept is either new, in which case there’s little relevant data to use, or so differentiated that they believe that their offering can disrupt the market, thereby propelling them to market entrepreneurially  (“the entrepreneurial marketing approach”) by personally engaging prospects.  The startup tries to identify customers whose needs are not being met by established competitors.

 At Stage 2, the Company has established the technical feasibility if it’s offerings and has generated credibility in the marketplace.  To propel growth requires introducing economies of scale and improving systems and controls.  A strategic guide map now becomes expected to exploit opportunities, and talks of future sustainability begin to enter the picture.  Collection and utilization of data and insights by necessity plays a key role in the strategic formulation, if for no other reason than to ensure that due diligence has been exercised to wisely allocate what are now more readily available financial resources.

Stage 3 sees explosive expansion, and the company founders need to respond to these substantial changes.  They need to change roles and separate executive functions from operating ones.  Creativity is maintained, but manifests itself in the ingenuity and application of capable workers taking leadership of separate departments.  With the wealth of customers and data, the company needs to leverage those assets by establishing a system of data collection and analysis to augment and focus it’s marketing efforts on areas that will supply present and future growth.   If the right strategy is implemented correctly, it’s at this stage that the company moves into a leadership position within its industry.

Then to sustain its position, additional efforts are required to organize the company by creating operating divisions to cope with increasing complexity-Stage 4. The strategic exercise continues on, but a vital task is to segment and organize the vast flow of data, both from the customer base and from outside, to enable leadership to anticipate the needs of it’s client base and future prospects.  Leadership companies residing in this space lead the markets, and need to anticipate the desires of the people. Steve Jobs is often quoted as saying that he thought it wrong for companies to wait to hear what customers wanted; that they didn’t know what they wanted, and it was the responsibility of the Company to anticipate what they wanted and make it for them.

Understandably, the importance of creativity remains vital at each stage. But just as important, however, is that the collection and usage of data becomes ever-increasingly more vital to corporate growth and anticipating consumer needs, desires and spending behaviours. Clean, accurate data can facilitate the anticipatory moves of the company so important in establishing or maintaining it’s position as a leader in its’ respective industry.  Just organizing the data alone can augment the chances of capitalizing on it’s worth.

Amazon has taken the idea of anticipating consumer needs to as-of-yet unprecedented levels.  With the plethora of data points they’ve collected on customers via online purchases, in-house produced algorithms will predict a consumers’ purchase and ship it to a nearby-located depot awaiting pick-up before the consumer actually buys it.  The company gained a patent for what it describes as “anticipatory shipping”, and believes that it can cut delivery times and discourage consumers from shopping at physical stores.  It also aims to provide consumers with repeated suggestions of items already in transit to the depots near them.[2]

If it works out, this initiative will dovetail nicely with Amazon’s “drone” project to deliver its wares via unmanned vehicles.  Whether or not Amazon is able to successfully implement these projects they are part of a growing trend among leading companies to anticipate consumer needs, even before consumers do.

The emergence of anticipatory marketing efforts also reveals at least one salient fact about consumers themselves, that they hold within them an important asset – information – that seems to be increasingly valuable to the companies they patronize.  How much is this information worth to you Amazon?

Nicholas Kilpatrick is a partner at the accounting firm of Burgess Kilpatrick.  He leads the firm’s consulting and strategy practice and works with companies to enhance their Analytics, Forecasting , and Data Optimization functions.  The practice’s focus includes quantitative forecasting, corporate and unit strategy and planning.  Please visit our website at www.burgesskilpatrick.com or on Facebook at www.facebook.com/Burgess Kilpatrick for more information on our firm.

[1] Bruno, Albert V., Tyebjee, Tyzoon T., McIntyre, Shelby H., Growing Ventures Can Anticipate Marketing Stages”, Harvard Business Review, Harvard University Press, 1982.

[2] Bensinger, Greg; Amazon Wants To Ship Your Package Before You Buy It; www.wsj.com; January 17, 2014.