00POINT OF VIEW

STAN STHANUNATHAN

ADMAP SEPTEMBER 2012

complex and polarised world, focusing on RoI in research is likely to inject incremental thinking. This is certainly detrimental for unlocking untapped potential in developing markets. Even in developed countries, the need is fresh thinking to stimulate demand. Focusing on RoI is likely to make the current situation worse by forcing the conversation more on denominator, i.e. cost, and not on numerator, i.e. driving revenue growth.

As an industry, we need to change the conversation from Return on Investment to Return on Insights. The reality is that if inspirational and provocative insights are delivered consistently, they can drive a step-change in business trajectory. Great insights have the power to become force multipliers.

So how do insights play a crucial role in transforming the trajectory of the business? This requires a change of mindset and a change of behaviour. It starts with a maniacal focus on providing insights that drive business growth. And ‘RoI’ starts there. It engages stakeholders in a conversation that is close to the heart of senior leadership. It is this that earns the ‘seat at the table’. When you are at the table, more than half the questions around RoI go away. While providing insights to drive growth, it is our responsibility to strike the right balance between driving short-term and long-term growth. Insights should be inspirational enough for people to start dreaming big about the world of possibilities and fresh ways to drive sustained growth. But always remember, there is no long-term without the short-term.

The next stop in this journey is on changing emphasis from ‘focus on efficiency’ to ‘focus on effectiveness’. Doing work efficiently is table-stakes. But getting stuck on driving efficiency beyond a point usually comes at the expense of a bigger impact that insights can provide. Enhancing the effectiveness of actions based on superior insights is a bigger play. This results in the function being seen as providing thought leadership, a function that is on the offense.

If company leaders are consistently asking ‘what is the RoI on research investment?’ we need to ask ourselves a simple question: ‘Are we inspiring and provoking people to take transformational actions?’ If the answer to the second question is a yes, the first question gets asked very rarely. Justifying the function by providing an RoI on research has a defensive tone to it. As they say in sports – offense is the best defense.

Change the RoI mindsetThe global research industry is worth $33 billion and growing. While growth is steeper in developing markets like Brazil, India, Russia and China, revenues are still concentrated in the large developed economies, like the US, Europe and Japan. The reality is that, just as the developed economies are experiencing anaemic growth, so is the research industry. And when the going gets tough, tough questions get asked. Justifying spend, therefore, becomes a business imperative.

Now, accountability is a good thing, but the big question is: ‘Is RoI on Research the right measure of accountability?’ In order to better understand accountability, we need to understand the three forces that are driving seismic changes in the research industry.

Technology is the first one. The spread of the internet and mobile phones has helped developing countries to not only catch up, but in some cases, leapfrog developed countries in research. The internet has democratised information and this has resulted in a higher level of pressure on the industry to go beyond providing information. The internet has also broken down geographic boundaries, resulting in some developing countries becoming backroom operations for the whole world.

The second big force is a shift in the centre of gravity of economic power from the ‘developed’ to ‘developing’ economies. This has resulted in a shift in mindset as well. In the developed countries, it is increasingly about efficiency and effectiveness, while in the developing countries, it is more and more about opportunities, growth, and unlocking the power. As a result, most of the noise

around RoI is localised to the developed countries.

The third big force is the competition intensity. The past few years have seen an unprecedented increase in the level of competition. Category definitions are getting blurred, the source of competition is becoming unpredictable,

the speed of entry and exit from markets is getting shorter by the year, barriers to

entry are becoming much less, and, above all, external forces like government

and civil society are increasingly impacting

brands and business. All this is resulting in a need to redefine what ‘RoI’ is all about.

In this

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about efficiency and effectiveness, while in the developing countries, it is more and more about opportunities, growth, and unlocking the power. As a result, most of the noise

around RoI is localised to the developed countries.

The third big force is the competition intensity. The past few years have seen an unprecedented increase in the level of competition. Category definitions are getting blurred, the source of competition is becoming unpredictable,

the speed of entry and exit from markets is getting shorter by the year, barriers to

entry are becoming much less, and, above all, external forces like government

and civil society are increasingly impacting

brands and business. All this is resulting in a need to redefine what ‘RoI’ is all about.

ADM Sept Stan_FINAL.indd 3 8/20/2012 10:41:37