Making Sense of Customers

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Making Sense of Customers

According to a global study of 1,500 CEOs conducted by IBM, the biggest challenge CEOs face is the so-called "complexity gap." Eight out of ten expect the business environment to grow in complexity, but fewer than half feel prepared for the change.1

The research also reveals that CEOs see a lack of customer insight as their biggest deficit in managing complexity. They prioritize gaining customer insight far above other decision-related tasks and rank "customer obsession" as the most critical leadership trait.

As a result, many companies are turning to customer research that is powered by big data and analytics. Although that approach can provide astonishingly detailed pictures of some aspects of their markets, the pictures are far from complete and are often misleading.

It may be possible to predict a customer's next mouse click or purchase, but no amount of quantitative data can tell you why she made that click or purchase. Without that insight, companies cannot close the complexity gap.

In fact, the rush to reduce consumers to strings of ones and zeroes often causes marketers and strategists to lose sight of the human element. Consumers are people, after all. They're often irrational, and they're sometimes driven by motives that are opaque even to themselves.

Yet, most marketers cling to assumptions about customer behavior that have been shaped by their organizational culture, the biases of the firm's managers, and, increasingly, the vast but imperfect data stream flowing in.

The human sciences approach is a radically different way to understand customers. It starts by examining the roots of their behaviors—the complex interplay between their interior lives and their social, cultural, and physical worlds. It digs deep for insights that elude more traditional business tools.

This nonlinear process, called sense-making by consultants Christian Madsbjerg and Mikkel Rasmussen, reveals the often subtle and unconscious motivations informing consumer behavior and can lead to insights that enable transformations in product development, organizational culture, and even corporate strategy.

As explained in their new book The Moment of Clarity, sense-making and the tools of human science are at their most powerful when helping businesses address novel problems ("big unknowns") in unfamiliar social or cultural contexts, such as new geographical markets or new generations of consumers...

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