Ville Tikka: To begin with, could you briefly introduce us what ReD Associates is and what it does? We know you’ve been spearheading the field of human-centric business development and innovation for almost a decade now and would like to learn more about what’s under the hood.
Mikkel B. Rasmussen: ReD is a strategic consultancy, or a management consultancy based in Copenhagen and New York. In a way, it’s a different ‘analytical engine’ that is focusing on applying human sciences to business. I think our goal is to become an institution in that, by taking something really soft and making it hard. And when I say soft I mean things like insights and cultural understanding or understanding of the everyday, and translating that into hard things like numbers, money, product specifications and so forth.
We work with human sciences and we think it’s a wonderful, although not new, approach in business to understand human behavior and what is valuable for people. Human sciences include the softer social sciences, such as political science, sociology, ethnography, anthropology, ethnology, etc., but also the harder human sciences, such as contemporary psychology or aspects of philosophy. The idea is to intake a volume of insight and theory to better understand what it means to be a human being and a social being. What it means to use things and interact with the world. And take all that great insight there is, and theories that exist, and apply them to the business world, which is not an easy undertake.
There’s no grand theory and there’s very little cumulative value created across the disciplines. On top of that, there’s a lot of ambiguity within the disciplines. For example, philosophers still disagree about what it means “to be”. They still haven’t even solved that one. And sociologist still disagree about what is ‘social’, and linguists still argue whether language is a representation of something, or if it is something in and of itself. That’s really problematic, because if you happened to be educated in the soft sciences or human sciences you are not well-equipped to be clear about what you’re saying, to help people that don’t have your background to understand what it is you know.
So I think one of the things we are trying to do – I don’t know if we’ve done that yet – is to take a lot of those basic ideas and insights from the human sciences, and applying them to the world of business by making them more tangible, simple to understand, and normative. I also think that finding out human needs is actually quite simple, it’s not very difficult. Applying it to a business, that’s complex. Getting people to understand. Getting engineers to understand what it means. Getting leaders to see ideas in the same way. Having the R&D people and the marketing people to look at the same direction. Implementing things. That’s really hard!
Ville: It’s a complex world out there for sure! So why is this holistic, yet human-centric approach becoming now seemingly more relevant for business?
Mikkel: I feel that our contribution – and not only ours as this is something that’s happening all over the world and in all big companies I have been acquainted with – is to answer to the fatigue of “default problem-solving”. It’s a fatigue for mostly deductive methods to test out what you already think about the world with highly quantitative tools and extrapolating the future by looking in the past.
If you look at strategies in many companies, you think they are really sophisticated and that the strategy work has become nearly a science of its own. But when you take a closer look you’ll notice all the strategies are the same in these days. They all have the same three components, describing how the companies aim to defend the current market, attack emerging markets, and attract talent. And we can really start to sense a deep fatigue in what you learn in a business school and in the ideas that management is a science that can be applied to any person or company, that leadership is a matter of a technique, and that algorithms and big data can solve the business problems, and things like that.
So people have started to search for something else, and I think that for a while that led to competing by leaving those default ideas and exploring the intuitive blue-sky thinking and creative problem solving. You know, the idea that you go to an office and brainstorm and you’re creative and design-y. Design thinking is also part of that, I think. That has also disappointed the business in a big way. It’s now gotten to the point where people think “no, that kind of creativity is probably too shallow, sorry, that’s not useful for our business”. It’s fun, but it doesn’t really help us design the future or find the value that we talk about.
I guess there is currently this fatigue with both the default way of thinking, but also with creativity in business. And I think that’s the really interesting field; to be able to enlighten a company with new ways to think about its future, its strategy, its products, or prices and sales channels with the rich understanding the human sciences have to offer.
We don’t yet know what it exactly will eventually be, but we know ReD is part of the answer, although not the whole answer as there are many others too. I don’t know any big companies that are not fully engaged to understand who are the people they are serving, what are their needs and what’s their everyday life like. There’s a lot of activity there, but this is still a field in its infancy and I think it’s going to be a dominating paradigm in solving the business problems along with the quantitative algorithmic approach that will be there as a supplement. So for me, honestly, it’s a journey that has only started.
Ville: To make things slightly more tangible, could you provide an example of how understanding people should happen in practice to support new value creation and innovation?
Mikkel: Well, there are different levels to answer that question. To begin with, there’s this tradition of market research – where a lot of the money is currently spent – to understand customers, users, people and culture with very wrong methods that suggest people simply consists of a body, a soul, and a brain that all can be studied separately. An example would be scanning people’s brains, or to do surveys and focus groups, to understand human behavior. It’s the wrong way to understand people, and the reason it’s wrong is what philosophers call ontology, which means what does it mean to ‘be’.
We firmly buy into a different idea that comes from Martin Heidegger, which is called “being in the world”. This means people are nothing in themselves. They’re only something in the world that’s around. For example, dentists cannot be understood by scanning their brains. You have to understand their world. A dental world. A football player like Messi cannot be understood by asking him many questions, but you have to look at the culture and the world of football.
So, if this is the case, then the way to unlock the human reality ought to be understanding worlds instead of understanding individuals. So that’s the first kind of basic step that we buy into. That means that most of our techniques, methods and models are built around understanding worlds.
So when we work with a company, for example Adidas, that we work quite a lot with, for example a project on a running shoe, we try to reframe running as a ‘social phenomenon’ and map the ‘running world’ that consists of many things and many data points. One of them is the runner, but there are also others, like running groups, and running shops. There are symbols and there is history. There are artifacts, like clothing and shoes, and so on. All of these have to come into our analysis, as opposed to going out and only studying a runner. So that’s the first methodology, to always start from understanding a world.
The second level is more related to having what I would call ‘quality of data’. I don’t think you can come up with a great idea without great data. Actually, I don’t think that has ever happened in the world, and you need data even when you’re just brainstorming. And data can be good or not as good. And I think when it comes to understanding people, the type of data that can unlock an opportunity is what we call rich data that comes from spending long time in the world you are exploring and getting all kinds of data, including the very small details.
A well-known American anthropologist Clifford Geertz talked about “thin worlds” and “thick worlds” and used the blink of an eye as an example. If you just look at the properties of the blink, it’s basically muscle movement but there are many differences in how this blinking is felt and experienced. There are probably more than three million types of blinking. For example, a blink in a bar might have a certain meaning that’s totally different from the meaning of a blink on a street for a taxi driver. But it’s the same blink. So this contextual thick data can unlock the depth of the human nature and the meaning of things. And that data cannot be based on what people say, what they think, and what their perceptions are. It has to be based on first-person data, which could be observations, self-reporting, social connections you have, and the type of data is probably more video or films, photos, field-notes, literature, and words, language analysis, and things like that. At least for a while.
Many businesses struggle with capturing good quality data when they think “oh, all we have to do is just hire a bunch of anthropologists”, “all we have to do is just give people a video camera and now we can observe people”, or “now, we just need a couple of engineers doing it”. And that is a completely wrong way to approach it. This will just disappoint everyone at the end, and that’s the other side of the coin when this field has not really been defined yet and there’s a lot of bad things going on, I think.
The third thing is something we call nonlinear problem solving. Which would be, not only saying for example, okay people blink in this way and it means that. But understanding the patterns behind, something we call pattern recognition. It’s basically a mix of analytics and creativity at the same time. So the way we do it is that we start without hypotheses and then use our hunch to form the hypotheses from the patterns in the data. We find it, and we validate it. Once we have validated it, we quantify it. So it’s not that we only work with qualitative, we are very quantitative, but mostly in the later stages.
Nonlinear thinking is a bit like if you’re a writer and you’re writing a book. How do you find your story? Well it’s not a completely linear process, and it’s not a complete chaos. You’re working in a pretty disciplined manner, but sometimes you guess, and sometimes you validate. And that’s the method we try to use. It’s really difficult. It’s not brainstorming. It’s so far from brainstorming that you couldn’t imagine. It combines synthesis with analysis and has creation of something new in it.
What we’re looking for is this one idea. So if you take a study we were hired to take; for example a study of the world of running, we’re looking for the one idea, the one insight that can unlock that whole market – the one truth. I sometimes compare it to science, when I talk to scientists, they say that human sciences is not a science as such, and I say well “how did Darwin come up with the theory of evolution? Did he do it by posting hypothesis and then testing them doggedly? No he did not. He went out and studied animals.
That’s not so different from what we do. It’s just that businesses have forgotten to discover. They don’t discover anything anymore. When it comes to the basic methods or tools or frameworks we use – they are basically philosophical in a sense that they are based on a specific ontology and epistemology – which is being in the world as humans, and then understanding that world through rich data, and finally using non-linear problem-solving to put it all together.
Ville: That makes a lot of sense. I really like the analogy between the fuzzy front end of the scientific method and the practice of helping businesses to form new hypotheses of the world and to discover opportunities for new value creation. But what should happen after you’ve captured your big idea? How businesses should start working with it and who should be involved?
Mikkel: We talk a lot about value creation, but I really think there’s another concept there, which is value exploitation. Once you’ve had your big idea and created a business out of it, the question becomes how do you exploit the idea and then repeat that? It’s not really about creating value anymore, but it’s simply how do you scale things out. I think that’s something that Danish companies are notoriously bad at, and probably Swedish companies are really good at, if I think IKEA as an example. In IKEA’s case, you can think what part of the business is currently about value creation, as the business would actually create something new, compared to value exploitation, and I would say the ratio is probably five percent / ninety-five percent. So actually in the long run a lot of value doesn’t come directly from value creation but from exploitation.
When we look at value creation within business, I would say the most important types of people are people who do stuff, such as engineers, scientists, and product people, among others. I think those are the most important value creators because without them you have nothing. For example, I went to a company that does audiovisual products like speakers and TVs, and they were really all into branding and this whole symbolic marketing world, and they talk about their consumers, and about the naming and all these things with social marketing, and so on. Then I met one guy, and he was an engineer, and he’d been working on a speaker for nine years where actually the sound waves fold around you, and he was so excited about it, and he showed me that, and it was a completely new way of thinking about sound. And I’m thinking, that guy, he’s a true value creator, and those other people are just symbol analysts, just like me, I’m just analyzing symbols, I’m not really creating anything as such. Symbol analysts are of course needed to make sense of the world, and I think both disciplines are needed. But at the moment it seems that the symbol analysts have taken over the world, and I’m a little skeptical about that. I believe that great companies are the companies that make quality products and I really think that the real heroes are the people who craft, the craftsmen.
So I think the biggest enemy of value creation is the idea that management is science or a discipline you can learn in a business school, and that management is about managing people. I think that’s the biggest enemy because it creates a focus on things that don’t really matter. Like how do we brand ourselves, or how do we segment our customers, or how should we be a matrix organization, or divisional organization. Like when the focus is too much on the internal part of the company. It’s not value creative. The same thing can be said about most branding people. The moment branding becomes a construction in itself; it’s a bit like improvising over an improvisation. It becomes just words. And I don’t believe that it’s so valuable. But when these people work together, for example, if you make a guitar, and you have craftsmen or engineers that can actually change how a guitar works, and you have managers who know music and can lead you into this new world, and you have branding people who can put words, pictures and symbols around it; and when they all work together, that’s truly great.
Ville: It sounds like companies should empower the ‘craftsmen’ and that the role of managers is to help them to do their thing and the role of the so-called symbol analysts is to help the ‘craftsmen’ to understand what to craft and eventually translate the outcomes into symbols and language that people listen.
Mikkel: I agree, and that’s a very good way of thinking that these symbol analysts are at their best when they are facilitating others and supporting others. So I agree on that one, but I would guess if you would just let the greatest engineers loose, they’ll come up with stuff that they think is fine, such as mobile phones that you could take to shower, and so on. And that’s not very value creative, and even worse, when the technologists take over a project, it sometimes just becomes new technology, just for the sake of it. You also must have seen a lot of that when working in the tech sector.
Ville: To summarize, for me, the key takeaway is that the human and social sciences have something unique to offer for contemporary business that can’t necessarily be reduced under the disciplines of design or branding. That something seems to include the ability to help the companies to truly understand the world in a new way by capturing good quality data about people and their worlds and using the methods of nonlinear problem solving to help companies to discover, and finally to serve as a facilitator between the disciplines of design, business, marketing, engineering and others to make sure companies can create things and new worlds that are valuable for people.
Mikkel: A lot of what you say makes sense. I think we have to get a little bit out of the picture and set the stage for the right heroes. We also have to be very clear about what is that people like us can do. And I don’t think it has been fully defined yet. We’re trying it out with something we call client interaction models, asking when should we be there, and when we shouldn’t. Or when we are the heroes, and when others should be. Those are some of the practical questions we are looking for answers when charting the future value creation driven by human sciences.
Ville: Many thanks Mikkel!
Originally published in Wevolves site