Reinventing Business

Heidegger's Marketing Secrets: What German Philosophers Know About Selling TVs


Christian Madsbjerg (left) and Mikkel Rasmussen

Photograph by Dustin Aksland for Bloomberg Businessweek

Christian Madsbjerg (left) and Mikkel Rasmussen

When the German philosopher Hans-Georg Gadamer died in 2002, at the age of 102, he was unaware of the impact he would posthumously have on mobile electronics, distilled beverages, and personal grooming, among other consumer-product categories. A giant in the field of phenomenology, Gadamer examined how human beings perceive and make sense of the world around them. He was celebrated for adapting hermeneutics—interpretive methods originally developed by Biblical scholars—to the study of human perception, but over his long career he also wrote about music, visual art, politics, medicine, and myriad other topics. He did leave some questions unanswered, however, such as: How can a low-end electronics company create products that wealthy consumers crave? And: What do women want in athletic gear?

According to two Danish strategy consultants, that was a lost opportunity. Gadamer’s hermeneutics aren’t only useful for understanding existence, argue Christian Madsbjerg and Mikkel Rasmussen; they offer insight into commercial questions as well. The two believe that Gadamer, his mentor, Martin Heidegger, French phenomenologist Maurice Merleau-Ponty, and any number of scholars considered abstruse even in the ivory tower can help companies solve some of their most complicated business challenges. To bring this form of problem-solving to the General Electrics (GE) and Lululemons (LULU) of the world, Madsbjerg and Rasmussen built a consulting firm, Red Associates, around the Monty Python-like idea that corporate leaders need to channel their inner Heidegger.

“It’s applying very theoretical constructs to very concrete situations,” says Madsbjerg, a cultural theorist with the air of a precocious teen. “I think that’s the ultimate skill that’s here. I don’t think that the people that designed theories of identity ever, ever thought about toothbrushing, but it’s very, very helpful.”

Mikkel RasmussenDustin Aksland for Bloomberg BusinessweekMikkel Rasmussen

“I’m probably more practical. I’m more interested in how you use this,” adds Rasmussen, a cheerfully argumentative economist. “Christian is very much into Heidegger, and I understand why, because once you get down to what it is he’s really trying to say, it is really inspirational. It gives you a completely new idea about ‘what is it I do, and how do I study something?’ ”

Since opening its doors in Copenhagen a decade ago, Red has signed up some of the biggest companies in the world, including Intel (INTC), Novo Nordisk (NVO), and Beiersdorf (BEI:GR) (makers of Nivea skin-care products). Samsung Electronics relied on Red’s research in designing what would become the world’s best-selling televisions. Red helped Adidas (ADS:GR) unshackle itself from its focus on competitive sports so it could capture much of the exploding fitness and sports-lifestyle market. With the firm’s advice, Pernod Ricard (RI:FP) figured out how to sell more vodka in a world where fewer people are drinking in bars.

“The great thing about Red is that they’re supersmart,” says Mike Milley, the director of Samsung’s lifestyle research lab. “They are an unparalleled deliverer of that well-framed idea that’s going to help tell the story of what we need to do.”

Red’s 70 consultants, hired mostly out of graduate programs in sociology, philosophy, political science, history, and anthropology, conduct a form of ethnography, embedding themselves in the lives of consumers the way Margaret Mead did among Samoans. They interview their subjects and the people around them, itemizing the contents of their kitchens and dressers while photographing and videotaping, and accompany them as they prepare a meal, or commute to work, or primp for a night out. Then they sift the resulting information for weeks, even months, looking for connections and telltale behaviors.

Several years ago, Lego turned to the firm. In an attempt to compete against the immediate gratification of PlayStations, the company was marketing easier Lego sets, action figure lines, and jewelry kits that weren’t really about building at all. Yet Red’s research showed that, while kids love video games, many also love things that reward time and patience and, importantly, allow them to show off their hard-earned skills. In an example that has become Lego lore, Red found an 11-year-old German boy whose most prized possession was a pair of skateboarding shoes worn down in such a way that it was obvious to his fellow skateboarders that he had mastered a specific trick.

Those were the kids Lego should be courting, Red argued, and they didn’t want easy Lego sets, they wanted hard ones. The insight helped persuade the company to jettison much of its product line, part of a larger refocusing that has put it at the top of the toy industry.

In the age of big data, Red practices what one might call little data: Rather than using algorithms to analyze oceans of numbers, it uses small data sets and subjective information parsed by smart, highly educated fellow human beings. Now, having honed their method during hundreds of client projects, Madsbjerg and Rasmussen have written a book, The Moment of Clarity, a slim volume about the power of the “human sciences.”

“I’m not interested in what’s useful or convenient,” says Rasmussen. “I’m interested in what’s meaningful”

“Companies, other consultants, they’re often trying to figure out what’s useful or convenient for people,” says Rasmussen. “I’m not interested in what’s useful or convenient. I’m interested in what’s meaningful.” The last decade has seen a profusion of firms that offer similar services—qualitative research is one term for it; corporate anthropology or consumer-centric strategy are others—and companies such as Procter & Gamble (PG), Microsoft (MSFT), and Intel today have in-house anthropologists and sociologists. The best-known of the innovation consultancies is Ideo, legendary for its work with Apple (AAPL).

Most of these firms were founded by product designers, and the focus, ultimately, is on the product. Red’s human scientists claim to be doing something at once more rigorous and more subtle. They take questions about sales figures and product lines and reconfigure them into questions about “worlds,” the context in which people unthinkingly live their everyday lives. This, they argue, is what Heidegger would have done. The idea is that examining the beliefs and unconscious biases that people have about modernity, or masculinity, or domesticity, or death will eventually yield profitable insights for food and beverage companies, or kitchen appliance makers, or financial advisers peddling annuities. “One of the attributes that Christian and Mikkel bring—especially Christian—is an intense desire for social science to count in business. It’s almost an ethical or moral imperative,” says Tony Salvador, director of Intel’s social research lab. “There are other people like this. He happens to be like this and also have a firm.”
 
 
On a snowy Wednesday morning in early February, a team of Red ethnographers is spread around a long table, thinking about food. The firm’s New York office is near the southern tip of Manhattan, high up in the old Standard Oil Building on what was once John D. Rockefeller’s floor. Far below, ships and barges steam down the Hudson into the Upper New York Bay; the famed Charging Bull statue is right outside the building. When Red moved in, Madsbjerg had the space painted entirely in black and white. “I don’t like colors much,” he says, almost apologetically. He’s 39, pale and thin, and on most days the red date numeral on his white-faced Rolex is the only splash of color on his person. He has a catered lunch from a Michelin-starred restaurant brought in for the employees every day.

The five people around the table are all 30 or younger, and between them they are fluent in eight languages. The client, one of the world’s best-known food and beverage companies (Red is not allowed to reveal its name and is sensitive about divulging details that would hint at it), came to Red with concerns about one of its product lines. The line is selling well, but the client sees consumer attitudes about food changing and is apprehensive about what that means for the product.

Four Red ethnographers have just returned from two weeks in the field, one pair in Latin America, the other in Europe. Each has studied seven households, augmenting their work by interviews with store owners, journalists, food experts, and activists. Earlier, the team’s leader, along with a Red partner, spent three weeks with the client company interviewing people in the marketing and research and development departments. They perform a sort of comparative ethnography, studying the client company and its customers—two tribes whose language and belief systems aren’t always intelligible to each other.

The meeting is the second day of the six weeks that the team will spend analyzing its field data and shaping the findings into recommendations—Red charges $250,000 to $300,000 a month for its services. A management consulting firm such as McKinsey or Bain typically charges more than twice that. The ethnographers take turns introducing the households they studied: a young accountant and her family, a civil engineer who used to be a chef, a hipster filmmaker. The process has the feel of a litigator’s argument before a judge—the discussion ranges widely, but there’s a specialized lexicon, an agreed-upon structure, and frequent interruptions.

Christian MadsbjergDustin Aksland for Bloomberg BusinessweekChristian Madsbjerg

“There’s a lot of stuff you just said that’s juicy,” one of them, Morgan Ramsey-Elliot, says to another, Sandra Cariglio, stopping her as she describes the layout of a particular household larder. Photos of one subject’s apartment trigger a discussion of why someone might splurge on high-end furniture while scrimping on food. It’s taken as a given that the subjects’ descriptions of their own behavior will only sometimes match up with what they actually do, and whenever the group unearths an example, they take note. “We need to pause on that because it is weird—or interesting, to be more polite,” says Charlie Hill, the partner in charge of the team. A stubbly and sloe-eyed Brit, he begins peppering Ramsey-Elliot with questions about the sometimes contradictory dieting practices of one subject.

As the presentations go on, everyone scribbles ideas on Post-its and slaps them down on the table. From there the notes will migrate onto large foam boards leaning against the wall. On some projects, Red also uses a data analysis computer program called Atlas.ti to help spot patterns. The team will come up with a long list of qualities and ideas they’re interested in—authenticity, say, or luxury, or freedom. Then coders in the Copenhagen office will go through the interview transcripts and accompanying video clips and photographs and tag anything that fits. That allows researchers to find everything connected to a particular concept and cross-reference it.

“We’re looking for tensions, gaps—‘asymmetries’ is a word Christian uses a lot,” says Hill, “places where things don’t align.” Places, especially, where the unexamined assumptions of the client company and the unexamined habits of the consumer don’t match up. “That’s the easiest way I have of explaining to my teams where an insight comes from,” he says.

Heidegger doesn’t come up during the pattern-recognition sessions, and it may be that, at least in part, the philosophers and anthropologists Madsbjerg talks about serve more as a branding mechanism, signifying intellectual rigor the way Warren Buffett’s modest Omaha home signifies prudence. In an increasingly crowded marketplace of corporate anthropology firms, Red’s pitch is that it is the company that can do the smartest stuff with the information it gathers.

“They ask the right dumb question,” says Adidas’s Carnes. “The one no one else has asked.”

Red’s clients seem convinced. “They have this ability to take even existing market data and decode it in a different way,” says James Carnes, the global creative director for sport performance at Adidas. “At the core of what they do well is that they ask the right dumb question, the one no one else has asked.” Adidas, for example, for decades defined being a sporting-goods company as providing equipment to competitive athletes. The approach served it well as it expanded from a German shoemaker into a global company. By the early 2000s, however, it meant that “we would create products for archery, because archery is in the Olympics,” says Carnes, “and then you have 100 million women on the planet dedicated to yoga whom we were ignoring.”

“I remember at one point we were spending all this time working on Olympics sprint-bike equipment, and they came in and said they found something: The number of 16-year-olds who globally watched more than one hour of the Olympics was basically zero,” he says. Teenagers were and are a hugely important demographic for the company. “This event that we consider to be the epicenter of sports glory was not being watched by the target,” Carnes says. What Red helped Adidas do, in his telling, is realize the ways that what felt like rational decisions to its executives were stemming from a set of assumptions of which they weren’t aware.
 
 
Madsbjerg grew up on Bornholm, an island in the Baltic Sea. His parents were militant communists, and his childhood was filled with fly-fishing and Marxist indoctrination. At the University of Copenhagen he studied philosophy and political science. He earned a master’s degree in cultural theory at the University of London, where he wrote his thesis on the color white. In his early twenties, he fell into brand consulting from journalism, and in 2003 he was hired to run a leading Scandinavian design firm. Rasmussen, eight years older and running a think tank for the Danish government, was brought in to start an innovation consulting practice. Within two years the pair and two other partners had bought out the practice and set off on their own. The official name of the new firm was R&D Associates, but the Korean executives at Samsung, an early client, didn’t know what to do with the ampersand and just called it “Red.”

In the mid-2000s, Samsung wanted to figure out how to sell high-end televisions to design-conscious Europeans. At the time, Samsung TVs, like those made by Sony (SNE), Sharp, and Panasonic, were sold as high-performance machines. The packaging loudly showcased screen size, resolution, and other technical specs, and the TVs had what one Red respondent described as a “very Star Wars” aesthetic of bright indicator lights and functional black-and-gray plastic. They were expensive, and Samsung assumed people would want to show them off.

Talking to their Scandinavian subjects, Red’s ethnologists found the idea of camouflage coming up again and again. People didn’t want their TVs to dominate their living rooms, and they didn’t want them to be visible when they were turned off, which was much of the time. One subject had jerry-rigged a system so he could hide his entertainment center in a cabinet and the remote control would work even when the doors were closed. Another had his television in a corner, like a framed poster he hadn’t gotten around to hanging up.

Red also found that the final decision on a TV purchase was usually made by the woman of the house. “When women decide, they see it as furniture,” Madsbjerg says. “What’s important to them in the situation is that ‘it should fit into my home, and it should fit as much as my couch and my books and whatever I have in my home.’ ” This idea, that TVs are furniture, not electronics, proved a breakthrough, guiding a series of design decisions at Samsung—a move toward subtler lighting and more tactile finishes that would make televisions blend in rather than stick out. The company today enjoys a reputation for elegant design and is the world’s largest TV maker. It also remains a voracious consumer of Red research.

With their book, Madsbjerg and Rasmussen are betting there’s a wider audience for their ideas beyond corporate design and marketing departments. Madsbjerg says he’s been talking to universities about offering an applied humanities degree. It’s unclear what it would mean for Red, though, if its trademark “sensemaking” became a method, not just a bespoke service. As an institution it has benefited from its aura of intellectual exoticism.

For the time being, the firm’s clients keep coming back. The chairman of Red’s board, Bill Hoover, spent three decades at McKinsey, rising to become a senior director at the firm. “I am constantly amazed at the kind of insights these guys get,” he says, “and it’s often not really clear where the insight came from. I’ve seen Red in meetings with hard-core board members who’ve dealt with the Big Three consulting firms their whole lives who are just blown away.”

It’s safe to say that some of Madsbjerg’s favorite thinkers would also be blown away at the uses he has found for their ideas. Ernesto Laclau is a post-Marxist political theorist whose work Madsbjerg has translated into Danish. “He has a very, very good theory of change, how change happens in organizations,” Madsbjerg says. That theory is laid out in a book called Hegemony and Socialist Strategy. Madsbjerg uses it all the time. It’s going to be particularly useful, he expects, to the project Red is running for the secretive global food company.

Bennett_190
Bennett is a staff writer for Bloomberg Businessweek in New York.

Reviving Keynes
LIMITED-TIME OFFER SUBSCRIBE NOW

Companies Mentioned

  • GE
    (General Electric Co)
    • $25.67 USD
    • 0.01
    • 0.04%
  • LULU
    (lululemon athletica Inc)
    • $41.68 USD
    • 0.50
    • 1.2%
Market data is delayed at least 15 minutes.

Sponsored Links

Buy a link now!

 
blog comments powered by Disqus