The Hindu Business Line : Ready for RDE?

One of the many ‘elephant jokes’ in Wikipedia reads: “Q: How do you shoot a blue elephant? A: With a blue elephant gun.” Crude, because it is always a better idea to shoot with a camera, rather than a gun!

Next question, “How do you sell blue elephants?” To this, you can find an answer in Selling Blue Elephants ( www.pearsoned.co.in) by Howard Moskowitz and Alex Gofman. The book would tell you ‘how to make great products that people want before they even know they want them.’ For instance, suppose you got an assignment to launch a new credit card for your bank, as begins a suggestion in www.sellingblueelephants.com, “how do you make consumers pick your offer out of hundreds and hundreds of look-alikes?”

Try out RDE (Rule Developing Experimentation), the authors advise. RDE is “a systematised solution-oriented business process of experimentation that designs, tests, and modifies alternative ideas, packages, products, or services in a disciplined way so that the developer and marketer discover what appeals to the customer, even if the customer can’t articulate the need, much less the solution!” Seven ‘basic RDE steps’ are explained in http://en.wikipedia.org. The first step is to identify groups or classes of features that constitute the target product. “For example, in the case of a credit card offer, the variables could be APRs (annual percentage rates), reward options, and so on. Every such variable (also called a ‘silo’ or a ‘bucket’ of ideas) comprises several APRs, rewards options and such.” The other steps include mixing and matching, showing prototypes to consumers, analysing results using regression, optimising, identifying ‘naturally occurring attitudinal segments of the population that show similar patterns of the utilities,’ and applying the generated rules ‘to create new products, services, offerings, and so on.’

What exactly is the etymology of RDE? Does ‘rule developing’ refer to a systematic process of working on new strategies evolved out of the existing parameters in a particular company’s marketing methods? Could it also mean casting aside well-proven theories and practices that are no longer relevant and conscientiously evolving a new code of operations based on new principles/moves? “RDE had been used by many companies like HP, Microsoft, Citibank, Ford, and AT&T before we formalised it into a cohesive approach,” say Moskowitz and Gofman, during the course of a recent e-mail interaction with Business Line. RDE’s origin is rooted in three seemingly unrelated areas, they explain.

“The first root is in experimental psychology from which RDE borrows the idea of the linkage between perception and behaviour (so called ‘stimulus-response’ paradigm). This approach allows for the discoveries of patterns or rules that describe this correlation.” The second origin of RDE, the authors trace to the driving power of business, which demands newer, better and different products in an ever-shorter time period. “Some geniuses can just guess correctly about what to do to develop a new product, service, message, and so on. The other 99 per cent of us need rules that will guide us in the process.” And the last source of RDE, according to Moskowitz and Gofman, is social science, which utilises adaptive experimentation (AE) for large-scale lengthy experiments with eco-systems and social issues. “Unlike AE, RDE is very fast (just a few days, sometimes, hours), inexpensive, easy to set up and execute and, most importantly, creates rules at the end that guide future development.”

Excerpts from the interview:

The examples drawn from Campbell’s, MasterCard, Hewlett-Packard and Maxwell House are highly inspiring. Are there any case studies pertaining to the Indian market place?

It is not coincidental that Moskowitz is currently in Asia opening ‘Blue Elephants Centres’ in China (one in Shanghai and one in Beijing). We clearly see and strongly believe that Asia – India and China particularly – are prime areas for RDE explosion. First, the Asian industry needs to develop new and competitive products for export to many diverse countries and be able to promote and sell them internally. And it has to be done fast and efficiently. Second, you want to stand out from the crowd and beat the competition. Third, Asia wants to know the algebra of its customers’ mind not only in your countries but in other places as well. Fourth, you do not want to spend a fortune to receive an answer, especially if you already know it, which is common for many legacy methods. With RDE, you can do fast, inexpensive and highly actionable RDE studies in a foreign country without ever leaving your office in Bangalore and paying exuberant fees for a custom consulting company in the West.

Many new products now rely on positioning related to experiences rather than just technical characteristics. HP was burned by missing this point in the early 2000s. Now it has discovered RDE, which is used for virtually every aspect of its operations.

For the majority of Asian companies, until now, this area was a domain of highly expensive Western advertising agencies and designers guiding the Asian manufacturers in the mysteries of the unforgiving bohemian world. RDE has levelled the playing field forever. With this method, one can find out what drives consumers interests anywhere around the world, whether it is a set of new features for a product, its appearance or packaging, advertisement or promotion, and so on. It is even easy to dissect competitive products and advertising and discover what works and what does not. Sometimes, RDE allows astute users to know more about their competitors than they know themselves!

And the applications for political and social arenas are so enormous that they are difficult even to grasp! With its huge diversity of population, political parties and interests, India is primed to take full advantage of RDE!

Can we finally conclude that what ultimately works is a revolutionary and newborn amalgam of marketing and selling techniques mounted on profound research?

The word ‘revolutionary’ often means something not yet fully understood and discovered or developed. This is not the case with RDE. It is quite simple to understand and easily accessible with readily available tools like Ideamap.NET. Although the scientific foundation of the approach might be daunting for many people without a PhD in statistics, there are no specific mathematical skills needed to use it. One does not need to know how a transmission works to drive a car. RDE has been successfully applied to such diverse areas as new product development, advertisements, promotions, package design, political elections (platform optimisation), crisis communications, stock market analysis and the like.

The new applications keep ‘popping up’ virtually daily, sometimes even to our own surprise. In most cases, RDE produces much better and more actionable results based on large numbers of consumers surveyed in a shorter time than focus groups or many other ‘legacy’ methods while being comparably or lower priced. If you ask them, people do not necessarily know or articulate what they want. But if you show several options created for them by RDE, they have no problem choosing what they prefer and what they don’t.

Many legacy methods such as focus groups are becoming prohibitively expensive and are not feasible for Asian companies looking into multiple global markets. These methods never produce conclusive results because they are not quantitative. RDE solves these problems by being easily scalable and deployable on a global basis.

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