The soul of a business is the story, not the spreadsheets: Rishad Tobaccowala7 min read . Updated: 10 Jan 2020, 11:01 PM IST
- The gradual decline in advertising, and resultant need for companies to focus on marketing and business transformation
- The good part of social media is you get connected, the semi-good part is you curate your life, the bad part is you lose focus and relationships
Adjudged marketing innovator by Time magazine and business innovator by BusinessWeek, Rishad Tobaccowala, chief growth officer at Publicis Groupe, has written his first book, Restoring The Soul Of Business: Staying Human In The Age Of Data. Published by Harper Collins, it will be released in the US on 28 January. In New Delhi for its India launch, the Chicago-based advertising veteran spoke about the inspiration behind the book, the importance of balance between creativity and data, and the decline in advertising. Edited excerpts from an interview:
What inspired you to write this book?
There were two reasons. One was external demand, and the other was the internal belief that there was a right time to write it. As I went around the world either helping clients or speaking at various events, people were surprised that I had never written a book. I was told I had an interesting perspective on various topics. They wanted me to share it more broadly. Also, whether it was in the US, Europe, India or China, people were asking me the same 12 questions such as how do you extract meaning from data? How do you upgrade your mental operating system? Or, how do you manage change?
That was the external reason. The internal reason was, because of the rise of technology and data, a great amount of wealth was being created by companies like Facebook, Amazon and Apple, among others. But more companies were focusing on the left brain part of work, on math. The focus was on what I call the spreadsheet (profit, losses, productivity), and not enough on the story of the company which is the culture, emotion and its people. Because of this, the business was getting hurt. The society was getting hurt. Today, social media companies are highly profitable. From a consumer perspective they are giving great products for free. But for a citizen, there is a negative impact.
Their platforms are feeding polarization and hate. Also, when you start focusing on the numbers, you become very short-term oriented. A consulting firm got into trouble as people said they represented drug companies and were helping them sell addictive drugs. So people asked, where are the ethics and the values of a company? So I said that the soul of the business is the story and not just the spreadsheet. A successful company has to combine data, technology and emotion.
Would you say that data has helped build companies like Amazon and Facebook?
The success of many of these companies has been built on three big factors: First, they were innovators and pioneers. These were ideas-driven companies and not data-driven companies. The iPod was an idea. iPhone was an idea. Social network in Facebook was an idea. Second, their business models were built on a combination of data and networks. So they use data and, once they have a certain amount of scale, it’s very hard to beat them. If you go for search and you keep going to Google, Google has more information, and it can search better. If all your friends are on Facebook, WhatsApp or Instagram, what are you going to do anywhere else? That’s called the network effect. Third, not Apple, but all the other companies are giving really amazing value for money. Google is free. Facebook is free. Amazon gives low prices and a lot of bundling. Consumers want things fast, good and cheap. These are innovative companies with ideas, that is, the right brain. Then they have data and networks, that is, the left. So they are not just data-driven companies. That is what I am trying to remind people.
Can you go wrong with data?
You can go very wrong. Although you cannot run a business without it, there are a lot of questions that data cannot answer about the culture of your company, what your talent feels about the company, or what your customers feel about the company.
So data can lead you to the wrong conclusions if it is outdated. Or, people sometimes don’t behave the way data tells you that they behave. People choose with their heart and then use numbers to justify what they just did. If we did not choose with our hearts and we chose only with the numbers, then there would be no luxury brands, which are some of the most powerful companies. If only the numerics work, then there should be no Taj or Oberoi. No BMWs or Mercedes. When people tell me it’s all data, I say most decisions are made through the heart.
Are companies relying less on market visits for insights and more on online data?
They are doing both. The ability to listen to consumers has changed dramatically. In the past, you could carry out a few market visits, (analyse) a few focus groups. Now you have the ability to look at people’s social and search behaviour, and begin to get interesting information which you didn’t have before. I have invested in an interesting company called QualSights. They do qualitative at scale. They basically tell people to put on the video on their phone while they shop. They collect thousands of videos all over the world, and then use AI and data to show patterns. Now you can do this globally, quickly, in people’s homes and other places because of technology.
How has the consumer changed in the age of social media?
On the positive side, they are connected with more people than they have ever been before. It might be a light form of connection. I remain connected to my class of 1974 because we have a Whats-App group. I can reach out to colleagues all over the world.
The semi-good part is, we start curating our lives. Sometimes we start thinking of what we do not because of what we want to do but because of how it will look on social media. For instance, in the US a lot of people are now renting clothes because they don’t want to be seen in the same clothes on Instagram. So you have businesses like Rent the Runway (a subscription fashion service for women to rent designer clothes) come up.
The bad side is that you live in that world and forget the world you are currently living in. Often people around a table are all looking at their phones. The good part of social media is you get connected, the semi-good part is you curate your life, the bad part is you lose focus, connection and relationships.
How will things change for companies with data privacy becoming a big issue globally?
Privacy will be a huge issue and it will, at some stage, be settled by the government. It’s very hard today to be anonymous. But different governments have different perspectives on this. The Chinese government doesn’t care about privacy. They are using a lot of facial recognition and trying to track everybody. In Germany they are very privacy oriented. So the way data is controlled will differ from country to country.
You once mentioned that advertising will decline. What will replace it?
I was referring to the US market. Markets like India and others are still healthy for both print and TV. In the US, the opportunity to advertise to people will decline 20-25% in the next five years which is pretty significant. Many newspapers in America have gone out of business. Even for a big newspaper like New York Times, there are more online readers than there are for its print edition. In a newspaper format, everyone will see all your ads. In the digital format there are few opportunities to show people ads. You can’t show too many ads digitally because people will get worked up. They don’t click on them, they stop going to the site or use ad blockers. Also, now more and more people are spending time in an ad-free environment like Netflix, HBO and Amazon Prime. So the opportunity to show ads has declined significantly.
Besides, who are you exposing your ad to? If you are relatively wealthy you can afford all these subscription services. If you are less wealthy and can’t afford these services, then you are also not in the market for some products. If you are selling a car or a travel holiday, then these are not the people who can afford that. So the people I want to advertise for are not available. India may be different now, but it is moving in that direction.
The future is not just about advertising but connecting in new ways with people. So our focus is on marketing transformation and business transformation, which is why we bought companies like Epsilon (a first-party data company) and Sapient which is about digital and technology.