Ross Honeywill

The NEO wave began building in 1991 with the advent of the Information Age. Coincidentally that was when I found them.

It all began on a windy day in March of that year when I stepped onto a bleak construction site in Melbourne, Australia. I was a forty-two year-old management consultant with a background in psychology and social history; consumer marketing and the arts; and here I was walking warily across reinforcing mesh and talking construction schedules with the project director.

Southgate, slowly emerging out of the ground was to be a mix of residential, office, retail and community facilities. As we walked the site, project director Kim Edwards talked of the terrible recession; about the bank that had taken over when the original developer was crushed under the dead weight of unserviceable debt; and about his plans to deliver the project. He wanted, he said, a more innovative approach to the potential market. He had all the demographic and socio-geographic data money could buy, but fresh from an executive MBA course, he believed there had to be a better way; a richer way of defining who would eat, shop, work and live at Southgate. And a smarter way of determining what it was that would bring them here. Like all good MBAs he may not have had the answer but he knew what to ask.

A month later, in the makeshift site office, I launched into a presentation on a then imaginary group who would eventually be known more scientifically as NEOs. I told Edwards and his colleagues about the importance of bringing psychology and economics together to solve his riddle. We need a human solution, I told the bemused executives. These were real people, I said; “real people who aspire to quality and authenticity; who care about provenance and heritage; who hate shopping malls and institutions; who like sport but love the arts; and who are very active through their behaviour and with their money.” This is who we should have writ large on the walls of our brains as we make this project a reality. I told them, “This is a rare chance to create something on a human scale that people will just discover; something that creates a new neighbourhood; something that is determinedly anti-institution.”

After a thoughtful pause, Edwards declared, “This is what I’ve been looking for. You’re hired.”

From that nascent step, the study of NEOs became my life. I had long been fascinated by what seemed to be an inexplicable phenomenon: there appeared to be two different types of people walking the streets. Of course it was more sophisticated than that, but all the complex behaviours and attitudes around me appeared to coalesce into two distinct types.

As I began work on the Southgate project in 1991, my observations of the two different types set the groundwork for what would come; and they are as current today as they were then:

One type is comfortable with rules and happy with authority, preferring someone else to make the big decisions for them. This attracts them to the armed forces, the police force, the priesthood, the public service and large corporate employers with documented rules of behaviour. Happy when there was no choice of phone service provider, when a simple flick of the switch made the lights come on without any thought being given to which energy retailer was sending the monthly bills, they dislike too many choices. They are also reticent about spending money, but love a deal or a bargain.

(When discussing this with acquaintances I always got an enthusiastic response, “That’s right. My uncle is exactly like that. He wanted to buy a new television so he found the basic model and then spent 3 months negotiating with competing retailers to get the lowest possible price. He’s well-off: he could have bought 10 TVs, but this is how he approaches everything.”)

Very conservative in their social attitudes, this group prefers right wing politics and organised religion, and believes a good stint in the military would solve homosexuality, youth violence, the women’s movement, drug taking, binge drinking and other social scourges.

Believing more in luck than self-determination, for this group the thrill of the moment always trumps the consequences: so they are more likely to gamble, over-eat and take uncalculated risks.

Happy with organised holidays and coach tours where they can follow the leader, they are happiest with predictable experiences like the consistency of service and food in a McDonald’s. They find comfort in the certainty of crowds and majority decisions; are slower to adopt new technology and distrust giving credit card details to anyone. Learning new things seems unimportant and probably an unnecessary burden; and they can’t understand why anyone would pay to have a car washed or to have a stranger clean their house. The older members of this group long for the music of the past, they wear the word retro like a badge of honour, celebrate anniversaries of failures and successes in battle and frequently intone, ‘if only life was like it was in the good old days.’

Features and functionality seem to rule their logical lives, with design or emotion coming last. “Why would you pay for an architect to design a house when you can get a perfectly functional house built by a project builder? You can see what you’re going to get and the price is set – no nasty surprises there!”

This group is what I now call Traditionals. Fifty per cent of the adult population, they define themselves by their jobs and their conspicuous, if erratic, consumption. This is the bedrock of the consumer culture and nothing will shift them from their devotion to big brands, big malls, status and the conspicuous consumption of products that tell them, and everyone else, who they are.

Then, back in 1991, there was the other type…

This group dislike rules and formality and are deeply unhappy with a faceless authority figure making any decisions on their behalf. When visiting the doctor, they want a diagnosis and a clear explanation of the prognosis. They then research it online and probably seek a second opinion. With what is known in psychology terms as a ‘high interior locus of control’, they are certain success in life is more to do with planning and self-determination than a matter of luck.

They find it incomprehensible why anyone would join the armed forces, the police force or the public service; and want a creative life filled with imaginative possibility. Cherishing a choice of telephone service provider or energy company, they demand options and choices; insisting on being the architects of their own lives. They want the best price – everyone wants the best price – but while price for a Traditional is everything, for this group price is just the cost of falling in love with a product or an experience that stands for something beyond its fundamental function.

They are very progressive in their social attitudes, preferring socially democratic politics; and spirituality to organised religion.

Where Traditionals are happy with organised holidays, this group wants to discover their own experiences: to use Lonely Planet for milestones perhaps, but to strike out on the path less travelled. Quick to adopt new technology, they are happy to give their credit card details over the phone. They are the first to buy a new mobile phone or computer, but only when it helps control their busy lives. Ambitious and well educated, they are confident that their own skills and talents will make them whatever they want to be; as long as it isn’t boring.

Lovers of design, they will happily employ an architect to create a distinctive, creative and imaginative place to nest. They are devoted to creating and sharing cultural capital.

This is the group I now call NEOs. Twenty-four per cent of the adult population, they define themselves by what they stand for and believe in. This is the vanguard of the anti-monoculture movement; the millions who would rather think small than have an institution think big on their behalf.

In 1991, these two different types were just observational fascinations. Over the two decades since then science has replaced observation and intuition, as Traditionals and NEOs became established social realities. Today, with data from 900,000 respondents across three continents, there is forensic proof that NEOs and the balance of the population known as Evolving-NEOs walk the streets, vote governments in and out, and redefine the changing social fabric every day of their lives. They were always there; they’d just been waiting for someone to identify them, to hold a mirror up to them. And for the Information Age to give them their own voice.

A year into the Southgate engagement, construction was progressing well and we turned our minds to reaching and talking to a socially progressive audience. The original developer had commissioned a corporate branding exercise that delivered a logo, a ‘corporate positioning’, a design style-manual, brochures, signage and grand ‘entry statements’ at each end of the site. Believing ‘our people’ hated malls I immediately binned the lot. Logos were banned. So was anything that hinted at a corporate intent. Surely it was obvious that this was a huge development. Why did we need to shout about corporate values?  Southgate was going to become a whispered secret to those who cared about finding local experiences; individual treasures in a new riverfront neighbourhood.

On a disused wall in the site office I painted two boxes: one, for the traditional, socially conservative group, contained the words ‘shopping mall’ and the other was headed Southgate. I listed the characteristics of a shopping mall in the box on the left and then in the Southgate box listed the counterpoints. Logo in one box became ‘no logo’ in the other. Convenience became ‘discovery’. Advertising became story-telling. Chain retail brands became innovative one-off local stores. Long-term rental leases became short-term frequent change and reinvention. Corporate signage became weird installation art. And the grand launch event became no event at all: after all, neighbourhoods didn’t have grand openings; they were just there when we turned the corner.

Two activities are worth reporting. The first is the advertising campaign. I knew our NEOs weren’t automatically attracted by corporate and brand image advertising, and that we needed to let them in on the secret that something was brewing down by the river, so in 1991 I developed a job ad campaign with beautifully designed long-copy ads filled with words and evocative illustrations inviting readers to apply for the best job in the world. No logo, so readers had to read the copy to have any idea what this ad was about. The successful applicant was to be sent to Paris, London and New York to take photos and send stories back to inspire us all. We had thousands of entries and a young psychologist won. Privately I preferred the application that came in second. That hopeful applicant said, “I write well. I photograph beautifully. I’m efficient and organised. And my wife says I can go.” That was my pick. The campaign attracted huge media coverage and the socially aware in Melbourne awoke to the promise of Southgate.

The second activity worth reporting was the launch. The non-launch, that is. Timing and place are everything, and the ‘Southgate arts & leisure precinct’ opened to the public just before the 1992 Melbourne Arts Festival. Southgate was positioned adjacent to the Victorian Arts Centre, so I organised a River Festival as part of the arts festival with wonderful performances on the river, in and around Southgate. And tens of thousands of arts loving residents turned the corner and just discovered this new neighbourhood. Boundaries, both physical and metaphorical, were blurred and visitors didn’t know where the arts precinct finished and this new neighbourhood started.

I had found the group that would come to be called NEOs. And they found Southgate. In its first two years the new neighbourhood was a great commercial and cultural success. Since then it has fallen into the hands of Traditional owners and managers and sadly become just like the malls I fought so strongly against. The binned logo has even been resurrected, perhaps as a symbol of surrender.

The NEO journey continued. By the mid nineties the international accounting and management consulting firm KPMG acquired a research company I had founded, and the NEO / Traditional social segments were gaining an evidence base across the world. A decade later, I found myself in Britain.

London’s Physic Garden, founded in the 17^th century as the Apothecaries’ Garden, was positively medicinal as I strolled its pathways. Having arrived from Melbourne that morning, I was determined to stay awake until nightfall, and thought a wander through the exquisite walled garden in busy Chelsea was just the prescription.

It was May 2005 and I was in London to meet with Sir Richard Heygate, much admired for the impressive role he played at IBM developing the first ATM and for his 20 years as a partner of the strategy-consulting firm, McKinsey & Company.

In addition to my Physic Gardens enthusiasm I was kept awake on that Sunday night by a deep anxiety that Heygate, a formidable stranger, was analysing and about to pass judgement on what was effectively my life’s work; and that it may not go my way. By this time I had left KPMG and started a social research institute with a partner. I was in the throes of finishing a new business book on how NEOs were changing society and the rules of engagement for business. I loved what I did and what I had identified and NEOs were rapidly becoming the currency in corporate Australia. But in London, this was a new and intimidating world stage.

In truth I had already been though this agony once before, in New York in the late nineties when I was head of KPMG’s Centre for Consumer Behaviour in Asia Pacific. The KPMG senior partners in New York had trouble believing that someone from Australia could develop a world-beating formula to identify who among an entire population were the most influential citizens. They commissioned an independent expert to review all research models available in the US and to make a direct comparison with the NEO methodology. Marketing and brand analyst Stephani Cook was engaged for the task and, after reviewing Yankalovich and all the other standards, she addressed the small but serious group gathered breathlessly in a downtown skyscraper and declared the NEO methodology the most robust and useable available in the US.

Since that time I have had an abiding fondness for Stephani Cook and New York City.

But back in London I was going through it all again. A life peer, Sir Richard Heygate, was in his own words one of those poor peers of the realm who no longer had any property and as a Baronet was one level off gaining an automatic seat in the House of Lords.

Charming company, Sir Richard had just finished writing a paper for the Harvard Business Review with the legendary David Norton titled, Putting Customer Understanding at the Heart of Your Strategy. Norton was famous for developing with Robert Kaplan the Balanced Scorecard management tool used by corporations across the globe.

Meeting in his club I raised a glass to my host and mused on how different this was to New York. No glass canyons and suited executives, just Richard and his seedy club. And no getting to the point. Very British.

“So what do you think of the science underpinning my NEOs?” I asked; I couldn’t stand this relaxed approach another minute. “Well” he said unfolding a piece of paper and smoothing it on the ancient table, “let me read you an email I have written to Kaplan.”

Dear David

I have uncovered a way for us to score a significant “first” in the customer space. The problem in defining a new value proposition is the (Balanced Scorecard) box on our strategy map called “customer insight”. Internal data is neither rich nor accurate enough to track emerging customer attitudes: external, tailored surveys identify new patterns of behaviour but cannot be attributed to internal data with any accuracy – thus are useless for customer management.

Recently I met Ross Honeywill, a very bright ex-KPMG partner who, I believe, is the first person in the world to truly crack this problem. Ross works with an external data provider, Roy Morgan International, which not only creates a very rich behavioural base for research (from literally thousands of variables) but can also align this with over 80% accuracy to a corporation’s own data. Even more interesting, using his technique, a corporation can even see what their competitors are doing with their key customers.

“We can skip the rest,” he said. “That’s enough to give you the drift of what I think of your discovery.”

Relieved, I ordered the next round of drinks and settled happily into the battered red armchair for the evening.

“By the way,” he asked, “has the term NEO got anything to do with the Matrix film?”

“NEO is just Greek for ‘new’”, I replied, “And an acronym for the ‘new economic order’. You choose.”

“Too bad,” he laughed.

Since those heady days, understanding what makes NEOs tick has helped global brands in Australia, Britain, the USA and Canada build more personal, less institutional relationships with their most important customers.

Understanding the NEO phenomenon has helped thought leaders survive and thrive during the global economic meltdown. In the shattered US real estate market for instance, Fingerprint Strategies Inc is selling new residences to NEOs where no one else can sell a letterbox. NEOs are buying the unsellable because they have decided the time is right. They are buying less but spending more as the world emerges from the global recession. They are turning their backs on the sanitised consumer culture and seeking out precious experiences that touch their spirits. And in doing so are re-imagining a world of diversity and genuine creativity; a world where mass production, mass retailing and mass media have no place.

A wave of consumer activism run, not by socialists but by cultural capitalists, is spreading and gaining momentum. The individual is the wave, and the wave is on the move.