Dr NEO’s story

 

Wave ImageThe NEO wave

My story begins in 1991 when a new consumer wave began building, coinciding with the birth of the Information Age. That’s when I found NEOs. From that first nascent step, the study of NEOs became my life’s journey. 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.

One type…

dislike rules and formality and are deeply unhappy with faceless authority figures making decisions on their behalf. When visiting the doctor, they expect a quick diagnosis and a clear explanation of the prognosis. They then research it online and get a second opinion. With what is known as a ‘high internal locus of control’, they know success in life is more to do with planning than with luck.

They find it incomprehensible why anyone would join the armed forces, the police force or the public service. They want a creative life filled with originality and imaginative possibility. Dreading a choice of telephone service provider or energy company, they insist on options and elective choices – they are the architects of their own lives. They want the best price – everyone wants the best price – but for this group price is just the cost of falling in love. In love with a product or experience that stands for something beyond its function, beyond what economists call utility.

This powerful band are progressive in their social attitudes, preferring socially democratic politics. And spirituality to organised religion.

This group want to discover their own experiences, to strike out on the path less travelled. Early to adopt new technology, they are happy to give their credit card details over the internet. They are the first to buy that new smartphone or tablet, but only when it helps them 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 ideas and new ways of thinking.

The other type…

are 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 behavior. 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 status, 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 traditional in their social attitudes, this group prefers conservative 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 comfortable 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 when I was a kid.’

Status, 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 from a builder?”

In 1991, these two different types were just observational fascinations.

Over the decades …

since then, science has replaced observation and intuition. Having surveyed 900,000 respondents across three continents, we now know that the first type is the New Economic Order or NEOs. And the second type is the Traditional Economic Order or Traditionals. In the 21st Century, NEOs and Traditionals are well established realities. Today, there is forensic proof that NEOs – and the balance of non-Traditionals known as Aspiring-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, hold a mirror up to them. And for the Information Age to give them their own voice.

Back to my story

By the mid-nineties the global professional services firm KPMG had acquired my social research company, and the NEO / Traditional consumer ecosystem spread across the world. A decade later, I found myself in Britain.

London’s Physic Garden, founded in the 17th 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 European 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 way of identifying who among an entire population were the most influential, the most valuable consumers. They commissioned an independent expert to review all research models available in the US and to make a direct comparison with the NEO methodology. Formidable marketing and brand guru 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 consumer classification available in the US.

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

But back in London, here I was was going through it all again. A life peer, Sir Richard Heygate, was, in his own words, one of those 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 work.”

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

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

“NEO it’s 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 the USA, Australia, Britain and Canada build more personal, less institutional relationships with their most valuable customers.

Understanding the NEO phenomenon has helped smart brands survive and thrive through global economic meltdowns. In the shattered US real estate market for instance, Fingerprint Strategies Inc sold new condominiums to NEOs when no one else could sell a letterbox. NEOs were buying the unsellable because they decided the time was right. They bought less but spent more as the world emerged from the global recession.

Today they are turning their backs on the sanitised consumer monoculture and are 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.

This wave of consumer activism is spreading and gaining momentum. The individual is the wave, and the wave is on the move. The privilege for me is to be its surfer-in-charge.

 

Dr NEO

(Ross Honeywill)