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Middle East Business Outlook for 2023 

These five practices will continue to drive uncommon growth in the region in the year ahead.

The Middle East is set for success and growth in 2023, even as businesses in other parts of the world face more challenges. Its importance as a hub for global trade is growing and companies are attracting more significant investments and talent. Overall, the bar is rising as the region takes a more prominent place on the global stage. 

That combination is breeding optimism and ambition throughout the GCC region. We’ve identified five opportunity areas companies should consider so that they can take part in that growth. 

1. Rebalancing Transformation Strategies, Making Them More Human and Less Digital 

Human centricity should be at the heart of any transformation efforts. Organizations should be putting people–customers, employees, investors and communities–at the heart of their strategies and evolving from the inside out.  

Digital is still essential, of course. But the goal isn’t to become more digital–it’s to become better organizations. The most progressive companies recognize the difference. The first question is no longer, “What technology should we invest in?”, it’s “What do our people need to be more productive, and how can we best support that?” And with this human-centric approach, companies are redefining what it means to be a modern enterprise. 

2. Defining Purpose Through the Sustainable Development Goals (SDG) Lens 

Environmental, social and governance policies are growing in importance, shaping businesses worldwide. But here, the emphasis is somewhat different. Organizations in the Middle East are more focused on sustainable development goals. These 17 global SDGs, set by the United Nations to achieve by 2030, matter more than the ESG goals devised by individual companies. 

Governments are setting the vision, sometimes with breathtaking ambition. The UAE, for example, has excelled, working SDGs into its national agenda. And it’s paying especially close attention to the guidelines for developing growth and innovation. This approach reflects its national ideals and challenges many people’s perceptions of the priorities of a Middle Eastern nation. Both these focus areas are now enshrined in the SDGs as it moves toward turning commitments into action. 

For companies, it’s inherently more confusing than simply delineating a strategy that best suits them. So, companies are plunging in with trial-and-error gusto as each tries to find a path forward. They want to comply, of course, and successfully navigate among many shifting government mandates. But they also want to do so in ways that build on their individual purpose, controlling what is theirs to control. They face intense pressure as they make these decisions–from employees, customers, investors, NGOs and regional communities. As they realize they don’t have to align with every SDG, the most forward-thinking companies choose the goals they can best contribute to and embed those into their purpose and strategies.  

For example, we’ll see continued growth in sustainable travel and tourism, with companies carefully examining how people’s hotels, itineraries and experiences impact the entire value chain. And since the region is heavily dependent on foreign investors, there will be greater efforts to demonstrate that companies act responsibly. 

3. Investing in the Start-Up Ecosystem 

The region is on track to produce a substantial number of unicorns in the next ten years. Uber, for example, recently scooped up Careem, based in the UAE, for $3.1 billion. And companies like Kitopi, a cloud-kitchen company; Fawry, an Egyptian fin-tech company; and Swvl, a mass transit system, are all in the $1 billion valuation club. 

This start-up ecosystem’s emergence encourages larger companies to chase business innovations. They’re making strategic bets on new business models. We see companies striving for greater agility. They’re using pod-based innovation, for example, as they look for new ways to collaborate. They’re more deliberate in efforts to break down silos and optimize spending. And they’re more likely to pursue joint ventures.  

4. Creating Data-driven Experiences That are Customized for Audiences  

Digital thinking continues to be the lifeblood of business. But–as is true in C-suites around the world–leaders in the Middle East recognize that data is only valuable when used strategically.  

People in the Middle East, especially in the UAE and Saudi Arabia, are among the most connected and digitally savvy in the world. Consumers want things now. They expect a seamless brand experience. They want holistic omnichannel experiences with personalized communication at every stage of the purchasing funnel. Now that brands have access to more customer data, it’s imperative to use this to unlock the opportunities it presents–delivering very tailored, specific products and personalized messages and communications. 

That means moving beyond broader mass-marketing tactics that simply target groups like millennials and Gen Z. Yes, the youth market is intensely significant in the Middle East. But younger consumers only spend on things they care deeply about. They prize authenticity in the companies, brands and influencers they deal with.  

Prophet’s recent Gen Z research finds that younger people are increasingly determined to curate their own digital experience. They want to connect with others that share their values and are eager to balance digital interactions with those that are human. 

5. Designing an Employee Experience that Delivers Well-Being 

More traditional leaders may still roll their eyes at the expansive responsibility of providing for employee well-being. But unless they understand how holistic well-being is fast becoming a requirement for job seekers, they won’t be able to gain a hiring advantage.  

Health is now the ultimate headline. People have had the chance to re-evaluate what’s important and possible in their lives. They’re fed up with outdated norms like the 9-5 schedule. They’re more open about burnout, chronic stress and fatigue. Employees are less willing to sacrifice their physical, mental and social health for their job.  

In the UAE, the government has set the way forward with a shorter working week–at 4.5 days–to help employees achieve a healthier work/life balance. Such steps allow organizations to re-energize employees, so they can become more productive and innovative. And it also helps retain talent long term. Enterprises are beginning to understand that it is their people that make companies what they are–and it’s essential to take better care of those workers. 

Employee experience design is a rapidly growing discipline. It’s how organizations can maximize their advantage in the war for talent and take advantage of seismic shifts in working patterns. When employee experience becomes a central pillar in a company’s people strategy, aligning with brands, business strategy and customer experience is easier.  


FINAL THOUGHTS

The Middle East has distinct competitive advantages, positioning it for growth in the foreseeable future. Relatively insulated from current global challenges and replete with an influx of talent, businesses here can–and should–be optimistic. They’re looking for new ways to increase revenues and find uncommon growth, outperforming other regions. 

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Paying it Forward: A Recap of Prophet’s Impact Auction

From weekend getaways to treasured family recipes, Prophet’s Impact Auction raised over $45k in donations to Partners In Health.

For seasoned Propheteers and our newest employees alike, the bi-annual Prophet Impact Auction generates unparalleled excitement. The Prophet Impact Auction is a global fundraising effort to rally behind a cause as we seek to use our expertise and creativity to spark meaningful change. Since 2010, Prophet has supported a variety of causes, from building sanitation facilities in Uganda, to funding girls’ education in Tanzania, to raising $50K to support local Covid relief efforts in 2020. This year marked our 7th auction and Propheteers upheld the beloved tradition by generously giving their time, talents and treasures, donating a variety of goods, services, and experiences to be bid on by colleagues.

Supporting Justice in Healthcare 

Through a firm-wide vote, Partners In Health was selected as our 2022 auction benefactor for its mission to provide high-quality healthcare to those who need it most. Partners In Health believes that every person has the same inalienable right to be healthy and achieve their full potential, regardless of their circumstances or where they are born.  

The money raised by Prophet was donated to Partners In Health’s global child malnutrition programs, which focus on providing lifesaving treatment to children in Malawi, Haiti and beyond. A single child’s nutritional support costs around $60 for six weeks of treatment. With $45K raised, we are grateful to contribute lifesaving nutritional support to at least 750 children. 

“Our deepest gratitude for your generous support of PIH’s child malnutrition treatment programs in Haiti and Malawi. Our teams are working hard to continue to deliver care amidst challenging circumstances, fighting cholera, and dealing with rising food insecurity. Your support helps them keep that important work going. We know that structural problems require sustained responses, which is why we are proud to partner with local governments and invest in systems, to continue to push for increased access to health care.” 

Patrick Ulysse, Partner in Health Chief Operations Officer

The Power of Propheteers  

With almost 70% firm participation, our employees donated 539 items valued anywhere between $10 to more than $1,000. Propheteers eagerly bid for these unique offerings that ranged from extravagant weekend getaways, such as a trip to a Mallorca townhouse, to sharing treasured family recipes, and hand-painted cookies. 

Check out some of the fun items that were donated: 

  • A dozen homemade Swedish cinnamon buns baked by Senior Partner Tobias Baerschneider  
  • A rap song and music video written for Prophet, created by our creative Associate Anton Gutierrez  
  • A personalized cross-stitched art crafted by Prophet’s Senior Engagement Manager Reem El Sayed  
  • A Manhattan Chinatown food tour with our Associate Kristen Wong  
  • An oil portrait beautifully painted by our Asia Marketing Manager Charlotte Zhang  
  • Weekly French lessons with our Prophet Francophiles 
  • Wine and fries with Prophet President Chiaki Nishino  

Through this auction, it was clear that Propheteers were ready to fully embrace the firm’s new values. Prophet’s “Give and Grow” value especially came to life as the entire firm offered talents, time and money in support of Partners In Health. Item exchanges traversed continents, bidding wars sparked conversation on hidden abilities and our value of “Share Joy” emanated across global offices as we came together and celebrated one another’s creativity and artistry.    


FINAL THOUGHTS

The Prophet Impact Auction is one of the ways we live our purpose to move society forward and create impact for our local and global communities. We find the best way to tackle societal, economic and environmental challenges is by coming together. Learn more about our other Prophet Impact programs here

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Defining a Higher Purpose to Build Brands of the Future: A Conversation with David Aaker on His 18th Book 

Prophet experts discuss how to build future-ready purpose-driven brands.

Prophet’s vice chairman and branding expert, David Aaker, has launched his latest book, “The Future of Purpose-Driven Branding: Signature Programs that Impact & Inspire Both Business and Society.” Following his recent books on portfolio strategy and the creation of a winning sub-category, David’s 18th book discusses how organizations can build lasting purpose through the creation of social programs. We sat down with David and Cecilia Huang, a partner at Prophet, to dive into some of the themes and insights mentioned in his newest book and their implications for brands in China.  

Why did you make this the theme of your 18th book? What are the leading market trends you see that indicate brands are becoming more purpose-driven? 

David Aaker: A dominant force is the fact that employees, especially the younger cohort, want more out of their professional life than increasing profits or even building insanely great products. They want to be proud of their firm’s efforts to make society better. Some customers also want to connect with firms that inspire with their social programs. Another factor is that social problems like climate change and inequality are so visible and so serious that the help of businesses is needed. Government cannot do it all. Finally, social programs can give energy and an image lift to businesses, which is sorely needed. 

Cecilia Huang: I’ve found these themes to be especially poignant in the China market as well. A survey among young people showed that 79% of the respondents felt the urgency to take action to build a better tomorrow. In turn, they also show appreciation towards brands that give back. For instance, the sportswear brand Erke gained significant popularity overnight among young consumers thanks to its generous donation pledge in response to the Henan flood in 2021.  

In addition, like their global counterparts, many young Chinese professionals who have started their first jobs begin to evaluate whether the potential employer’s values and culture align with their own before fully committing to the opportunity. How to internalize and motivate employees with a higher purpose has become a key challenge for today’s businesses. Thus, defining a compelling and effective purpose is paramount for every organization and will have a profound impact on the business inside and out.   

How should companies find a purpose that’s meaningful and differentiated? 

DA: A purpose that encourages social programs and creates a supportive culture can be very helpful in explaining to employees and others that the business cares about helping society with the serious issues and problems it faces. It is critical to show commitment to the effort by the CEO and other leaders. It is the organizational culture, beliefs, values, priorities, behavior and management styles that determine how the organization and its employees view and act on issues and options that come before them. A well-thought-out purpose can play a key role. 

Sometimes a business purpose is broad enough to include social programs. For example, CVS Health is about “Helping people on the path to better health”. This guides its business but also provides a home and a direction for its social programs. Tencent promises in its mission to create “Value for Users, Tech for Good,” which is incorporated into its ESG programs. Some of its key focuses include improving the accessibility of technology for elders and promoting scientific innovations through the Xplorer Prize.  

However, in most cases, companies need to develop a social purpose that is separate from a business purpose. A business purpose (or value proposition) can guide and communicate the business model and operation. The social purpose can then focus on the type of social objectives that the business has created. When unconstrained, both can be free to be more complete, more forceful and more credible. They should be complementary, even overlapping, and have staff and programs that interact and even intertwine. 

CH: It is also wise for companies to consider the shared values unique to the local culture and social context. In China, people strive to live a better life – to eliminate poverty and create opportunities for everyone. Therefore, consumers expect businesses to think beyond just “donating money” and get involved by devoting their capabilities and resources to solving societal issues. This can be done through a commitment to infrastructure developments, or by creating open platforms that empower the people.   

We had the pleasure to interview Xin Yi Lim, the executive director of sustainability and agricultural impact at Pinduoduo, and were deeply inspired by the tech leader’s sincere commitment to driving agri-tech innovation and empowering farmers. Another great example from China is Baixiang Food. Earlier last year, it was reported on social media that one-third of Baixiang Food’s employees were disabled, winning the struggling company enormous support.  

What is the role of the signature social program?

DA: With the purpose in place, there are three strategic thrusts or action plans (Figure 1) that will represent the future for firms that strive to move beyond being relevant to being in a leadership position in the purpose-driven age.  

  • Attack society challenges with signature social programs that have inspiring, credible brands.  
  • Integrate the signature social program into a business  
  • Build inspiring, credible signature social brands  

A branded signature social program is needed to represent a social purpose and to impact a visible social need. The brand is critical because it guides, inspires and communicates. Without a branded signature program, the “social effort” tends to be grants, volunteers and energy goals. These often also tend to be unfocused, hard to communicate and the same as other firms.   

The signature program should also elevate the business brand—adding visibility and energy, an image lift and opportunities for employees and others to be engaged through volunteering. When that happens, the program benefits as well gaining an endorsement and access to resources including volunteers and a communication budget. It is a win-win. 

Salesforce, for example, has a signature program called the Pledge 1% in which it devotes 1% of the company’s equity or profits, 1% of products and 1% of employees’ time to society’s good. The program, which was put in place at the launch of the firm by Marc Benioff, now has over 10,000 companies that have joined worldwide. The result is a point of pride for employees and an amazing image lift for Salesforce, especially among those 10,000 firms that have signed on. In the words of March Benioff, “It’s time for a new capitalism — a more fair, equal, and sustainable capitalism that actually works for everyone…”   

 For all this to work, the signature program needs to have a strong brand, a brand with high visibility, a respected image and employees and customers that are engaged. Some paths to brand strength are to form brand communities, create signature stories and to brand your unique appeals or attributes. 

How should international brands adapt and evolve their purpose across different regions, given there might be different social challenges?

DA: Unilever’s Lifebuoy sets a great example of adapting its social purpose for different countries. Lifebuoy was introduced in 1894 as a hygiene hand soap to fight cholera. Drawing on this legacy purpose, it developed the “Help a Child Reach 5” program of improved handwashing in areas without clean water. It has since reached its target to help more than one billion people across the world develop good handwashing habits.  

By collaborating with different NGOs and responding to specific problems unique to different places, Lifebuoy has set up different programs around the world. Its largest programs in Indonesia and Vietnam are a great example, which work in partnership with government organizations to reach mothers with hygiene education. In some of the poorest countries across Asia and Africa where people are at risk of trachoma, a preventable blindness, it has partnered with NGO Sightsavers to adapt schools’ handwashing program to include face washing. When communicating its social programs, Lifebuoy also takes into consideration different local cultures and carefully designs its stories in the most compelling way. One of Lifebuoy’s most moving films tells a story about a young couple’s interactions around a tree. It was later revealed that the tree represents the couple’s lost son, as it is an Indonesian tradition to plant a tree for every child that is born for their health and prosperity.  

CH: It is also important for companies to identify a social purpose that’s anchored in universal values. Brand purposes spawned by these shared values are the most authentic and resonant and are easy to amplify among vast audiences. International brands can define a higher-level purpose that’s rooted in one or two of these shared values and then translate it into more concrete social programs based on the unique cultures of different regions.   


FINAL THOUGHTS

In order to articulate complex social themes, storytelling is key. And social programs are rich sources of emotional stories that connect. Creating signature programs that inspire employees, customers and society at large is key to building purpose-driven branding that is meaningful, impactful and lasting.  

You can contact David Aaker here to interview him for your next podcast or article.   

Contact Prophet today to see how signature programs and purpose-driven branding can be a part of your company’s broader ESG strategy. 

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Financial Services Trends We’ll Be Watching in 2023 

There are many reasons why 2023 can – and very much should – be the year of relentless relevance in financial services.

It’s that time of year again, when we stick our necks out to envision what’s coming for financial services in 2023. You don’t have to be clairvoyant to know that there will be more disruption and plenty of innovation. The tightening economic landscape means that banks, insurers and wealth and asset managers will need to prioritize investments that deliver results in the near term, even as they look to establish strong foundations for long-term transformation and ongoing innovation.  

1. Resilience Through Relevance Becomes the Priority  

Yes, customers are likely to be more careful with their spending in 2023. But, no, customer experience will not become less important. Financial services firms should “buy the dip” by continuing to fund innovation programs.  

Market experience and research from Harvard Business Review tell us that firms that retain their focus on and continue to invest in innovation (especially in those areas of relatively low opportunity cost) during times of economic uncertainty significantly outperform their peers in sales and profit growth. And many well-known brands and market leaders have fully reinvented themselves during downturns, by focusing relentlessly on resilience and retaining their relevance.  

For large financial services firms, they must overcome the common tendency to solve their own internal business problems rather than solving authentic customer problems, as broad and evolving as those can be. Showing empathy and aligning with customer values can help brands stay relevant and differentiate during tough times. That means defining the corporate purpose in terms that are meaningful to customers, a topic we cover in more detail here. Such clarity is especially important in embedded finance and other areas of disruption, where established brands must define their role.  

2. Mega-Growth Comes from Sub-Categories  

When it comes to reaching new segments, many financial services companies are finding success with tailored offers that can create separation from the primary brand and the competition. As Prophet Vice Chairman David Aaker has written in his book, “Instead of promoting the superiority of a brand, create a subcategory with new or markedly superior customer experiences or brand relationships to create barriers to competitors.”  

Sub-categories are promising because they allow incumbent brands to go into new places. And there are many potential opportunities:  

  • Banks offering credit and other services tailored to small business categories
  • Insurers launching digital policies for millennials and Gen Z 
  • Wealth managers focusing on simpler income protection products and decumulation strategies  

There has been considerable market action along these lines in recent years: Some sub-category explorations and extensions have been successful in gaining traction, while others have delivered sub-optimal results, while also producing ample learnings that can be applied to future endeavors.  

We’ll give David Aaker the last word here: “Subcategory-driven growth has exploded in the digital era because of technological advances and the fast, inexpensive market access made possible by e-commerce and digital communication.” That trend will surely continue in 2023 and beyond.  

3. Brands Will Define Their Roles in the Embedded Finance Value Chain  

Critical mass may still be a few years off, but the days of nearly all finance being delivered as-a-service are getting close. Embedded finance is on the same trajectory that made “digital marketing” just “marketing” and “mobile phones” just “phones”. 

According to recent research, the U.S. embedded finance industry is expected to grow at a CAGR of 23.5% from 2022 through 2029, reaching $212 billion by 2029. Plaid expects a 10x jump in embedded finance revenue from 2020 to 2025. We expect the growth of embedded finance to be nearly recession-proof.  

At the center of this growth is the shift from standalone products to solutions delivered at the point of need. After all, customers don’t want a credit card or an insurance policy, but rather an integrated payments experience that streamlines purchasing and provides protections for important purchases. We believe that a primary way to differentiate in the embedded finance space is to start with the customer and design products and experiences around their needs and relevant to their financial journey. 

The next 12 months will see plenty of milestones. Investment advice is everywhere and easily hopping over industry boundaries. Consider how DriveWealth is offering advice for health savings accounts (HSAs).  

The tipping point for mass adoption of embedded finance is clearly getting closer and we very well may reach it in 2023. Financial services organizations that start with deep insights into the needs of customers’ financial journeys and that engage successfully in ecosystems will be best positioned to win the innovation game in the embedded era.  

4. Holistic Wellness Matters as Much to Your Employees as Your Customers   

For many financial services institutions, customers are your employees. A weakening macroeconomic environment will only intensify the need for greater wellness – including physical, mental and financial wellness. There’s a risk that employers may cut programs because of cost pressures in a recessionary environment; that would be a mistake in our view. While wellness may seem a consumer hot topic du jour, financial firms should recognize that wellness equates to confidence and security, which is what consumers are looking for when they buy financial services products.      

We expect to see more financial services firms expand their content, education and advisory offerings (via both in-person and Robo channels) for the simple reason that more people need such services. That’s true at every level of the market; from high-net-worth families that want multi-generational wealth distribution strategies to younger consumers just starting their careers and seeking higher degrees of financial literacy and basic tools for budgeting, savings and investing. To realize the benefits, banks, insurers and others will need to master their activation strategies.  

Financial services firms keying on wellness would do well to understand the complex linkages between mental health and financial wellness. For instance, financial stress is the number-one driver of poor mental health among employees, according to research from MetLife. Because dynamic relationships between different types of wellness play out for both customers and employees, the group insurance and employee benefits space is seeing more innovation, much of it focused on driving well-being. For example, the Morgan Stanley at Work program offers holistic features for both financial security and empowerment.  

5. Human Capital and Strong Cultures Deliver Even More Competitive Advantage    

Post-COVID, more companies have rediscovered the power of their people (okay, maybe not Twitter). It’s more than companies having to compete for scarce talent. Rather, those firms that embrace cultures of learning, creativity and flexibility typically realize better results in terms of customer-centric innovation. And it’s not a matter of choosing to invest in tech or people, but rather getting the right people in place to boost returns on your tech investments.  For all of these reasons, 2023 will not be the time to cut back on learning, development and upskilling/reskilling programs. These initiatives help strengthen cultures and create a more resilient workforce, just what financial services firms will need to thrive in the near term.  

Whether and to what extent inflation or a recession impact the job market remains to be seen. But it’s possible that wage increases may rise faster than price increases. And financial services firms have an opportunity to hire more tech-savvy talent after widespread Silicon Valley layoffs; this is another opportunity to “buy the dip.”  

But even if there is more talent available, banks and others must ensure their cultures are attractive to the right type of talent. Typically, that means emphasizing collaboration and taking a human-centric approach. Our research into the Collaborative Advantage shows that higher levels of teamwork enrich individuals, building new skills that increase engagement and job satisfaction – what financial services firms need to complete in a dynamic market landscape today. 

6. Balancing ESG Expectations With Reality  

While the bright spotlight on environmental, social and governance (ESG) matters will not dim significantly in the coming year, attention will shift toward closer brand scrutiny, both in terms of greenwashing and the authenticity of their ESG claims. More companies – including the “big 6” banks that have aligned to the Paris Agreement – will be evaluated in terms of how well they are “walking the walk” relative to their commitments. That scrutiny will come not just from regulators but the full range of stakeholders, including employees, investors, and clients and customers, who will not react well to big gaps between brand perceptions and actual ESG performance.  

Tensions and contradictions will be called out. For instance, many of the firms marketing green products and aiming for inclusion in ESG funds and indexes also continue to underwrite fossil fuel infrastructure. No wonder some banks are considering leaving industry alliances.  

Financial services firms should be thoughtful in understanding their ESG efforts from a broader range of perspectives. Certainly, there will be more focus on the “S” or social dimension “People well-being” is one potential lens for evaluating commitments and monitoring progress. For instance, the employee experience can be viewed in terms of its social impacts, as can loan portfolios’ inclusion of minority-owned businesses.  

Financial services firms should not shy away from articulating their value relative to ESG, but they must be careful about mere virtue signaling. They should also look to get beyond compliance focus, though of course, lawyers are going to restrict what can be said about green offerings. Further, firms will need to become experts in ESG data and reporting, not least because more detailed disclosures are coming soon.   


FINAL THOUGHTS

Anchoring on what matters most to your stakeholders, especially your customers, will provide a tangible edge in a tough market in 2023. From sub-category extensions and embedded finance to employee wellness and ESG, there are many reasons why 2023 can be – and very much should be – the year of relentless relevance in financial services.   

Contact our financial services team today. We’d love to talk about what transformation can look like at your organization in 2023. 

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Five Healthcare Trends To Watch in 2023

Healthcare leaders can drive change in 2023 by thinking boldly and targeting investments in the following trending healthcare spaces.

Looking ahead to 2023 in healthcare, the big macroeconomic clouds on the horizon make for a less than cheery outlook. The combination of an economic downturn and higher costs will be a dominant theme for the entire healthcare industry and a huge challenge for organizations across hospitals, health systems and device makers, pharmaceuticals, and life sciences companies, as well as players in technology. 

Still, taking the glass-half-full view, we see many opportunities for leaders across the business to drive operational discipline and innovation by focusing on investments that matter most in driving better outcomes for all stakeholders. As we point out in our transformation playbook, changemakers that push beyond the many common barriers to innovation can achieve a great deal. Yes, the economic pressures will be greater. But 2023 will see plenty more disruption – and thus plenty of growth opportunities – as our annual list of healthcare trends below makes clear.  

1. Holistic Wellness Solutions Continue to Influence the Market  

Successful one-off wellness apps and small niche solutions are adopted by large employers and payers to enhance benefits programs and give people more options to live healthier lives. As consumers adopt wearable data trackers in support of that goal, they will increasingly choose to work with healthcare organizations that are committed to holistic wellness.  

 It’s not about the gadgetry, but rather driving good outcomes, particularly relative to social determinants of health (SDoH) and patients’ lived experiences. The start-ups and tech firms with the most attractive and powerful solutions will achieve rapid scale by going the B2B2C route. We think the biggest winners will emerge in in-home diagnostics, preventative health opportunities (e.g., perimenopausal women and metabolism and nutrition) and mental health, which will be of interest to large employers, as well as individuals. Apps and widgets that empower individuals with their own data, plus timely prompts and attractive incentives, will crack the code on growth.  

2. Venture Capital Focuses on the Best and Brightest  

While we expect to see a few big winners among tech players, most firms will face a tighter funding landscape and more intense due diligence. Venture capital, which has been flowing freely and voluminously for years, will become less available as investors scrutinize business models more closely and back only the best and brightest.  

 We suspect the firms that attract funding will be those that focus on narrowly defined patient cohorts already engaged in self-monitoring behaviors and where innovation can move the needle on cost control or value delivery. Those that can collect real-world data from outside the four corners of traditional clinical environments, and integrate seamlessly into core systems, will be specially well positioned to attract funding and potential partners. Chronic disease management, patient engagement and population health solutions will also be priorities because there is clear clinical and financial upside in all these areas.  

3. The Workforce Shortage Worsens as a Full-Blown Crisis  

With continuing burnout among healthcare workers, large provider organizations face issues with care quality and deteriorating patient experiences. The supply-demand fundamentals are inescapable: There are simply not enough doctors, nurses and paraprofessionals – not to mention data scientists, business analysts and experience designers – to fill all the vacancies. 

However, there are multiple potential solutions to resolving talent shortfalls. Workforce optimization and workflow efficiency are necessary, so too automation and more advanced technology in everything from reading x-rays to identifying payment fraud. More support for patient self-monitoring, continued expansion of telehealth and in-home care will also help alleviate chronic talent shortages. There’s also a large cohort of tech-savvy talent looking for jobs with a higher mission after layoffs from Silicon Valley giants.  

4. Value-Based Care Models Become Innovation Labs  

The inevitable momentum toward value-based continues. More than 40% of U.S. healthcare reimbursement now has some value-based component, a proportion that will only rise in 2023 and beyond. Though pockets of resistance remain, more provider organizations will advance and mature their Value-Based Care capabilities. And they’ll do so on several fronts. More sustained preventative outreach efforts to underserved, high-risk and high-cost populations for routine screenings will continue producing strong results. Shared-incentive contracting will be more attractive for capital-intensive equipment, such as MRI machines and CT scanners.  

Sophisticated technology usage will be a hallmark of VBC winners. Consider how the burden on the workforce could be reduced with digital apps and AI-enabled patient engagements leveraging HIPAA-compliant natural language processing on existing voice platforms (e.g., Alexa). Such applications also free clinicians to operate at the top of their licenses. The next year will see many pilots of creative concepts in the space.  

The tightening economic backdrop, alongside rising consumer expectations, more powerful technology and the prevalence of chronic conditions, will fuel further adoption of VBC models. Large employers wanting to know what they are getting from higher rates will be yet another prompt for innovation.  

5. Consolidation Increases as Non-Traditional Players Press on  

Challenging macroeconomic conditions will drive more consolidation and spark aggressive plays from tech platforms and large retailers. In this sense, 2023 will look a lot like recent years. Retailers and other non-traditional players are cracking the code on healthcare, faster than healthcare players are cracking the code on consumerism.  Amazon, Walmart and other large players will continue experimenting on their own, buying up promising ventures and looking for partners that can further their huge ambitions.  

And their ambitions won’t shrink just because the economy does. If you already thought these companies were relentless competitors when the economy was good, then you can expect them to press their advantages even more forcefully in pursuit of ever greater market share as cost and capital pressures rise for others.  


FINAL THOUGHTS

The healthcare industry has seen plenty of change during the last few years. The next year will continue that trend. And as challenging as the economic conditions will be, healthcare leaders can drive change for the better by thinking boldly and targeting investments in the most promising areas of opportunity.  

Contact our healthcare team today. We’d love to talk about the transformation opportunities at your organization. 

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Six 2023 Leadership Trends That Will Reshape the C-Suite

Profits, politics and planning will look very different in the months ahead.

The last few years have proven that disruption is the only “normal” in business. The world is still slogging through seismic plot twists of the previous few years, making inflation, supply chains, Ukraine and hybrid workplaces a critical topic on virtually every corporate agenda.   

While most forecasts call for nothing but grey skies, we disagree. History shows that periods of economic uncertainty heighten innovation and lead to new products, services and business models. After all, companies like General Motors, Microsoft and Electronic Arts formed during recessionary times.  

In 2023 we expect to see new ideas and products emerge from the rubble of disruption we’ve experienced on a global scale. But to get there, c-suite leaders will need to rethink how they lead their organizations.   

We expect the most successful c-suite leaders to lean into these six key leadership trends in the coming year.  

1. Productivity Improvements Will be a Critical Path to Profitability   

Over the last few years, a handful of digitally native organizations have chosen growth over profitability and had ample investors who were happy to take risks on future opportunities.    

Rising interest rates have ended that party. And as a result, investors are pressuring companies to continue to grow and make money or at least commit to concrete paths to profitability.   

Throughout the second half of 2022, many organizations abruptly shifted their focus from growth at all costs, even if that meant risking profitability, to achieving profitability by cost-cutting measures. 

 And while some companies may need to lean into cost-cutting efforts in 2023, more c-suite leaders will look to enhancing productivity within their workforce to achieve sustainable growth and profitability. For these leaders, the productivity improvements will come from technology, data and analytics.  

2. Balancing Short-Term and Future-Back Planning to Drive Sustainable Growth  

Long-term planning will always be a core component of business strategy. But the upheaval of the last few years has made it painfully clear that companies need to speed up the journey from thinking to doing. And that means integrating quick wins with future vision, so that the results you drive today do not hinder your long-term progress. 

Take, for example, Disney’s recent decision to increase prices for park admissions, annual passes and vacation clubs. This decision infuriated loyal Disney fans, who accused the company of price gouging. While the company may have achieved a quick win from this plan, the long-term effects of the decision may slow Disney’s progress toward its vision.  

In 2023, c-suite leaders will need to carefully balance short-term and future-back planning:  

  • Short-term planning: This type of planning requires leaders to think and make at the same time. Risks are reduced with small bets to show progress quickly. Using data and behavioral insights, companies can identify things they know, which they can execute now. They can also explore what they think they know with new and near-term concepts. And those efforts will inform what they think, allowing them to hypothesize, and validate along the way.
  • Future-back planning: This approach is about creating predictive models of the future, nine years or more out, to model the probable and preferable future. Which levers should a company pull to get there? Might they do better to build, buy or partner? It considers complex elements, such as politics and socioeconomic shifts, so leaders can confidently see where the business fits in the future and the immediate steps they need to take to get there.    

C-suite leaders who successfully lean into this leadership trend will be well-positioned to achieve immediate wins while also investing in the future of their organizations.   

3. Purposeful Data-Driven Decision-Making Will Reduce Risks   

Data-driven decision-making is critical to increasing confidence and reducing risks. And while that’s been true for decades, more and more companies realize they may have too much historical data and need more predictive data to better inform their decisions. As a result, many executives are making different demands of their AI and analytics teams, aiming to sharpen their business strategy.   

But being data-driven in your decision-making is only one part of the equation. During times of uncertainty, it’s essential to be purposeful in utilizing data to inform your decision-making.   

Amazon has long aced this approach, using analytics to evaluate whether a decision is a one-way-door or a two-way-door.    

Two-way-door decisions are safer and relatively easy decisions to reverse. For example, if the pricing strategy for a new service is hindering performance, it is possible to right-size and reposition the offering or pricing strategy.    

One-way door decisions are more complex, nearly impossible to undo, and require rigorous scrutiny. For instance, a company that misjudges the demand for a product or service has no opportunity to take that decision back. These decisions require rigor and high confidence levels that predictive data modeling can provide.    

In constrained business environments, risky decision-making can be detrimental to the success of your organization, which is why it is more critical than ever to understand the true impact of the decision and be purposeful in how you evaluate the opportunity.   

4. Environmental, Social and Governance (ESG) Regulations Will Require Businesses to Rethink Their Global Approach 

There was a time when everyone building a global business and a global brand thought they could have one approach that would work across different countries: One operating model. One brand positioning. One value proposition. That time is over. Every country has divergent priorities, consumers and governments requiring differentiated business strategies.   

Consider the increase in ESG regulations that have surfaced globally. For example, the European Union (EU) recently passed the Corporate Sustainability Reporting Directive (CSRD). This new directive will soon require large companies that meet specific requirements or are listed on EU-regulated markets to disclose environmental and social metrics across their supply chains. It will also hold these companies legally responsible for their ESG commitments. To meet CSRD targets, large companies doing business in the EU will have to rethink their supply chains and operations and their entire value chain from product and service design to business models and innovation.   

And in the U.S., the Securities and Exchange Commission’s new proposed rule amendments will require domestic and foreign companies to disclose climate-related risks, governance of climate-related risks, greenhouse gas emissions, climate-related financial statement metrics, and information about climate-related targets and goals.  

Global businesses need to ditch their one-size-fits-all approach to international expansion to meet evolving government regulations and consumer preferences. Instead, these companies will need to find new innovative ways to tailor their brands, business strategies and operations to meet the diverse needs of each market. 

5. New Models of Production Will Unlock Sustainability, Efficiency and Customer Intimacy   

The era of mass production may be ending right in front of our eyes. As a result, we’re seeing a new leadership trend emerge from the c-suite: decentralization. Not only is this a solution for the supply chain challenges it is also a more sustainable and efficient way to impact local communities.    

Many leaders also realize that decentralization can get their products into the hands of their customers in a quicker and more sustainable way. Localized production also allows for co-creation with their customers, improving service and a low-cost path to differentiated and more relevant product offerings.   

There are risks, however. Getting decentralization right will require leaders to closely re-examine their operating models, decision rights, and leadership skills. Without leadership setting a solid direction for the organization, leaders risk efficiency without innovation or innovation without efficiency.   

6. Leaders Will Walk a Tight(er) Rope When It Comes to Political Issues   

The purpose-driven gospel of recent years insists that companies take a stand on issues–or risk losing employees and customers. But figuring out how to do so keeps CEOs, CPOs and CMOs up at night.     

BlackRock’s struggles are emblematic of this challenge. Six states (thus far) have yanked billions in investments from the world’s largest money manager, protesting its commitment to environmental and social change.    

Over the last few years, organizations have been called upon to take a stance on hot-topic political issues ranging from healthcare to ESG. But taking a stance (or not) has become more complicated as companies increasingly navigate accusations of being either too woke or not woke enough.    

In the year ahead, leaders will strive to sort out political agendas with three different pathways:    

  • Publicly support political issues     
  • Stay silent on political issues     
  • Show support for political issues within their workforce policies without publicly supporting the cause     

Regardless of where you or your company stand, the decision to engage publicly on political issues needs to consider the full range of potential consequences that might arise. Speaking out quickly might feel good in the first 24 hours, but unintentionally create outcomes that fly in the face of the very values you espouse. 


FINAL THOUGHTS

The only true business constant is continuous business disruption. Creative leadership, purposeful planning and data-driven decisions will be vital to driving profitability and growth during times of uncertainty.

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Leaning Into Leadership: A Conversation with John Ellett 

John recently transitioned from CEO of Springbox, Prophet’s demand generation and digital experience agency, to a senior partner with a focus on building the firm’s reputation among the CMO community. You may recognize his byline from a regular column he contributes to the Forbes CMO Network. John has a wealth of relevant experience that he’s always willing to share, and I always enjoy talking to and learning from him. I hope you glean as much from this interview as I did! 

Amanda Nizzere: What do you do at Prophet and in what circumstances would I come to you for something? 

John Ellett: As a former CMO myself, I have an ability to connect with “my tribe” at Prophet about the myriad of issues they face, especially those new to their roles. I’ve interviewed hundreds of marketing leaders to get insights for my book, Forbes column and the CMO solution guides I’ve written. I’ve learned something from each of these experiences. Whether it’s advising clients on developing brand and demand strategies, structuring their teams or launching a new company, I can bring an empathetic point of view to any Prophet or client team. 

AN: Who has influenced you most when it comes to how you approach your work? 

JE: I had the good fortune of working for Michael Dell for seven years and helped Dell grow from $60 million to $3 billion during that timeframe. I took two things from that experience that have shaped how I work. First is a strong sense of optimism. Anything is possible with a sound plan, a good team and persistence to overcome obstacles. We were a blip on the industry’s radar when I started, but we were focused on becoming the #1 PC company on the planet and then did it. I continue to believe that things will turn out well, even if we’re in the midst of significant challenges (like a global pandemic). 

The second is based on something Michael used to say, “If you are the smartest person in the room, you have the wrong people in the room.” I love to include diverse perspectives in problem solving and my role tends to be to ask questions, get divergent points of view and then synthesize those into a plan that the team can support. I may not be the smartest person in the room, but I may be the most curious. 

AN: What was your first job? 

JE: My first job was as a swim team coach during the summers when I was in college. My time swimming competitively was over, but I learned that I got more satisfaction out of helping others succeed than I did from winning my own medals. Whether it was seeing a 6-year-old boy finish his first lap in a meet or his big sister win a city championship, I felt joy from seeing them accomplish more than they initially believed they could. I think that early insight has shaped me as a leader. 

AN: What energizes you at work? 

JE: I get energy wrestling with challenging topics alongside my colleagues, especially when it involves an opportunity with a new or potential client. Seeing the positive reactions and impact from our work with clients gives me an extra boost. 

AN: What’s one thing that surprised you about working at Prophet? 

JE: What didn’t surprise me was how smart and collaborative everyone is. What did surprise me was how entrepreneurial the culture is. If you have an idea to try something new, you’ll have an opportunity to make your case. So much of what the firm today is because multiple people stepped forward and said, “I think we should do this,” and it got done. It is a very organic approach to corporate innovation. 

AN: What’s one thing you’re currently trying to make a habit of? 

JE: I am trying to make it a habit to reach out each day to several connections that I’ve done a poor job of keeping in touch with historically. I’m loving the LinkedIn Sales Navigator system to help enable my evolving habit! 

AN: If you had to pick one age to be permanently, which age would you choose? 

JE: Whatever age I am at the time. I’ve enjoyed every stage of my life and never try to hold on to the past or get too excited about the future. I’ve tried to enjoy every day and every year as it comes. I could easily freeze this period in time since I’m blessed with a wonderful and adventurous family and the health and wealth to be able to support our collective wanderlust! Life is good! 

AN: If you could trade places with anyone for a day, who would you choose? 

JE: Scotty Scheffler, a University of Texas graduate who won the Masters Tournament this spring. That way I could play Augusta National whenever I wanted. As an avid golfer, I’ve never been able to play that course. Maybe someday. After all, I am an optimist! 

About the Series 

Throughout my career, I have been fascinated with the building blocks of leadership, from motivation, coaching and communication to mentorship, empathy, inspiration and more. Unraveling and understanding what makes a strong and impactful leader tick can help each of us implement new strategies to grow as individuals and leaders ourselves. Over the years, I’ve listened to podcasts, read books, attended conferences, and listened to TED Talks about various leadership topics, but some of the most impactful lessons and pieces of advice I’ve learned have been from those around me—my mentors, colleagues, and industry peers—which led me to create this interview series. I invite you to join me as I interview various leaders in my network to share new tools and wise advice from them that you may just want to add to your own leadership toolbox.  


FINAL THOUGHTS

As senior partner, John helps senior leaders develop transformative ideas that unlock uncommon growth. He frequently advises CMOs on their transformation agendas, including brand revitalization, demand acceleration and marketing organization design. Over the years, John has partnered with marketing leaders at AMD, Caesars Entertainment, Comerica Bank, Hershey, Microsoft, NEC Displays, Samsung, Sharp and Toshiba. John is also author of “The CMO Manifesto,” a contributor to Forbes CMO Network and host of the Valiente Awards that recognizes courageous marketing leaders annually at SXSW. Have a CMO or marketing-related question for John? Reach out here

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Prophet 2022 Gift Guide: 12 Sustainable Ideas

‘Tis the season for gift giving. This year, with Prophet’s focus on ESG, we’ve sourced ideas for the best sustainable presents.

December has finally arrived, bringing along cooler temperatures, festive lights and the season of giving. Black Friday and Cyber Monday may have ended, but the holiday spirit has only begun. At Prophet, we believe that ESG is core to a business’ sustainable growth. Our ESG team has honed the firm’s efforts this year by supporting 18 ESG pursuits, publishing six ESG-influenced articles and sharing two research reports highlighting ESG themes. That’s why in this year’s gift guide, we have decided to show our support for these ESG-driven initiatives again and address the 37% of surveyed consumers that said sustainability will significantly affect their holiday shopping decisions.  

The holiday season frenzy brings the climate risks of consumption to an all-time high, from plastics and packaging to tons of wasted resources. Amidst this time of increased consumer demand, there’s an ethical concern if the individuals working in many production factories are receiving fair compensation and having their well-being prioritized. 

But it doesn’t have to be this way. We can all help create a new future of sustainable and ethical shopping from brands that are doing their part and going above and beyond to make a positive change for our world. 

By reaching climate neutrality, using recycled materials, and contributing to sustainability and social initiatives around the world, we’ve pulled together a collection of noteworthy brands that can be the next stop on your holiday shopping list this year. 

For the Always Active Consultant with a Penchant for Nature and Traveling   

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Cotopaxi offers outdoor gear and apparel for the adventurous-hearted. As a Climate Neutral Certified organization, the brand incorporates repurposed, recycled and responsible materials in 94% of its products. It also plans to increase this number to 100% by 2025. On designated Giving Tuesdays, Cotopaxi donates 100% of purchase profits to fight poverty through its own foundation. The brand prioritizes ethical sourcing through rigorous codes of conduct and audits, as well as offering a (Re)Purpose Collection that uses leftover fabrics from other companies. Our new Prophet hip packs came from this same collection! 

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Noso patches offer an alternative, sustainable solution for repairing your favorite gear. They have designed (stylish) stick-on patches that can be used to repair tears and holes on outdoor apparel such as jackets and pants that tend to get damaged. This prolongs the lifecycle of the products and keeps them out of landfills, a win-win for sustainability. Noso recently adopted a new carbon credits program that allows customers to calculate the cost to compensate for the carbon emissions associated with their purchase, and the extra fee goes towards certified climate investment partners. 

For the Activewear Enthusiasts Who Like to Hit the Gym in Style   

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Fox & Robin is an activewear brand and Certified B Corp, with sustainability initiatives such as donating 1% of all sales to environmental NGOs and using plastic-free packaging. To prioritize responsible production, quality products, and reasonable pricing, the organization has chosen to mitigate costs by spending next to nothing on paid ads and relying on organic advertising. The company is also the first and only activewear brand to disclose its factory workers’ wages to promote greater compensation transparency. 

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Allbirds is known for its comfortable and stylish footwear, but it also sells a variety of other apparel. The shoe brand is committed to reducing its carbon footprint to nearly zero by 2030 through initiatives such as renewable materials, regenerative agriculture and responsible energy. Allbirds tracks progress to its goals by measuring emissions through materials, manufacturing, transportation, product use and end of life. When shopping on its website, you can see a detailed sustainability breakdown for each product. 

For the Content Creator Preparing for Their Next Gram-Worthy Picture 

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Everlane is a modern clothing and essentials brand that describes itself as embodying “Radical Transparency”. The brand only works with factories that score 90 or above on factors such as fair wages, reasonable hours, and environment, and even reveals the true costs behind its products to customers. Everlane has committed to science-based targets to reach net-zero emissions before 2050 and includes a strategic breakdown on mitigating Scope 1-3 greenhouse gas emissions on its website. Each of its product listings also includes a sustainability breakdown of its materials and construction. 

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Thousand Fell specializes in comfortable, everyday sneakers made from sustainable materials. The company strives towards a zero-waste closed-loop future by recycling its old sneakers to make new ones, and it has spent over three years designing a supply chain that allows the brand to make a circular lifecycle for sneakers a reality. Thousand Fell also offers its customers shopping credits for sending in old clothing so that it can be recycled and stay out of landfills. 

For the Wellness Seeker in Need of a Caffeine Kick or Relaxing Cup of Tea 

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Pukka Herbs creates organic herbal teas and supplements for a variety of associated health benefits such as digestion and immunity. The company has built itself upon the values of organic farming, fair trade and conservation through commerce. Pukka is Fair for Life certified, donates 1% of revenue to environmental and social causes and has been climate neutral since 2019. 

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Grosche offers drinkware products for coffee, tea and water while using proceeds to fund its safe water project. Through this project, every product sold by Grosche funds 50+ days of safe water for those in need. Among its many initiatives, the company diverts 91% of its waste away from landfills, operates on 100% green renewable energy and has had a negative carbon footprint since 2010. 

For the Remote Worker Looking to Level up Their Household Items 

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Full Circle Home creates sustainable and stylish home care products. The company is climate neutral and now has hopes of becoming plastic neutral. Full Circle aims to be 100% plastic-free packaging by the end of the year and use only recycled plastics in its products by 2050. 

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Made Trade is a women-owned and family-run business that offers a variety of home goods, furniture, clothing and accessory. The company prides itself on verifying and vetting each of its products to ensure it meets its core values of equity, sustainability and transparency. Made Trade is Climate Neutral Certified and allows customers to filter product searches by specific criteria such as sustainable, vegan and fair trade. 

For the Employee Always Working Overtime    

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Yolélé strives to create economic opportunity for smallholder farming communities while also sharing ingredients sourced from Africa with the world. The company offers Fonio chips made out of ancient West African grains, as well as spice rubs and pilafs. By using these ancient grains in its product offerings, Yolélé connects small farming communities with local and global markets, allowing the farms to support themselves from agriculture and increase food sovereignty in the region. 

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Misadventure takes a new take on vodka by offering the world’s first-ever carbon-negative consumer good. The company fights against the growing food waste problem by taking food waste–specifically from baked goods– and using the starches to create its alcohol. Misadventure’s mantra is centered around “hedonistic sustainability”, the idea that you don’t have to punish yourself to do good and it has done a great job. 

Don’t see anything that catches your eye? No problem – check out this website to search through thousands of Certified B Corporations that are committed to doing their best for the environment, for employees and for the community. 

While we hope this guide serves as inspiration; sustainable gift-giving can go beyond what money can buy. The ultimate sustainable gift can be the one you make yourself or a special experience you share with others. Our recent Prophet Impact Auction showed the breadth of limitless creativity– from painting lessons and crocheted items to professional coaching and Pickleball games– the possibilities of giving sustainable (and deeply appreciated) gifts are endless! 


FINAL THOUGHTS

Whether you are buying a gift for a coworker, a friend or your family the hunt for the perfect gift can be a challenge. Hopefully, our list spurs some environmentally friendly ideas and provides some inspiration during the season of giving. Afterall, we all have the power to #givesomethinggreater this holiday season. Happy holidays from our Prophet family to yours! 

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CMO Focus: Five Trends to Watch in 2023 

Expect marketers to navigate economic upheaval and changing customer preferences by leaning into new approaches.

Chief marketing officers are looking to the year ahead with caution as the story of the economy plays out through 2023. While growing economic uncertainty means almost nothing will be predictable, it also creates opportunities for leaders to shine by doing more with less and leaning heavily into creativity and innovation. On the one hand, CMOs feel pressured to keep in step. They want to move faster and are looking for ways to add speed and tactical agility. But they’re moving more thoughtfully, too. They want to deepen their connections with people at a time when consumers are more conscious about their spending. Importantly, they feel well equipped “to go into battle” as they can lean back on lessons learned from the beginning of the pandemic. 

While building a strong brand is always critical, it becomes more important during economic downturns. When presented with brand choices, consumers are more likely to stick with brands they know and trust–even when given lower-priced options. So CMOs are questioning which moves will best strengthen trust with their existing customer base while finding ways to resonate with more consumers. 

In the coming year, we expect CMOs to: 

1. Flex Into Expanded Roles 

Their titles haven’t changed, but marketers recognize that their sphere of influence is shifting. The marketing function is no longer just responsible for using marketing to deliver value to the organization. They must prove and demonstrate how while taking on more ownership of the growth agenda. That includes uncovering new pockets of growth and figuring out new audiences and opportunities. 

As board-level expectations rise about marketing’s ability to prove its value, CMOs become integrators. They are bringing together different functions, from sales to product to ESG. This expanded responsibility for growth means moving beyond marketing key performance indicators to commercial KPIs, substantiating their impact on growth.  

And that means marketers must embrace a different language, leaving marketing jargon behind as they translate everything they do into the lexicon of business value. 

2. Refocus on Existing Customers Through Their Post-Purchase Journeys 

In times of economic uncertainty, companies should shore up their customer base, exploring new ways to drive loyalty. In lean times, brands must find ways to build trust and stay top-of-mind. Creating better customer experiences is a sure bet. 

The more companies invest in customer experience, the more they learn how to improve it. That means they’re making sure CX is brand-led, differentiated and personalized. The shift comes from seeing CX less as a defensive exercise and more as a positive relationship builder. It’s a way to expand the brand definition, bringing customers closer to its purpose. It creates more meaningfully engaged communities that act as stores of value during challenging economic times and sources of advocacy when conditions improve. 

Only data can inform that level of intimacy, so CMOs are becoming more outspoken about ineffective corporate data strategies. They’re learning that an overabundance of data often means they can’t thread the needle. And they’re constantly re-evaluating the role analytics play in the marketing organization, aligning marketing technology to produce more meaningful insights. 

It’s not just about having the right data. It’s also about having the right talent and teams in place to support the shifting needs of the business. We expect CMOs to continue to prioritize adding insight and experienced professionals who know how to ask the right questions of data and uncover insights that drive growth. 

3. Hold the Line on Brand Versus Performance Marketing Budgets 

The mix matters. And it requires extra attention in bumpy economies. Many companies are already slipping into fear-based budgeting, tipping into demand marketing at the expense of brand initiatives. It’s easy to do so at a moment when the rest of the C-suite is begging for quick results.  

But it’s also a mistake. And the most effective CMOs will make a case for sticking to the 60/40 rule, even as they find better ways to integrate brand as a growth engine. 

And they’ll increase efforts in key areas: 

  1. Experimentation: Under budgetary pressure, it’s tempting to back away from unproven channels. Those that continue to test and learn will see the best long-term growth results versus relying solely on quickly outdated benchmarks. But with the stepped-up scrutiny on budgets, experimentation should be agile. It’s okay to redeploy resources if the tests aren’t delivering results.  
  2. Channel Strategy: Social media is changing so fast that it requires teams to constantly refine goals and tactics. As TikTok becomes mainstream, Twitter (and new competition) evolves, YouTube gains clout and the metaverse beckons, brands need to constantly chart new directions. Few brands can–or should–be everywhere. But they all need to know how and why their customers use social.  
  3. Reporting: Tracking and socializing results should be done through business outcomes, not marketing metrics. This makes it more possible to connect brand and demand performance. No one in the board room wants to hear about clicks. The point of reporting is to evaluate past performance and make better, more effective strategic decisions for future efforts, getting the most out of limited resources. 

4. Welcome More ESG Moves into the Marketing Tent 

As governments, investors, employees and customers demand more accountability, environmental, social and governance policies are under the microscope–and their weaknesses are showing. Marketers can and should take on more, addressing the many ways ESG issues directly impact brand value. More CMOs are putting sustainability commitments and public announcements on the front of bottles, addressing it in packaging and formulation.  

They’re becoming more aware of how vulnerable brands are to greenwashing claims. That means focusing on the key proof points needed to substantiate ESG efforts.  

But most importantly, CMOs recognize that ESG has become a customer preference and a strong one. People want companies to make less harmful products and to behave responsibly. It’s no longer possible to think that only subsets of consumers care about the planet or labor practices. It’s a trend that will only intensify. 

We’ll see more businesses realize that ESG shouldn’t be thought of as a single set of initiatives. It’s a commitment a company makes, which then translates into many facets of operation and consumer engagement. 

5. Rewrite Their Personal Purpose 

Many CMOs are facing a significant amount of internal and external headwinds which can lead to a sense of frustration by not being able to deliver the impact they’re looking to achieve. While their creative energy and strategic skills may have propelled them to the top job, the harsh challenges of the last few years have sucked much of the fun out of their careers. Bludgeoned by the Great Resignation, skirmishes over hybrid work policies, positions that seem unfillable and looming economic storm clouds, many feel more like survivors than visionaries. They have less freedom to be creative. And motivating teams while managing department-wide burnout takes much more of their time than it once did. 

While the last few years may have presented a number of challenges, there’s ample opportunity to start taking their purpose-branding lessons to heart and redefining their career goals. Expect to see CMOs applying the lessons from tough times to dig deeper for motivation and find new ways to reignite their passion for marketing. Their goal is to transform resilience from a corporate buzzword to a personal mantra. 


FINAL THOUGHTS

We’re not surprised that the average CMO tenure hovers at 40 months, the lowest in a decade. Periods of constraint are inherently more demanding than growth spurts, and CMOs have to do more with less. But cutbacks also fuel innovation. We expect to see CMOs build trust with customers by leaning into personalization. They’ll find new ways to collaborate, forming creative partnerships that span silos. They’ll enrich their brands with thoughtful experimentation. And in doing so, they’ll unlock uncommon growth–even in a recession.

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Best and Worst Brands of 2022 

From YouTube, Patagonia and Taylor to Twitter, FTX/Crypto and Adidas

This has been a year for brands to shine in big ways–and fall in even bigger ones. It has also been a year of impressive brand heroics, with record-setting generosity, expanded inclusivity and high-octane comebacks. We’ve seen more companies spin pandemic-era lessons into smart marketing moves, using brand purpose and customer engagement to achieve impressive levels of relevance.  

Many brands unleashed their inner value propositions, from EVs coming out of Detroit to the inspiration named Volodymyr Zelenskyy to the hard-charging prowess of HBO Max and Hulu. And many took the world by surprise, like the brilliance of BeReal and the reimagination of “ugly” shoe brands such as Crocs and New Balance. It’s also been a blast to see Harry and Taylor rise (again) and watch the coming-out party for AB InBev. All in, 2022 found plenty of unexpected ways to win hearts, minds and wallets, especially in an unstable economy.  

With as many brand winners, we saw an equal number that either missed the mark or raised more questions than answers. Elon Musk imploded, tainting Twitter and Tesla. Then there was FIFA’s continued corruption and Ticketmaster’s monopolistic nightmares coming true. Singer Jax revealed the truth about Victoria’s Secret, Shopify lost some magic and Beyond Meat failed to meet the moment. Big Oil garnered record profits while most of the world struggled at the gas pump, and questions about Meta(verse) abound. Many brands are ending the year trying to climb out of big holes. 

That said, I went to my amazing Prophet colleagues from around the world to get their take. For the tenth straight year, they delivered, producing close to 100 nominees. A dozen stand out, all with lessons for marketers as we head into 2023. 

The 2022 Brand Winners  

Airbnb 

This hospitality company continues to expand its frame of reference with a super-inclusive approach and stream of updated offers. This includes a new listing service in the U.S. that allows renters to offer their apartments for short-term sublets, just as homeowners can. And its categories feature is a genius way of browsing. Why not stay in homes that are 10,000 feet above sea level, built into caves or with amazing pools? Even as rival VRBO comes on strong with consistently powerful marketing of its own, Airbnb continues to redefine what it means to be a creative traveler. 

Patagonia 

In a world full of Mars-bound billionaires, Founder and Chief Executive Yvon Chouinard donated the entire organization to Planet Earth. By giving his $3 billion company to a foundation that will devote all profits to the environment, he invented a Triple Crown for branding: Epic generosity, the most significant investment in brand purpose ever and a competitive difference none can match. Bravo Patagonia! 

Taylor Swift 

Few performers–and fewer women–have built a brand as strong, enduring and appealing as Taylor Swift. Her tightly controlled record releases with a host of product tie-ins (the record clock) show that no one else is calling the shots. And in an acid test for all brands, she’s expertly steering through her part in the epic Ticketmaster fiasco, reaching out to fans to heal the damage.  

YouTube 

YouTube, the Google-owned social media platform that’s also the world’s second-largest search engine, outdid itself this year, proving its relevance as never before. It surpassed Netflix in global streaming watch time. And it sharpened its support for creators, launching monetization for shorts and providing a much better deal on revenue sharing than TikTok. It’s barreling into live shopping. And it surpassed 80 million music and premium subscribers, up 30 million in one year.  

BeReal 

This social platform appeared out of thin air and captured an audience of 74 million with its two-minute window of authenticity. Radically different from competitors, it finally gives young fans the ability to shake off that phony Instagram vibe. And like Wordle, which won big love last year by asking for so little, BeReal is fast becoming a daily ritual for increasingly anti-social young people. Is it sustainable? That may be a meaningful question for marketers. Gen Z could care less.  

AB InBev 

OK, Budweiser and the AB InBev stable of beers have been languishing stateside for years. But a moment on the giant stage of the FIFA World Cup gave Budweiser a chance to shine, making it the beverage of choice for pro-Western democracies. When Qatar banned beer sales just days before the tournament, Budweiser’s quick-witted response made sure its $75 million sponsorship didn’t go to waste, with its promise to donate all that beer to the winning country with a smart new campaign, “Bring Home the Bud”.  

The 2022 Brand Losers  

Twitter 

Unsurprisingly, Elon Musk and Twitter are No. 1 on the most bad-brand lists. But the real loser may turn out to be Tesla. Musk’s reign of terror at Twitter transformed his personal brand from disruptor to dirtbag, a reputational body blow that may follow him forever. With massive layoffs, his gutting of the unprofitable social media company has resulted in plunging ad revenues. Hate speech on the platform is soaring as customers flee: In the first week of Musk’s control, Twitter lost 1 million users

Tesla 

Elon may have also believed Tesla, long a darling of the tech world, was immune. But there may be little overlap between the free-speech absolutists who love him on social media and Tesla’s affluent planet-conscious customer base. Tesla sales are declining, pressured by cheaper competition and anti-Elon-ism. And its stock price keeps dropping, falling 50%–well below the overall market. 

Adidas 

Adidas first formed a partnership with Kanye West, now known as Ye, in 2013, earning plenty of sales and enviable cultural relevance. The relationship deteriorated, and Adidas reportedly has been looking for an exit for four years. But by waiting until Ye spiraled into overtly antisemitic tirades, Adidas calls its commitment to purpose into question. In some ways, it is understandable: Yeezy products brought in $2 billion in sales or 8% of its revenue. But the delay is inexcusable–perhaps more so because of the founders’ apparent ties to the Nazi party. Will Adidas bounce back? Of course. It’s one of the world’s biggest sporting brands. Will consumers ever believe its purpose blather, all about integrity and diversity? That remains to be seen. 

FIFA 

This global organization has been engulfed in corruption scandals for so long that it’s hard to imagine the brand faring worse. Yet this year’s FIFA World Cup Qatar 2022 vaulted it to new levels of disgrace. The selection of tiny Qatar, triggering human rights, a bigoted stance on the LGBTQ+ community and more corruption accusations proved that the ugliest organization represents the beautiful game. 

Victoria’s Secret 

The world’s largest underwear brand is halfway through an ambitious five-year makeover aimed at erasing decades of sexism and misogyny. Some might say it’s working: Sales are rising, and it’s launched new and more inclusive marketing–there are even reports it may reintroduce its fashion shows. But the popularity of Jax’s “Victoria’s Secret” exposes how many younger consumers still take issue with the unrealistic body image standards that the brand is so well known for promoting. And the $400 million acquisition of AdoreMe, the direct-to-consumer dynamo, seems like an admission that it doesn’t know how to talk to Gen Z. 

FTX/Crypto 

While FTX’s $32 billion meltdown is deservedly getting much attention, the entire crypto market has taken a terrible hit. And certainly, the 30-year-old Sam Bankman-Fried is a Madoff-level conman. But we’d like to call out the mainstream press, including the New York Times and the Wall Street Journal, that lauded him as an altruist. While some brands will weather the crypto collapse, the entire regulatory apparatus that allowed FTX to happen deserves condemnation. And it likely set retail investing back a generation. 


FINAL THOUGHTS

We would love to hear your thoughts. What brands made your 2022 winner/loser lists? 

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The New Science of Demand: Digital Transformation and Consumer Engagement

Critical steps to accurately forecast consumer demand during turbulent times.

Earlier this year, Target Corporation lost nearly 25% of its $100B market capitalization following a disappointing earnings report. A few weeks later, the stock fell again as the company announced that it would be reducing prices due to rapidly increasing inventories. Walmart, a retailer four times larger than Target, lost 20% of its value over the same period claiming changing consumer behaviors and continued supply chain challenges were responsible. Shockwaves spread across the retail landscape as markets scrambled to process the impact of underlying trends. This may have you wondering: “In a world spinning with constant news of inflation, spiking energy costs and supply-side woes, why would deflationary trends like ramping inventories be hitting some of the world’s largest businesses?”  

If your business is consumer products, many challenges of the pandemic era have become abundantly clear: hiccups at the top of the supply chain due to lockdowns, shortages in shipping containers and port infrastructure, a massive transition from consumption of services to goods and housing and breaking news every week are impacting all these factors as they shift and churn. While understanding how all these dynamic inputs impact your bottom line might seem like an impossible machine, they all boil down to one core concept: forecasting consumer demand.  

Whatever the incarnation, be it sales operations, inventory, or revenue management, it is someone’s job to predict future demand as input to a variety of investment and staffing decisions. It can be done terribly, as a trendline of historic quarterly sales with a seasonal adjustment applied—an approach completely unable to respond to a shifting macro environment. It can also be done incredibly well, with dynamic tools in the hands of multiple stakeholders sitting on real-time data that responds to the slightest change in consumer preference, sentiment or spending power.  

Below, we outline three key elements to building successful demand forecasts that will keep the pulse of consumer engagement no matter how unpredictable the world can be.  

1. Look to First Party Digital Data for an Accurate View of Individual Customer Behaviors Over Time 

The first thing to note: Organizations need to use web and/or app engagement data as the foundation, ideally first-party data blended with media exposure and eCRM for a more holistic view across the customer lifecycle. These data types are most critical and valuable due to their real-time nature and reflection of active shopping behavior. After all, if a consumer is no longer interested in buying a product from you, they won’t be visiting your website to read about it. This is the signal you want. It is also important to have data tracked via a robust web analytics platform (such as Google Analytics or Adobe Analytics) collected via a logged-in state or a first-party cookie. This will enable consistent visibility into the same consumer’s behavior over multiple visits, especially if your products have a longer consideration cycle.  

Additionally, having a good tagging strategy and metadata is critical. Organizations will want data scientists to mine the data to understand exactly what users were engaging with at each stop across digital properties. One of the big mistakes we’ve seen among companies who use digital data for demand prediction today is that they look at all the behaviors on aggregate, which can mask a dip or rise in demand behind outlier behaviors. Organizations’ goal should be to predict the demand for each individual and then aggregate demand at the other end. Otherwise, they risk forecasting inordinate demand for a single consumer or household.  

Also, strive to migrate complex engagement data (“log-level” data) into a flexible big-data environment. This should be done so that data science models and business applications can be easily built on top of it. A good example of this would be the big-data warehousing products within any of the ‘big three’ cloud providers (AWS, GCP and Azure).  

While it might sound like a lot, most mid-to-large-sized organizations already have most of the key elements in place and will simply require a few small pieces to complete the puzzle. Building the infrastructure can take as little as three weeks or as long as three months, depending upon the current maturity and toolkit. But the value is there: Many companies who accurately predicted the Covid-19 demand shock and subsequent demand spike did so by getting real-time signals from individual consumers based on changing digital engagement with their brands and products.  

2. Empower Data Scientists and Engineers to Design and Automate New Demand Models—but Don’t Sleep on Strategy.  

Another lesson every business has learned over the past decade is that all the data in the world is worth nothing if you don’t know how to use it. A small, dedicated task force of data scientists, engineers and at least one strategist is ideal for building this capability.  

The strategist role is critical for developing any sort of data science application, akin to a product manager but with more specialized skills to serve as a subject-matter expert on digital data and sources. This person acts as a steward of the business to ensure data scientists and engineers have the appropriate context in designing their analysis and setting up the infrastructure to support it. “Demand” as a concept isn’t one-size-fits-all. Multiple ideas and approaches need to be evaluated and prioritized over the course of the project. With that in mind, the strategist also acts as a liaison to the stakeholder teams when decisions need to be made regarding proxy measures, model outputs and historical techniques for comparison.  

Data scientists ensure the data is organized to interpret cause and effect, that the model is as accurate as possible, and that the output is responsive to new information entering the ecosystem. If they’re working in a cloud environment, they will have access to data processing tools and ML-as-a-service. The data science team will likely lean on those tools and their native integrations with the data platforms to develop scalable and up-to-date demand models.  

Data engineer(s) should ideally have expertise in ML Ops and some exposure to digital analytics and demand-side platforms, as source data can be somewhat ugly and difficult to work with. Key tasks for this team will be the processing of source data, staging of data for analysis (and eventually reporting) and automating the model outputs. The latter is of critical importance, since getting updated forecasts frequently is the key to understanding shifting trends and reacting before it’s too late.  

Working together, this team can generate not just improved demand forecasts to inform downstream applications such as inventory, but also outputs powering higher-funnel tactics such as dynamic creative optimization and offer management. Keeping the team online as new capabilities launch and managing a roadmap of prioritized future applications is a great way to get continual value out of your digital infrastructure. 

3. You’ll Need User-Friendly Tools if You Want to Drive Adoption of New Techniques  

The only thing better than having all the smartest tools in the industry: actually using them. Getting the outputs of the organization’s data assets into the hands of decision-makers is just as important as developing those assets themselves. Business intelligence (“BI” or Data Visualization) tools and specialists are the keys to disseminating new data that suits each stakeholder’s needs. BI specialists should work with stakeholders to understand their requirements and with the engineers to produce user-friendly outputs from the models upon which they can design visualizations.  

Reframing team roles and advancing technology and tools allows businesses to democratize critical data and serve business units based on their purpose and key decision points. Regional merchandisers may want to see shifts in demand with the ability to drill down on specific geographies. Others may want broader, national demand (or individual product propensity) visualized alongside incentive, inventory or media spend. Targeting a few stakeholders early who are interested in trying new techniques can be important; building internal advocacy and developing case studies early on can speed up the process of getting new tools to market.  


FINAL THOUGHTS

As the pandemic and its fallout have demonstrated, the importance of having a pulse on demand cannot be overstated. But with a willingness to invest a little in digital platforms, underlying data assets and the right people, sustainable improvements in forecasting are attainable for every organization. Furthermore, this relatively small investment enables more agile teams and better-informed decision-makers at the heart of a billion-dollar problem.  

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Four Steps to Optimize Digital Product Creation

Whether you’re a B2B, B2C or DTC company, Prophet’s proprietary hypotheses-led approach to innovation takes product concepts from 0-1 efficiently and successfully.

Necessity is the mother of invention as they say. And many successful companies and products were started in times of an economic downturn, from the inception of Netflix in 1997 (now valued close to $100B) to that of Airbnb in 2008 when the Great Recession saw demand for short-term, low-commitment housing increase exponentially. However, when the stakes are high, the reality often is that the bets are fewer, there is less room for error and the need for more certainty of success goes up. You can’t simply take the old corporate RND approach to “Spray and Pray”, that one of your concepts will be market driving.   

Oftentimes, businesses will have identified a new opportunity area, market, audience or digital channel that looks potentially valuable for their growth. However, they are not at the point of concept definition and design to immediately hand it to internal development and product teams to begin to build. While they will have a concept of what they think would be valuable for customers, many businesses lack the evidence and detail of where they should invest first, what they should (or more importantly shouldn’t) build and in what order to deliver customer and business value quickly.  

Across all industries, B2B/B2C/B2B2C/DTC, and phases of company maturity, Prophet’s proprietary “Hypothesis to Action” (H2A) approach enables us to take product concepts from 0-1 successfully. It helps get from idea to minimum viable product (MVP) in the most efficient way possible; cutting through ambiguity and defining where to start at the minimum possible investment, with a clear direction of what is going to build traction in the market, reduce risk and increase the likelihood of a successful digital product that meets the true needs of customers.  

The H2A Model  

Leveraging our own learnings from decades of successfully shipping net-new products, we have optimized the most successful product creation engine of the past 15 years in the approach of Silicon Valley venture capital. The H2A model was created from years of work and insight and aims to provide cross-functional teams with a minimal structure to make better-informed digital product decisions and enhance design progress. It is comprised of four key stages: Hypotheses, Findings, Conviction and Actions – and in many instances we have executed the entire H2A process within two weeks.  

In one instance, a financial services client came to us with the desire to improve lead generation among prospective customers; the company had impressive loyalty among existing customers but struggled to attract net new to the business. Thus, formed the idea for a digital product, “a predictive profiler,” through which the business could predict and offer a tailored product mix and accompanying advice to its prospective customers based on user-provided information. With the problem-to-solve and initial idea in place, we were ready to begin cycles of H2A to take this idea from a concept on a page, to a user-validated, defined and designed MVP.  

Let’s take a closer look at each of the H2A stages in turn as we put it into practice with Thrivent.

1. Generate Hypotheses

Hypotheses are critical assumptions you are making about your product or idea, articulated as a testable premise. Most often, the riskiest assumption you are betting on at the start of product innovation is simply that your idea is in fact solving a problem or addressing the needs of your target user.

Taking the example of the financial services company, we were assuming that prospects would be more likely to convert if guided to the right product mix and provided tailored advice. We took that overarching assumption and broke it into more specific hypotheses to answer specific questions, starting with what is the right “way in” to lead prospects to a recommended set of products. Our hypothesis: Rather than answering generic questions, users will prefer to self-select into different archetypes, then answer more specific questions to achieve greater levels of personalized results. We quickly designed a lightweight test to prove this, balanced by business ambitions.  

2. Extract Findings

After rapidly testing the hypotheses in real-world situations, often sourcing feedback from real customers or users, we build an evidence-filled set of findings. These findings are observed truths made in a test that repeats across more than one participant or scenario.  

In our example, we found that we were, in fact, correct. Presented with four different potential “ways in” to kick off the user flow, the majority of prospects preferred to self-select into an archetype group, then answer more specific follow-up questions to deliver tailored results, citing a desirable balance of entertainment (perusing the archetypes) with the rigor of analysis of more targeted questions. Luckily, this user-led finding coincided nicely with the business ambitions of strong data collection (questions) with minimal PII risk (leading to self-selection).  

3. Form Convictions

Our findings are swiftly synthesized into convictions that form the basis of the new product. These convictions are the “so what” – product declarations, informed by findings, that become product decisions to be taken forward into design.  

Because user feedback conveniently converged with business needs, convictions for this H2A cycle for our financial services client were clear: the optimal “way in”, from both a user experience and business POV, is to lead with archetypes followed by questions to inform the product mix recommendation.  

4. Determine Actions

All of this comes together to form the specific actions to move the team forward in designing and defining the user value proposition.  

With our client, in closing out this cycle of H2A, we determined that the next best action for the predictive financial services product was to play out a complete interaction model across archetypes and questions, exploring means to delight the user with feedback/findings along the way to encourage completion of the full experience.  

We repeated the H2A cycle across a series of six two-week sprints, through which we tested, learned, adjusted, and optimized the product until we reached a fully defined and designed MVP, backed by user data and aligned to business priorities, ready to enter development. Ultimately, when launched in the market, the product achieved 12X the conversion rate of previous lead gen campaigns within the business, evidencing the power and speed of hypotheses-led innovation in driving high-impact products at the minimum possible investment.   

The H2A approach has led to the successful launch of B2C, B2B and B2B2C products and services in everything from home goods to healthcare. At its core, the value lies in its ability to find a way to start small, learn quickly and launch successfully. By unearthing the riskiest early assumptions that might be being made – and proving or disproving those rapidly with data-driven evidence – when the product does go live its chances for success will be that much greater and the path to scalability that much clearer.  


FINAL THOUGHTS

When resources are limited and risk tolerance is low, you need to move at pace through evidence-led decisions to get to market quickly. Product market fit is never guaranteed, but our methodical approach continues to drive customer and business success regardless of industry.

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