PE value creation: right audience, right insight

Good strategy is built on good information. Since its emergence in the mid 1900s, the strategic development process has always been based on building a picture of the different audiences and their needs, the competitive picture and the larger commercial and cultural context. And since the mid 1900s, stakeholders have experienced frustration with a research process that is too long and expensive, and that provides only an accurate picture of what people felt, thought and did yesterday. 

Even now, when data is plentiful and readily available, collecting, managing and analysing all that data is demanding in terms of time and resources.  

For those of us whose job it is to provide the informational basis for strategy, there has never been a more exciting time to be working.   

Jensen Huang of Nvidia describes the four revolutions in AI as being Perception, Generative, Reasoning and Physical. In what feels like a few months, the technology has advanced through the first two revolutions and we are now in the midst of the third: Reasoning, where AI masters information, considers deeply, builds knowledge and reaches conclusions.   

And that is thanks to the ever-more sophisticated natural language processing (NLP), machine learning and predictive analytics that power the AI revolution. When it comes to research, necessary process steps that previously took time and resources to complete are now the work of a few moments.  

Category and competitor analysis that used to involve hours of desk research can now be automated.  

Rich and useful dashboards can be easily set up, and dynamically maintained. 

Synthetic respondents provide a qualitative research alternative when you need to build hypotheses, explore concepts or test surveys before the real world roll-out.   

And with predictive analytics, AI is giving us a more and more richly informed idea of future trends, and even the potential consequences of our decisions.  

Never before has it been easier or more affordable to employ high quality research and data practices in your strategy. But the strategic value of information lies not in its existence but in its application to decision-making. And when it comes to identifying and understanding the most promising audiences for a product or service, you need insight. Not just data.  

Great audience strategy is based on insight. The difference between information and insight is the difference between knowing how a person behaves and knowing why they behave as they do. The latter allows a company to solve problems and meet needs that no other company can. The real beauty of AI for practitioners is they now have the time and confidence to use their experience to ladder from the information to powerful, actionable insights. 

Information informs, insight transforms. 

Companies - whether PE Houses or portfolio companies - need to work with people who have the experience and judgement to extract insight from information and to distinguish between signal and noise.