Creative industries – a new way of doing business

Mr. Christian Madsbjerg is a partner at ReD Associates (Denmark), one of Europe’s leading innovation agencies working with sophisticated user insights, product development and innovation strategy.

He leads a team of 35 smart people, whose main job is to think, to get the insights from a changing world, to transform them into patterns, and then into commercial business models fitting people’s needs. ReD’s clients are large companies around the world, like Adidas, Intel, Samsung, Greeland.

HotNews.ro:You own and run a company working in sophisticated innovation, in ‘creative industries’ field. What is this field about?

Christian Madsbjerg: Creative industries mean a big field, it has many, many areas, but basically it has to do with changes and capitalism. Capitalism used to be about creating products to people who didn’t have anything. If you created a new product, it would fulfill an obvious need.

Now, if everybody has all the needs fulfilled, you have to come up with new ways to make your products and product offers interesting and relevant.

That leads to a different way of creating new products. It used to be engineers, new technologies were used to sell. But now there are so many products, ten times more than 20 years ago and different sharing your product is very difficult if you have the same technology.

The only way you can do now is by creating a different bit, a different feel to a product and making it relevant in a way. And that is how the creativity is working.

HotNews.ro: Can you give an example?

Christian Madsbjerg: If you take the Apple ipod, it has Samsung technology inside, it is not an Apple technology, but the way it is packaged, the way it is designed and it is connected to the Internet by a really simple service, it is a new way of treating music.

That whole concept – the design, the business concept, the relation with i-tunes music store, treating music as one song, the way to personalize it is basically a new concept: of how to listen to music, having extreme amounts of music on your ipod, a few CDs.

It is not a new technology, that was created in ’80s, and the way you make it relevant to people is a new type of relation. It is about how to understand what people want without asking them; because if you ask people what they want, they don’t know what to say: they would say cheaper and better or something like that.

Ford has always said, the founder of Ford Morris company [the car producer]: ‘If I had asked people what they wanted they would have asked for a faster horse instead of a new car.’

Don’t ask people what they want

So people have great difficulties in explaining what they want, so if you use a survey or if you use a focus-group to ask people what they need, they normally lie, they tell stories or they don’t know what to say because they don’t know what they need.

The interesting thing is that there are sciences that are strong everywhere, psychology, anthropology (that’s about human beings and the life of human beings), ethnography (gathering data about people’s lives and seeing patterns in their lives), and those sciences can be used to study people and the insights, and you can use the understanding you get from that to develop your products.

That’s basically the concept: that you use a science to systematically get data about people’s life. On the basis of that, you can use related tools to transform those insights into new ways of dealing with a certain product.

Focus has been taken away from the exact product, like technology, because you can buy it, which is easy to get. The focus switches on other arias, like the feel of the product, the way you sell it, where you sell it, the pricing, the whole business model, and how you make money on a certain product.

For instance, the core of the ipod is free, the i-tunes software is free, you can actually download it, the core concept is given away to make money from something else. And that’s the business model.

So that is why people with creative minds are now more welcome in board rooms, R&D departments, they are able to connect different types of innovation at the same time. If you say that there are maybe ten different types of innovation or more, you can play it as a piano, you can play business model, planning or sales channel.

Before you use one finger, just make better technology or cheaper products, now you have to play several keys at the same time, which makes it much more complex and much more difficult. And you need more insight to do that. That’s a kind of new feel that that model makes sense for businesses because those products are the most successful and difficult to copy. They are more complex.

A lot of different companies now go in that direction and they start hiring anthropologists.

“I would never create a need, I will find a need”

HotNews.ro: The difference compared to advertising, to copywriting, is it that you create a product, and not the image of a product?

Christian Madsbjerg: I would never create a need. I will find a need, I will see what people really need. We created a product for Adidas, the German sports manufacturer, and it was about how to help people to start training. We did a study and we could see that a lot of people, especially the women, have big problems with first starting, and second, to stay on track.

[c:1:d]The whole sports industry treats sport as something wonderful. But it’s not wonderful, it hurts a lot, it’s not fun, it’s not interesting, it’s something that you have to do in your life for other reasons, so it’s a mean to an end. If people want to go to gym, they pay in advance to oblige them to go not to loose the money.

They use a psychological way, telling the others: ‘I’m going to run 20 km today’; it will be really embarrassing if they didn’t do so. It is a kind of create expectations, of having to do things. Some of them bought a lot of expensive equipment to make it so embarrassing not to do anything or all kind of rules for themselves.

We did a product that mashes where you want and how much you want. The sport shoe is connected to software, which monitors your training. You can set up a target and then your shoes will tell you if you did it. That’s one part, about technology.

But the interesting part is that we use the sales channels, so another finger on the piano keyboard, the private health insurance company. We asked them how much they spend on health insurance for people who are overweighed and need a lot of training. They said: “a lot of money”.

They replied: “If you can do that and get people walk 10.000 steps per day, just 10,000 steps, just walk, we will cut the costs of their health insurance by 20% [that’s a lot of money in the USA, 400 USD/month].” And then we asked them what about having a system to make people to train and to measure it?

But the mean thing about it, the capitalist idea about it is that the minute you stop, your health insurance goes up.

It makes a kind of the same idea of paying in advance you fee for your fitness class or buying expensive equipment, but it’s much better, it’s connected to your health. The idea is to connect software, a service, an experience, a shoe and a training system and a business model.

Than they sold a lot of Adidas shoes instead of one pair of shoes that people buy in the store, they sell 2000 pairs per day. So the model, the whole way of thinking the business on shoes is just different, and all of this came from studying women in their every day life, and what they need.

So it’s taking the insight of something into a very commercial business model that also helps people with their lifestyle.

Creativity to me is not about choosing black or blue colours or designing things wonderfully or writing a nice text for advertising, creativity is about creating solutions to people that are relevant, and that uses different elements of all values of a company to create new.

HotNews.ro: What’s the profile of a person working in your company?

Christian Madsbjerg: They are heavily academics, normally in social sciences, but not necessarily. They are smart, really smart people and creative. I have seen a lot of creative mathematicians, and engineers or biologists. When you are smart you can see new solutions to things.

HotNews.ro: …and connections between facts

Christian Madsbjerg: …and taking an example from one aria and applying it to another aria.

HotNews.ro: However, there are differences between individuals, how can you deal with that?

Christian Madsbjerg: There are patterns. When we do a study, we normally have 20-30 people in each segment. Maybe we have 90 people in a study and then we see the pattern that goes across that.

When we are out, researching, we live with the people maybe for a week, maybe more, we meet them early in the morning, we hang up with them during the day, we talk to them, we won’t interview them, it’s more like journalism, like an open situation when you talk about things.

HotNews.ro: You were a journalist yourself before.

Christian Madsbjerg: Yes, exactly.

So it is the same situation you try to create, then we videotape – at the beginning it’s a kind of annoying for them, but then it disappears, it is there – and then we take all those data, all the videotapes that we have – one week with 90 people, that’s a lot of hours of video tape we have, all that videotape we put it into a piece of software, so it’s basically a kind of detective software.

HotNews.ro: …which creates these patterns

Christian Madsbjerg: We tack different works to clips / to videos, it could be: men, women, family, luxury, those that are relevant to the situation and then 30-70 different words.

And family – it can be father, brother, son, siblings, different kind of words. And then we have people sitting there typing into the system and you can go and search across all these different things, you can look for, for instance, women buying electronics, not mobile phones, luxury, afternoon etc.

And then you get all those clips that have all those tacks involved in the situation. You can go in and cross-check across all these different data. It’s basically like a library, an advanced database. You can go and search.

If you want to search on kids, as we did a study about toys, then you say kids having fun, you click and all the different clips that were tacked with those words like fun, kids, play, for instance, will come up. And you can see all those. And you can see the pattern.

And then we have people going again and again, searching across all these data to find the strongest patterns. We work on which of those patterns is the most commercially interesting, the most interesting in terms of the business model. Because it might be something, that is not relevant at all or difficult, or technologically impossible or all kinds of things.

HotNews.ro: On some markets it seems like a beautiful science-fiction… Just because it seems so, I imagine that your clients are rather multinational companies or anyway large companies across the world. But how do you see the evolution, do the medium companies realize the need of such approach?

Christian Madsbjerg: In the USA it is starting. It’s beginning also for the medium companies. In the beginning we only worked for the big companies, because those were only ones to have the resources and the time to think.

HotNews.ro: But did you have to educate also the large companies in having such approach?

Christian Madsbjerg: Yes. And the only way to educate them is to show them the commercial success, to show them they can get money from that. What they care about is the commercial impact. And it’s not that expensive. If you think how much companies spend for advertising… for me, if you have a really good product, it will sell itself.

HotNews.ro: Do you think so, don’t your products need advertising?

Christian Madsbjerg: Of course they do. But they need less.

HotNews.ro: and less exaggerating probably their features.

Christian Madsbjerg: Advertising is used for telling the market that there is a new product. But if you use advertising to convince people that they have a need, that way is wrong. What we often do is that a package from us comes with a cutting of costs in advertising.

You don’t have to advertise that much if the product is actually directed to needs that are real and are there, because people need it, they didn’t know that they needed it, but they do.

HotNews.ro: I know people working in copywriting industry who feel often frustrated because sometimes they know that they are selling a lie, they create an image which is just stimulating for consumption.

Christian Madsbjerg: I think that costumers now are much more intelligent than they were 20 years ago, they are able to understand better the media messages, especially the young generation, they want honesty, simplicity, and clarity. And they want great products.

HotNews.ro: I will switch the field to politics. Have you ever worked for a politician or political organization? A party does not provide goods, but provide services.

Christian Madsbjerg: There are two arias that I am really interested in right now. One of them is the public sector. Places like hospitals: if you think about a hospital, it’s basically built for the doctors and the nurses. And the last is the people who go there. Understanding how it really feels to be a client in a hospital, what is the pain, missing the one you love.

You live in those places, with white walls, and all the others are sick and you feel even much sick just by being there. What if you create another experience? And in term of impact, you can get people out of there much quicker because they would feel better. They would get better services.

And that is one aria. But if you think about how politicians, how civil servants come up with new initiatives, it’s always based on some kind of brainstorming, where they come up with ideas, about how to tackle a problem. If the problem is, for instance, the integration of minorities, they think that they simply come up with ideas and they will help.

But what if they don’t understand people, what if they don’t understand the feels of people and the relation to people, and they just use their intuition, and there is something there is a way to be very, very sure that you misunderstand your customers is by thinking that they are the same as you.

If you think that your customer does the same thing as yourself and you have the same values and you share the same needs, then you are wrong. And that’s what the politicians do. They haven’t got the data, they haven’t got the analysis, they don’t understand it, and they waste so much money on stupid initiatives instead of thinking about what are the real needs.

HotNews.ro: But sometimes they use polls.

Christian Madsbjerg: There is a difference between bacteria and people. If you look at bacteria through a microscope, you’ll see they won’t change their behaviour just because you’re looking. But if you are looking at people by giving them a poll sheet, they change their behaviour. That’s called double hermeneutics.

The only thing in the world that has this behaviour, that when you look at them they change their behaviour is people. So you have to go behind what they think, you have to go behind that polling situation, because they answer the questions in a way that they think you want to hear or that they represent themselves in a way that they want to be represented.

HotNews.ro: What they want to hear about themselves.

Christian Madsbjerg: Exactly. And that’s a lie. It’s not an evil lie, but people lie a lot. If you base your judgement upon how people want to be represented and not how they actually live, then you can make big mistakes and spend a lot of money on things that are not relevant.

The tools of polling and of focus-groups are wrong for innovation. It is good for testing things, for understanding: do you like this product to be red or black, do you like it to be like this, do you have any problems with that? But understanding the new, finding the future first is something about understanding that people are not aware of themselves.

HotNews.ro: It’s a classical example about polls, when people are asked: what kind of newspaper would you prefer to read, they would rather say FT, and not Playboy, although they have Playboy in their case.

Christian Madsbjerg: And they say that they read the editorial first. They don’t . They read the lifestyle.

“I won’t work for George W. Bush. I don’t like him”

HotNews.ro: We are in the USA right now, so I’ll challenge you with an exercise of imagination: what if your client is George W. Bush?

Christian Madsbjerg: I don’t think I’ll ever take him as client.

HotNews.ro: Why?

Christian Madsbjerg: Because I don’t like him. And I don’t want to help him. We often say “No”.

HotNews.ro: Really? So it is important to be empathetic with clients.

Christian Madsbjerg: It is. I have in my company some of the smartest people I’ve ever met, and if I came with a project they did not like, they would resign. If I came with a project with George Bush, they would stop to work for me. That’s how it is to have clever, smart people around you.

HotNews.ro: How could you recruit such smart people?

Christian Madsbjerg: They just want the best, the most intellectually challenging projects. They want to be able to think about things. And have time to think. And they want to have very problematic, difficult questions posed to them. Questions like ‘Why is the pattern of the way that children play changing today?’ They want to work with this kind of questions.

They attract each other. And we have people moving from the USA or from Korea to Denmark because they feel this is one of those places where actually you have time to think. You can think how the world is changing,

HotNews.ro: Is it Denmark such a place?

Christian Madsbjerg: No, but our company is.

Well, Denmark is also, in terms of the companies that are in Denmark, they are pretty advanced, not only technologically, but also in the way of thinking about the future.

HotNews.ro: And how to understand it.

Christian Madsbjerg: Yes. So we don’t have any production at all in Denmark, we don’t produce anything, we only produce ideas, so that’s the only product that we basically have, ideas.

HotNews.ro: It’s a kind of ideal country, to play with the words…

Christian Madsbjerg: I don’t know.

It’s a country where a lot of people have high education, they work on research, development, green technology (like wind-meals, solar cells), that has all to do with understanding people, and there is also one thing that I am not aware of because I am Danish and I can’t see myself in the back, but they say that there is a certain attitude to watch consumption.

That just consuming, just buying new stuff is basically ugly; it is seen as something very negative, some call that minimalism, but it is also about just having enough. Not buying three big cars if you don’t need them. Buy a small one. Not doing something is a kind of classic in our society.

So if you are in China, they would not understand that, they will say: we’ve just got this, why shouldn’t we spend the money?

Or if you go to Russia, they have another feeling of money, which is that good, it’s just different, and this kind of very aesthetic and restrictive way of treating consumption, some people think that’s beautiful, they think that the products have a long lasting timeless quality, so are the furniture we produce, you buy a chair for 30 years and you’ll give it to your kids.

You don’t need more than that. It’s a beautiful chair, it’s perfect, you just keep that instead of buying new ones all the time.

So cutting down on consumption hysteria, and only have few things that you like, that you really like and you think they will last for a long time. And that way of thinking is very Scandinavian and a lot of my associates in the company that I work with, my colleagues that are not from Denmark, they came often because of that.

They feel that they can live a clean life, it’s like throw away all that stuff, clean up and think instead. If you look at the American society, it is full of stuff, and we hate stuffs, we don’t like it, and when we like something, it should be really, really good. So you can keep it.

And that’s a kind of design attitude, attitude towards products, and that is something that my clients like because they know that this way of thinking will be a broader way, a broader thing. And it’s moving to the big cities, it’s to live a clean, minimalistic life.

HotNews.ro: One question about the emerging markets in Eastern Europe: how do you see the evolution of the creative field in this region?

Christian Madsbjerg: I don’t know a lot about Eastern Europe, but we are doing a project about media in Eastern Europe for a Finish company, and what I can see now is that the emerging markets are emerging very, very fast. I travelled a lot in Korea, China, Singapore, Malaysia, India, those places.

In the West, in Denmark, for instance, a kind of general feel, a general idea about the future is that we will be the brains and they will be the legs and arms.

That’s just not true. They have brilliant engineers, brilliant concept designers, they have brilliant people, they are moving with a speed that there is much, much higher than what we do in sleeping old Europe. I feel that emerging markets will pretty soon come up at the same level in terms of competitiveness as the Western world.

That will create a whole new situation for all of us. I don’t know how that will happen, but I think that companies like Eastern European companies, some of the African companies, from India, Pakistan, China, of course, Korea, especially Korea – Korea has this hunger for getting up and being productive, being competitive.

And I am not afraid, I love it, I think it is fantastic, and I work with them, with these people, and I wouldn’t feel bad if companies in Denmark, companies in Germany go bankrupt because they are challenged. I think it’s wonderful if some Indian companies or some Romanian companies are more competitive, do better products, do have better technologies than Danish companies, fine.

That’s how it is. And that is how the global situation we are in, that is about being really, really smart and attracting the best people and working with the smartest people. And not being local, being global in your approach.

And when I look at countries like, let’s say France or Germany, they can’t speak English. You can’t pay with a Visa cards. They are just so behind in many, many ways, because they think they are good enough.

An interesting question is: would you rather be an A+ student coming from China, India, or Romania, or a C+ student coming from France? What would you rather be? A C student? I would be the A+ student from China, because I would have the leverage to be a part of what’s happening right now, instead of being served by the state as it’s happening in France, and not be able to get up.

[c:2:d]I think that the smart young people, let’s say, Romania, India, China, from those places, have so much opportunities, than they’ve ever had before. And they are running now, and I really feel that. They want to live interesting life, be part of the global culture, community.

HotNews.ro: Speaking about career, how do you see yourself in 10 years?

Christian Madsbjerg: Something very different. I only see myself in 2 or 3 years, maximum. I see so many turns in my life already, I don’t know. I want to write some books at some time.

HotNews.ro: In this field?

Christian Madsbjerg: Not necessarily. Maybe a novel.

the interview is simoultaneously published in the cultural weekly Dilema veche