Cognizant has made an investment that gets to the heart of “digital”—understanding and serving the customer of the future. The service provider announced a 49% stake in ReD Associates, a consulting firm specializing in using human sciences to help businesses understand consumer behavior. The approximately 70 ReD consultants include behavioral economists, anthropologists, sociologists, and ethnographers. The partnership complements and extends the capability Cognizant has in DigitalWorks for human-centered design thinking as a lead in to how “digital” can truly change the way we work.
ReD specializes in making “understanding people” the heart of decision-making. Cognizant has been moving in this direction with its use of design thinking to lead digital transformation, but its culture is rooted in IT and also business process services. This partnership brings together specialists in human science and behavior with specialists in IT and data sciences to define problems and solutions. The solutions can then, of course, tap into the Cognizant suite of services.
Service providers tend to rely on what a service buyer tells them, their consulting activity, and/or data and analytics. A human science capability adds a new lens through which to develop an understanding of the consumer. We’ve seen how human scientists can participate effectively in design thinking and transformation efforts run by other service providers. On the other side of the coin, the partnership with Cognizant gives ReD a channel for extending the use of its capabilities into areas of the business that might not be thinking about using their capability yet, and also enables them to turn the insights into action through the extensive set of Cognizant services for “run better” and “run different.”
By taking an investment rather than acquisition approach, Cognizant allows ReD Associates to maintain its employer brand and agility as a small company. While human behavior scientists are increasingly valuable participants in digital and business transformation, a service provider like Cognizant is not a natural “home” for this skill set and profession. We believe ReD is in a better position to recruit and retain behavioral science talent. However, the two companies will need to establish some solid guiding principles on joint efforts to avoid a culture clash between the consumer consultancy and the large IT and business process services provider.
On the plus side from a cultural standpoint, Cognizant does design thinking very naturally as part of its digital transformation initiative, which will be complementary for the creative talent at both organizations to embrace. It will be advantageous for Cognizant to connect its Digital Works strategists and designers with ReD’s human science talent to maximize the creative potential of the combined organizations. It is promising that the two companies have already worked together over the past year on various projects, including an effort to find ways to digitize healthcare experiences to make them less expensive and more efficient for healthcare staff and patients. Another area with high potential for synergy is ReD’s initiative to analyze human interaction with driverless cars.
By investing in this type of talent and skill, Cognizant is demonstrating a keen eye to service future consumers. We see this move as another step in Cognizant’s “run different effort to help clients both “run better” and “run different” and be increasingly flexible and ready for change.
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