THE FUTURE OF DAIRY: Building an Intelligence Engine
Accounting for 11% of U.S. agricultural output, the vast majority of the dairy industry is comprised family owned and operated farms across all fifty states. But the industry has struggled to meet rapidly changing consumer needs and tastes that are being better met by alternatives. We partnered with the USDA's Dairy Management Inc. representing the dairy community to deploy design on the scale of an industry. As part of a multi-year strategic engagement, we are laying the groundwork for an intelligence engine to serve the 45,000 entities throughout the farm to table chain. We anchored our approach to building this knowledge base around understanding the broader consumption landscape and identifying the core values most at work in informing food and bodily consumption, in order to frame dairy within the larger context of meaningful decision making. And more importantly this consumption framework operated as a scaffold for existing and future research, reframing their understanding of today's consumer and connecting the dots within this rapidly changing landscape.
Our goal in building this engine is to catalyze entities across the spectrum from small family farms to large producer conglomerates to utilize core values to inspire innovation, whether that is aligning new product development with consumer aspiration or attracting top talent to the community. By reframing traditional segmentation constructed around past behaviors, the core values framework helps organizations understand how to tap into consumer aspiration and hopes. We reorienting dairy from cow to consumer and in the process, aligning dairy's value proposition with more contemporary concerns and telling dairy's story in ways that more compellingly resonate with consumers.
Our foundation study paints a picture of consumers who are confused, conflicted and seeking clarity. They distrust traditional authority and nutritional science and drawn to gurus and food philosophies that are more personalized and relatable in their quest for clarity. In seeking balance, they reject 'ism's in favor of 'ish.' And consumers fall in and out of predictable learning stages when they are actively researching and more open to ideas. In unpacking these stages, in identifying the triggers, the markers, the influences and the best communication channels, we're helping the dairy industry to better target consumers when they're actually listening and open to change.
We currently delivering the results of this first research phase through facilitated workshops with various industry groups combined with an online immersion experience and a print component to springboard new product development and innovation across the industry. Expanding design practice to operate at the scope of industry and work pre-competitively required new ways of thinking, and novel methods of interaction. Yet in doing so, we're expanding the definition, reach and outcomes of design in genuinely exciting ways.
Situating Core ValuesCore values endure while the attitudes and perceptions that inform behaviors change as new information is internalized
Widening the AperturePulling back to situate diary consumption within the larger context of meaningful decision-making
Conducting a large-scale ethnographyConducting nationwide fieldwork with 50 consumers in 5 regions over 5 hr interactions
SynthesisAnalyzing and synthesizing to distill findings and frameworks
The Perfect StormToday's changing consumer landscape is the result of a perfect storm of factors that leave consumers confused and conflicted
Building an Intelligence EngineCreate a dairy community intelligence resource that not only informs but builds an organizations capacity for innovation.
Innovation FrameworkSelecting various elements from the toolkit deck to force novel associations, organizations develop new concepts and services based on insights and core values.
Totaling $31.8 billion in 2016, the dairy industry accounts for 11% of U.S. agricultural output. The vast majority of dairy farms are family owned and operated, and over 80% of milk production comes from producer cooperatives in all fifty states, a stark contrast to industrialized farming in other sectors. But the industry is in free-fall as consumers have soured on milk. Milk consumption has dropped precipitously, milk prices are at historic lows, and with a misguided emphasis on cows rather than consumers, more efficient dairy operations have resulted in a worldwide milk glut. On the consumption side, the rapid growth in alternatives better aligned with changing needs, tastes and concerns has eroded dairy's core value proposition. Yet the industry has focused on selling what they make rather than making what people want.
In 2017, we partnered with the USDA's Dairy Management Inc. to deploy design on the scale of an industry. As part of a multi-year strategic engagement, we are laying the groundwork for an intelligence engine to serve the 45,000 entities throughout the farm to table chain.
Consumer behavior can seem opaque, inconsistent and irrational. The dairy industry has found itself on the defensive, reacting to rapid changes in consumer perception, behavior and needs. The rise of dairy alternatives and the effective campaign to malign dairy and its traditional image of wholesome goodness have caught the industry off-guard, conceding the health high ground. Dairy finds itself out of step with contemporary health concerns, food production and processing fears, and product development trends.
In initiating this engine, we identified 3 immediate challenges: 1. Understand the larger landscape of consumer consumption, attitudes and purchasing behaviors to situate dairy consumption in the broader context of meaningful decision-making 2. Evolve the industry from its' reactive position to a more responsive one, where dairy organizations can make sense of rapidly changing consumer beliefs, behaviors and perceptions 3. Deliver this information to diverse entities in ways that drive innovation across the industry while remaining pre-competitive throughout our interventions
The first step was theorizing and executing a foundational study that would represent a robust intelligence scaffold on which existing and future research programs could be organized and structured around. The resulting approach was unique in two ways. While beliefs and attitudes change over time and circumstances, they're better understood as changing expressions of enduring core values that act as a compass for decision-making. Once identified, they can explain and predict behavior and springboard new product development. Secondly, unlike existing industry research, we widened the aperture beyond dairy consumption to look at products people ingest in or on their bodies, from food and drink to skin care and supplements to compare and contrast beliefs and behaviors and how they operate across categories.
The Core Values Foundational Study was a nation-wide, deep immersion ethnography with 50 consumers across five regions over 2 visits totaling 5 hours each. We conducted in-home interviews that traced life-long food journeys, documented and explored food inventory, investigated influences and social networks and observed various rituals and routines that uniquely informed an individuals approach to consumption from shop-alongs to meal preparation to online research. Our cross-functional team of anthropologists, designers and psychologists worked together to conduct fieldwork and synthesize an enormous body of information into concrete and actionable insights and opportunities. This was no small feat with 250 hours of video and over a thousand pages of coded transcriptions. What we discovered was a perfect storm for the dairy industry.
Milk mustaches cannot hide the fact that milk is no longer the drink of choice for anyone other than children. With an eroded value proposition, the dairy industry needs to shift their understanding of their core business in order to evolve. In addressing the immediate, but also larger structural challenges, our work paints an over-arching narrative of a dramatically shifting consumer landscape. People are confused about what is and isn't healthy, seek clarity from curators because its easier to figure out who to believe than what to believe, reject nutritional science in favor of food philosophies, embrace 'ish' over 'isms' in finding a balance, and move in and out of learning stages where they're more or less open to new ideas. This narrative is set against a framework of the aspirational core values that inform meaningful decision-making throughout one's lifetime as a roadmap for new product development across the industry. While one's behaviors, attitudes and perceptions change with new information, our core values once established in early adulthood, remain consistent and help orient the larger trajectory of our lives. While we're not always aware of our core values at work, they impact decisions both big and small. And products that resolve tensions and conflicts are primed to resonate.
OUTCOMES Our initial study provides the intelligence and actionable strategy for America's diary farmers to respond to this changing landscape and arm themselves with a deep understanding of not only how consumers make decisions but the rich opportunities to inform and influence those decisions. By nature, these organizations are structured around the primacy of milk, but that mindset hinders their ability to evolve their core business. We're shifting their understanding of the consumer in ways that allow them to more nimbly respond to changing needs and tastes, to develop the kinds of products that keep dairy relevant and to understand how to speak to consumers skeptical of science and traditional authority. Our work redefines the core business of dairy by creating value around their core products, shifting from a purveyor of milk to one of dairy based nutrition. And leaves behind the language of science and nutrition to speak to consumers in ways that clarify, connect dots and resonate with deeply personal experiences.
To disseminate this intelligence across the dairy community, we needed to distill our findings in simple, compelling yet nuanced ways. Our comprehensive intelligence eco-system is comprised of facilitated immersion workshops with industry groups, and a comprehensive toolkit comprised of an online, interactive experience and a print component that keeps findings close at hand for key decisions, all currently being deployed across the industry. Our rich, in-depth research findings were distilled into the top ten quick and memorable learnings that people could continually refer back to and inform their path forward. Our core values frameworks is structured to jumpstart innovation through forced associations and novel combinations. And our multimedia components bring findings to life by showcasing the consumers' voice. We identified the 28 core values most closely aligned with consumption, clustered into five primary orientations, as a framework to act as both a springboard and a reality check for new product development, upending traditional market segmentations based on current behaviors.
Though constrained by the pre-competitive nature of our work, we've highlighted opportunities for organizations across the spectrum to capitalize on these insights. For example, as alluded to above, consumers experience learning stages often associated with life milestones like a first pregnancy or when a parent becomes ill, when consumers are actively researching and much more open to new ideas. We partnered with a data analytics group to identify product clusters that signal learning stages and then deliver relevant information at a time when consumers are actually listening. And we're dimensionalizing this work in ways that deliver value across the spectrum, from the farmer whose immediate concern is staving off bankruptcy to large producers keen to better align their product portfolio with emerging opportunities.
Why does this matter? Today's desperate situation of America's dairy farmers negatively impacts our economy, environment and health. Without the ability to remain viable, dairy farmers face bankruptcy, herd selloffs, and disturbingly, a recent sharp uptick in suicides. As farmers are driven out, industry consolidation leads to the rise of large-scale, industrialized dairies, rare just a decade ago. These concentrated dairy operations are an environmental crisis. They strain effective manure management and lead to elevated levels of nitrogen seeping into the groundwater and acquifers, oxygen-depleted dead zones, and increased risk of fecal coliforms contamination.
Big dairy also contributes to the economic woes of the industry. Got milk? Too much. The obsessive focus on increased efficiency and production results in far more milk than production capacity, driving down worldwide prices and leading to increased cases of milk dumping. Lastly, America's heritage of family owned and operated farms has all but disappeared across agriculture, with the exception of diary, which represents one of the last outposts of traditional farming. This strategic partnership was built to develop and deliver the intelligence needed to help these organizations survive and thrive in a new consumer landscape.
Providing dairy farmers the vital knowledge to better understand consumers and their changing needs and the tools to innovate around those needs form the basis of our intervention. Transforming an industry by design has demanded new methods and means to reach across disparate organizations to seed innovation while ensuring we're not playing favorites. And it means expanding the definition, the reach, and the outcomes of design practice in unconventional and pioneering ways.