Measuring the ROI of Thought Leadership | Cindy Anderson and Anthony Marshall | 449

How do you measure impact and ROI for thought leadership? That's a question I hear from a lot of heads of thought leadership and also from their senior leadership sponsors. So today, let's look at that question with two individuals who are answering it with confidence and data. Meet Cindy Anderson and Anthony Marshall of the IBM Institute for Business Value. Cindy is the global lead for thought leadership engagement and eminence, and Anthony serves as senior research director at the institute. The institute has a long history of excellence in thought leadership, and I've asked Cindy and Anthony to talk about the institute and then also recent research they've conducted to measure the ROI of thought leadership. Today we're focusing on the metrics of thought leadership impact. I'm Bill Sherman, and you're listening to Leveraging Thought Leadership. Ready? Let's begin. Welcome to the show, Cindy and Anthony.

Thank you.

Thank you.

So Cindy, let me start with a level set question. The Institute for Business Value at IBM, what is it? What does it do? And maybe just a little bit of its history and pedigree, if you will.

Absolutely. The IBM Institute for Business Value has been around for 20 years, and for two decades it has served as the independent thought leadership think tank for IBM. And what that means is that we produce thought leadership, which is what we're talking about today. We produce about 120 reports a year. Including 5 major research studies that generally include interviews with 2,000 to 3,000 to 4,000 global executives and consumers for each one. Our work is broadly categorized into 5 major programs, the largest and most well-known of which is our C-suite program, which is actually older than the IVV itself. That covers both traditional C-suite roles, so CEO, CIO, COO, And also those emerging roles that we're seeing come through Chief Sustainability Officer, looking at Chief Data Officer, Chief Transformation Officer, some of those kinds of things. We report on multiple technologies and various functions, things like HR, talent, future of work, supply chain. And we also have a pretty robust ESG portfolio that's focused on diversity and sustainability, quite a lot of content there. We have our third Women in Leadership study actually scheduled for March of 2023. And we are super proud to say that we were awarded the first Gold Stevie in both the American and the International Business Awards this year for excellence in thought leadership in the first year that that category was actually offered as part of the awards program. So, so that's the IVV in a nutshell.

Congratulations on the Stevie Award for Thought Leadership. And if I can put in a point of pride as well, we were the ones who went to the Stevies as Thought Leadership Leverage and said, this is a business category of work that needs to be recognized and that excellence is happening and is not on radar and it needs to be established as a function.

We're very grateful for that. Thank you.

So one of the reports I believe that the Institute does is the annual CEO report, correct?

Yes, sir.

And that's one that listeners may be familiar with. Let's talk on that for just a moment as a piece of tentpole thought leadership, if you will. How does that work, Anthony?

So the IBM Institute for Business Value CEO study has actually been around since 2004. That was the first year that the IBV, before I joined, started with the CEO study. And that really led to a whole program of C-suite thought leadership. So the original C-suite CEO study was, I think, around 400 CEOs. We're up to 3,000. CEOs now. And it has changed over time. Some years we've actually produced a C-suite study in total, so across 6 roles in one study. Now we've decomposed it again into a CEO that we bring out every year, but we're supplementing that with other roles. So in the last 12 months, we've produced a CIO study, a Chief Technology Officer study, a CFO study. And we're working on a Chief Data Officer study. We've just released a CS/CO study, but each year we produce the CEO study, which is helpful on a couple of dimensions. Number one, because it's been going for so long, we've actually got this fantastic longitudinal data to see how the sentiment and ideas and philosophies of CEOs has changed over time. So we had some questions that we asked very consistently across all of those time periods. But it also allows us the flexibility to deep dive into specific topics. So sustainability, top of mind in the last period of time, has been the focus of the most recent CEO study, but not just about sustainability. We focused on more strategic or what we call transformational sustainability. And so that's really looking at the, you know, the perspectives of the CEO in how they employ technologies or things like ESG. And actually use it as a driver of strategy, not just a mechanism of compliance, if you will.

I think one of the things that, for listeners, I want to explore just a little bit is the concept and the value of having done this for 20 years. So many organizations now that are outside of the consulting world, they may be in manufacturing, they may be in technology, They're looking and saying, "Okay, how do we stand up a function of thought leadership recognizing that it's different than content marketing, different than many of the traditional mechanisms?" What is the value that you've seen beyond the longitudinal piece of the 20 years an institute has existed? How does that impact how the institute works within the organization and beyond the organization? Cindy?

Yeah, sure. I think one of the main impacts of having 20 years of history of the CEO study and the C-suite series and thought leadership in general at IBM is that we have immense levels of support for thought leadership as a brand-building capability, as a top-of-funnel capability, as a an awareness capability within IBM. So our executives are immensely supportive of the work that we do, and they have directed the rest of the organization to use IBV's thought leadership as the content engine for the rest of the organization. So we see ourselves as, depending on how you look at it, either the foundation or the umbrella over all of the other promotion work. In fact, Anthony and I are sort of fond of saying that thought leadership is the 8th marketing P, even though it doesn't start with the letter P, because it's essential to that marketing mix and the kind of content development, the kind of promotions that an organization does as the basis, as the foundation, because it delivers that credibility and that authority and that just, you know, foundation that you can build every other promotional campaign from. So I think that's the main benefit that we've seen and the value of having such a long history within an organization is really that support of the executives in using thought leadership as the content engine.

Anything you would add to that, Anthony?

Yeah, it's very interesting that, you know, it's in some ways until recently, no one's been able to quantify the value of thought leadership. This is something that we've been able to do. I'm sure we'll talk about that more later. But even before that, given that the Institute for Business Value has existed for such a long period of time, it has demonstrated a commitment on the part of the organization that even if there hasn't been a lot of data to support the relevance and the fact that thought leadership can be a huge driver of value, of setting the scene, being the tip of the spear, enabling conversations. At a strategic level with the C-suite and others, the IBM organization's really supported it for a long time and made major investment in it. And so, in many respects, that's a leap of faith. And I think we're starting to see the data to show that that faith has been borne out by the facts and all of the conversations that I'm sure you're having, that Cindy and I are having, that thought leadership is becoming ever more important. As a differentiator in terms of motivating discussion, having something to talk about, having something of value to bring to clients that doesn't involve a sale of a product or service.

Exactly. And what I love in the journey that the two of you jointly described is from executive sponsorship within IBM, where there was belief, we're going to invest in this because we believe this is a value and we know it will take a time to what I would describe as a phase of anecdota where there are stories, data that's sort of squishy, but you can sort of compile it and go, we know we're making some impact, but it's not rigorously measured or defined. But when asked, how is this working? We can at least point to something. And you alluded to Anthony moving that to a point of rigor. And I think one of the things that has happened because much of marketing has moved from anecdota to quantified rigor through the last 20 years with the internet and be able to do a paid sponsored ad and then see what those results are on that. The question has become increasingly more to the top of mind How do we measure the impact of thought leadership? And I know that that's something both of you have looked at, both theoretically and then on a very applied level within IBM. So I'm going to start with this question here, Cindy. How do you measure thought leadership and how have you thought about it?

Well, thanks for that question, Bill. And we've been thinking about this for a very long time. We've been really fortunate in that you know, who better to really investigate the value of thought leadership than those who do it every day? And that, you know, those who do research and investigate the value of all sorts of things in the world. And so, we were fortunate enough to be able to turn the research lens on ourselves, on our own practice. So, the kinds of things that we do every day, we turned that around and said, "All right, what does that mean to us? What does that mean to thought leadership?" And we were able to put together a survey, a study that we did with, with our research partner. And we interviewed 3,700 executives. Half of them were CEOs, half were other C-suite roles globally in 26 countries, 16 countries and 26 industries, average revenue of $29 billion. So these are the world's leading executives, CEOs and other, other C-suite executives. And we asked them how they use thought leadership, what they do with it, if it's valuable, what does it mean to them. And we also asked them how it impacts their business decisions, how it impacts their purchase decisions. And we were able then using that research and that data to calculate an ROI, a return on investment for thought leadership. So, I'm skipping over a lot of the middle there, and I know Anthony can share a lot of the detail with that. But that was, you know, our purpose was to say, all right, we do this every day. We look at, we use research, we analyze, we figure out what things mean and where the value is. Let's look at our own practice. We did that and we were able to calculate a really data-oriented, data-driven return on investment for thought leadership.

And I think you now have the attention and perhaps the envy of every head of thought leadership listening in the sense that It is the question that all of us want to answer. What is the ROI? How do I calculate it? And how do I give a reliable, consistent number? And a lot of us have been coming at this question from different directions. Anthony, I'm going to turn to you. Let's talk about the study. Let's dive in.

So one of the things that we learned when we did the survey about executives and how they think about thought leadership, how they use thought leadership, is that two aspects of thought leadership came through as most valuable. Number one, expertise, and number two, proprietary original data that people can't get from anywhere else. If you've got that with analysis, then that is the gold standard of thought leadership, and that is enormously attractive to executives. So with that philosophy, we sort of applied that philosophy to to the questionnaire and, and literally asked executives, does consuming thought leadership impact your purchasing decisions in terms of services and products? And if so, to what extent and how frequently? And we were able to find that, uh, in excess of 80% of executives indicate that they've made a purchase decision of some kind in the last 3 months based on the thought leadership that they consume. Depending upon the size.

And let me pause there. Made a purchase decision on behalf of their organization rather than personal, correct?

Correct. So we're talking, you know, basically a purchase decision of goods or services from their organization. Yep, exactly. Um, because as, as you know, thought leadership is, is most effective in a business-to-business environment. And, and so these— and, and we're able to start sizing the magnitude of that spend, both from direct spend that is directly influenced by the thought leadership. And that's not saying, you know, I'm selling a widget and the thought leadership is about the widget and go out and buy the widget. This is about—

Yeah, that's product marketing at that point.

Yeah. I'm talking about transformation and, you know, here is an analysis of transformation and key strategies that we've been able to demonstrate as most effective in transformation. These are the sort of steps that you need to take. These are the investments you need to make. It's those sorts of decisions. And depending upon the size of the organization, that's well in excess of $100 million in the US and in directly associated spend. But there's also influence spend. You know, in marketing, you talk about influence, influence of spend in marketing. It's a similar concept here, and that is orders of magnitude greater. So, you've got the two elements of impact. Number one, you've got the fact that thought leadership is leading to purchase decisions on the part of executives, particularly if the thought leadership is seen as rigorous and independent. And within that, you've got an aspect of that decision that is direct in terms of directly associated spend, but also influence spend, which is orders of magnitude greater than that.

And I'm thinking of influence spend as a halo effect. Is that a fair way of thinking of that, Anthony?

That's exactly right. And if we're starting to do some calculations based on the data, and of course not all that influence spend is realized, and so we're having to look at the data in more specific ways and sort of say, okay, what, you know, of this large amount of money, whether it's 300, 400, $500 million, What proportion is actually going to be realized? And it's going to be a fraction of that. But the fact is it's going to be something, right?

There's an opportunity to go after that halo and you can start saying, okay, how do we get that 3 to 5x of direct spend? Now on that $100 million of direct spend, was that self-reported by the interviewee or was that calculated a different way?

So that was directly reported by the interviewee. So we didn't lead the witness at all. This was not something that we drove by assumption. We literally asked, how much do you spend? And we were able to associate that with overall spend. And given that IBM's a technology company, we also looked at technology, which is some proportion of that.

But there's a piece here that I think is worth calling out. If that's self-report data from the CEO that's interviewed, That's $100 million on average that they're aware of and influencing at their level and their spend. That's not the total influence of a $20 billion company. That's just the fraction which is visible to the CEO. And if we were to cascade down through the layers of the organization, you would have, I would assume, more direct spend in different areas. As well as then significant indirect spend.

That would be correct. And also, if you look across the portfolio of possible areas, we honed in on—

You're just looking at technology.

Engineering, architecture, rental property. There are so many possible areas that thought leadership is now becoming part of that it really is a very sizable amount.

Yeah, I would say one of the, one of the things that we did with this study is you're absolutely right, Bill, and the numbers can get exponentially bigger depending on the size of the organization. But we wanted to focus on what we could prove through the data. So that's where when, when you hear us talk about ROI and talk about the number when you want to get there, but it's really from the data. And the calculations that we have done are from the data that was directly given to us by these CEOs. So there are a lot of, you know, kind of assumptions that we could make about what this number could look like. And like I said, it could get really huge, but we didn't make those assumptions. We used the actual data and calculated based on, you know, the numbers that they gave us. So this ROI, this kind of opportunity for thought leadership-producing organizations is the minimum of what it could be.

Absolutely. And in some ways, if this was a journal article, I'm jumping down to the next steps and places for future research because I think what you're doing is laying out a methodological foundation that can be extended and extrapolated. If you are Enjoying this episode of Leveraging Thought Leadership? Please make sure to subscribe. If you'd like to help spread the word about the podcast, please leave a 5-star review and share it with your friends. We are available on Apple Podcasts, Spotify, and all major platforms, as well as at leveragingthoughtleadership.com. So we've teased a fair amount. Let's get into the heart of this, which is the ROI. Everything that every head of thought leadership wants to be able to take to senior leadership or to the board and say, if you put an investment of X, what is the Y on the outcome on that? And for a long time, it's been more of a black box mechanism for thought leadership. What did you find And how did you find it?

Yeah, the, um, so the ROI for thought leadership based on our data is 156%. And that we can go through what the actual calculations were, and organizations can calculate their own based on the data that we have to, you know, depending on how they spend. But what we found is that this is 16, 17 times greater than what a typical marketing campaign will return, which is somewhere around 9 or 10%. So, we're looking at, and this is why we call it the 8th P of marketing, right? Thought leadership is essential as the foundation of a promotions program within an organization because of the returns that it delivers. Both direct, Anthony mentioned 87% of CEOs said they have made a specific purchase decision in the last 90 days as a direct result of reading thought leadership. That's not—

And had something in mind when they were replying to your survey, right? That's not an abstraction because they were able to say yes and give a number.

That's right. It's unequivocal. And again, I didn't mention this when we were talking about the survey, but this was a double-blind survey. It was completely anonymous. So, the respondents had no idea that IBV, that the IBM Institute for Business Value was the originator. And we had no idea who the respondents were other than we set parameters of how many CEOs and what size organization. So this is completely without bias. It's not based on us knowing the people we interviewed. It's just completely free of bias and justifiable in that sense.

So when you calculated those numbers, were those— because I think everybody who goes into a study has a little bit of a hypothesis they're testing or an instinct. Were those on par with what you were expecting? Was that lower? Was that higher? Anthony, I'd love to hear your thoughts and then I'll come back to you, Cindy.

Well, it was immeasurably greater than we thought. It really blew our minds, quite frankly, when we started seeing the numbers. And originally we just started, we surveyed in the US and the numbers were extraordinary. We subsequently surveyed in the other 15 countries that Cindy mentioned, and the numbers held up proportionately. In fact, as a proportion of revenue, the United States is only the third most adopted thought leadership in the world. Interestingly, India is number one.

Interesting.

And other countries in Asia— now, in aggregate terms, it's lower because the average size of the organizations that we surveyed were lower in India, were smaller in India, but proportionally, it was even greater. And so not only did they hold up, they were actually the sort of variation that one would expect from a random sample, which this was, given that we were surveying particular organizations. Initially, although we had the data to calculate an ROI, it really hadn't occurred to us to do so until we saw the implications on spend, both direct and influence, which made us think, okay, well, how would we calculate an ROI? Unfortunately, we had the core ingredients. Such as how many thought leadership organizations does an average executive consume? How much time out of the week do they consume thought leadership? We talked about the spend elements of it. We were able to decouple all those sorts of things, estimate what the profitability of a research organization was, estimate an average budget from looking at annual reports, et cetera, et cetera, in order to come up with the number that Cindy indicated. So, And as Cindy mentioned, this is completely defensible to the extent possible. There were no assumptions in here whatsoever. It was all parameters set by the survey itself, which is what the executives were telling us, not what we were telling them.

This is the sort of data that shifts a conversation from defensive on thought leadership of, okay, we know we're doing this because it's probably good in the long term. To a conversation of why aren't you doing this and how are you allocating your spend to make the most of thought leadership. One of the things that stands out to me as well, Anthony, you made the comment that the US is third in this study. And I have heard from a number of people who are practitioners on thought leadership around the world that they assume that the US is in first place on the consumption. Of thought leadership. So I'm surprised by that finding alone, that it is not an American-led piece as perception may be. Cindy, your thoughts on the ROI?

Well, I love the ROI, Bill. I wish I had it 15 years ago when I was looking at thought leadership competency at my previous job because I would've had some rational evidence to go to the executive team with to say, "Here's why we need a thought leadership program." Rather than tap dancing, right? Or rather than saying, "Well, everybody's doing it. We know it's a good idea. Look at all the folks who have been doing this for years and years and years." So, you're absolutely right. The proof aspect of it is immensely beneficial to those of us who do what we do, and it feels so gratifying. To know that we can prove that what we do is beneficial to the organizations that we do it for with the, with this data and with these numbers. So, and Anthony is right, it did, it knocked our socks off. We were, we were very surprised by the number being as high as it was. And, you know, we did take into account mindshare, you know, how many, how many thought leadership organizations does an executive consume? What's the reach? Can you reliably assume that just because the CEO is reading it, that everybody in the organization is reading it? You know, what are the share rates? So, all of that is calculated or is incorporated into the calculation of the ROI. We didn't have the data, like, you know, what's the average profitability for an organization? We went to other third-party sources and got, again, completely defensible numbers to include in these calculations so that we were 100% confident that we were delivering an ROI number that would be defensible for our colleagues around the world when they're in budget conversations.

Now, there may be a number of heads of thought leadership that are eager for their next meeting with their champion or senior leadership to share this number, and they're probably wondering where they can find a citation or something that they can point to. So I'd like to turn the conversation to you. We've had this conversation. They could point to the podcast, but how are you going to be telling this story of this research? Where does this go from here? Cindy?

Well, originally we were just happy with the number and we're very happy that we could shop it around at IBM and give it to our marketing colleagues and so forth. And as we've talked to our colleagues in thought leadership in other organizations, there's been a lot of interest in it, as you can imagine. If I had heard this on this podcast 15 years ago, I would have been like, yep, give it to me. So, Anthony and I are in the process of writing a book, which will be out at some point next year, which will have all of the data and the information that we that we captured from the survey will show the calculations, the, you know, the way that we arrived at the ROI. And it will also deliver a tool for organizations to use in calculating their own ROI using their own numbers based on our data.

So, Anthony, if you were to advise a fellow thought leadership practitioner who is going to make the case internally? What advice would you give based on what you've learned, not only through your career, but also through this study? Maybe a tip or two.

So just following up on an earlier point that you made in terms of the consumption of thought leadership, we found that the average executive spends 2 hours a week consuming thought leadership. Just a lot of— and that stood up remarkably well. I'm talking about within 5 percentage points. Percent variation around the world. It was really remarkable. And so I think the first thing that any leader in this space could categorically indicate is that people are consuming thought leadership. Executives are consuming thought leadership. In the United States, 88% of CEOs consuming thought leadership, our survey found. And we know that they're consuming 2 hours of thought leadership, 2 hours each week they're spending on consuming thought leadership. We know that on average, the average executive consumes thought leadership from 5 organizations, and we know that it is influencing their decision-making about what they spend their money on. And we also know that the more independent and rigorous the thought leadership is, the more that it's going to influence them. And so, the opportunity is there for any organization to pursue. Thought leadership as a key aspect of their engagement strategy with their clients. What is critically important to remember though is that if you start messing about with it, if you start making it less independent, if you start making it less rigorous, if executives can't trust it, they're going to stop consuming it and it's not going to have any impact. It will in fact drive resentment and we're looking at the relationships there and we're seeing precipitous drop-off. Of engagement if executives don't perceive it as being robust, rigorous, and relevant. So, it's certainly worth making the investments in building capabilities within your organization. If that's not possible given scale, sort of finding other ways within an ecosystem of building those capabilities, whether it's contracting with particular organizations or building partnerships, but getting into the space if you're not there already. And if you are there, building and making and improving the capability is enormously value-increasing.

You mentioned that statistic of 2 hours a week, and early in my career, I remember the phrase, "Leaders are readers," and it was tied often to the consumption of the number of business books that an executive or someone on executive track would read versus the average employee. Now there are different modalities of consumption of thought leadership. But I think the underlying point when you say 2 hours a week of a multi-billion dollar C-level executive's time, that's expensive and they're not going to continue it unless they are seeing return on investment for that time that they spend learning. And so they're looking for a call to knowledge and education rather than, you said, being pitch slapped, where all of a sudden halfway through the article there's, you know, and here's our product or service, right? Cindy, let me turn to you. Practical tips, recommendations based on things that you've learned over your career or through this study that you would advise a colleague.

I think Anthony hit all of the highlights for sure. The most valuable thing I think that any thought leadership professional can do is find data like this, use it to generate support at executive levels within the organization, build the relationships that are going to be most valuable to the thought leadership production organization or function within the organization. Because without that support, it can happen, but it's, it's immeasurably more difficult for it to happen that way. And then the other thing I would say is be careful that you don't jump on bandwagons of the latest type of content. One of the, one of the fun, most fun data points that we found in the survey was as much as people have been claiming the death of PowerPoint over the last two decades, PowerPoint is, if not number one, number two in the way that executives prefer to get thought leadership information. Um, and it's something we'll investigate further, but we think it's probably related to them, you know, seeing presentations or, or attending events and hearing presentations and, and remembering what they're seeing in slides. So PowerPoint is by no means dead for thought leadership producers, nor is long-form content, you know, which is really the foundation of that trusted, authoritative work that Anthony was talking about. So I would advise, you know, my colleagues or my earlier younger self to say, you know, don't necessarily jump on every bandwagon that comes along with respect to new types of content. Or if you do, make sure that you've got a good mix of different methodologies that you're— or methods that you're delivering your content in, because it's really important to the executives who are reading it to see multiple different things. And then I guess the last thing I would say is Anthony mentioned our investigation into what we're seeing as a significant premium for independence as well as trust. So there are premiums for organizations that produce— what'd you say, Anthony— robust, rigorous, and relevant thought leadership that is independent or perceived to be independent of the sales arm or promotions arm of the organization. Super important. And that is trusted. And, and that was an element of the survey as well. So I would just reinforce what Anthony said about, about don't muck around with the model, which is thought leadership has to be those two things in order to deliver the kinds of value that we saw in the ROI calculation.

So I want to thank both of you for taking the time to share these findings, and I am incredibly happy that you have both led the research on this. I am looking forward to more details. So when the book is out, I would love to continue this conversation with the both of you. And thank you for taking time today.

Thank you, Bill. Great to be here.

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