The ROI of Human Understanding
Executives rarely set out to waste resources. Yet in organizations of every size and sector, waste quietly accumulates, often because decisions are made with partial understanding.
It shows up in misdirected capital investments, campaigns that address the wrong problem, and initiatives that solve symptoms rather than causes. Each represents the same failure of process: acting before understanding.
The most efficient organizations aren’t those that move the fastest. They’re the ones that start with better insight.
Why Strategy Fails Without Insight
Richard Rumelt, author of “Good Strategy / Bad Strategy,” argues that every effective strategy has three parts: a Diagnosis that identifies the real challenge, a Guiding Policy that sets the general approach, and a set of Coherent Actions that make it real.
The first step — diagnosis — is the one often applied poorly. Leaders rush to policy and action, mistaking surface-level analysis for deep understanding. Leaders lean on their expertise and years of experience, which has certain value of course, but can also blind them from their own assumptions and biases. Or conversations don’t occur in places of safety and trust, and productive dissent never surfaces and group think takes over.
Without the right diagnosis, even perfectly executed plans waste time and capital on the wrong problem. The discipline of diagnosis is where insight lives. It’s not just data analysis or dashboards; it’s the deep understanding of human experiences, perceptions, and expectations that explain numbers.
In dynamic business environments — which seem to be in every sector right now — adaptation depends on continuous sensing: watching for signals, patterns, and contradictions that static models miss.
Rich Horwath describes it even more practically in “Deep Dive”:
Strategy is the intelligent allocation of limited resources. The quality of those allocations — and the ROI of the strategy — depends entirely on the depth of insight that precedes them.
Community Insights Drive Capital Efficiency
Case Example
A regional health system was facing a familiar challenge: should it expand outpatient capacity across its growing service area?
At first, the data suggested restraint. Population growth alone didn’t justify new facilities, and travel times looked manageable. But when leaders engaged the community directly — hosting town halls, visiting neighborhoods, and even driving the routes themselves — the story changed.
A single two-lane bridge divided the southern region. East of the bridge, along the coast, residents were more affluent, many having moved from outside the area. They commuted north along major highways, oriented toward the larger coastal towns. West of the bridge, the community was more rural and less affluent, and residents traveled locally along smaller roads.
Though the two areas appeared geographically close, they were socially and economically separate. People on one side rarely crossed to the other — not for groceries, restaurants, or healthcare.
No dataset could have revealed that. Only human insight — the kind gathered through observation and conversation — explained why an outpatient facility located east where the population was most dense wouldn’t serve both populations. The capital plan was revised to include a larger hub as far west as feasible to bridge both markets, and a smaller access point west of the bridge.
The revised plan not only improved access and retained market share that was drifting out of the service area; it prevented millions in potential waste from misallocated construction and underused assets.
Strategic ROI lesson: Ground decisions in lived reality, not averages. Quantitative analysis identifies opportunity; qualitative insight ensures relevance.
The Campaign That Solved the Wrong Problem
Case Example
A marketing department for a mid-sized health system faced another common frustration: patient volume in surgery had plateaued. The team launched a campaign urging residents to “choose local surgeons.”
It made intuitive sense — until the data was examined. Referral patterns hadn’t changed. No new competitor had entered the market. And local residents weren’t defecting elsewhere.
The problem wasn’t competition; it was behavior. During the COVID-19 pandemic, many patients had delayed or abandoned elective procedures. They hadn’t switched hospitals — they’d stopped seeking care.
The campaign was reframed around unmet need, not loyalty: encouraging people to act on pain, fatigue, and loss of mobility they’d normalized over time.
The shift wasn’t cosmetic. It changed everything from creative design to call-to-action. Early results showed stronger engagement, faster lead conversion, and, most importantly, a reawakening of latent demand.
Strategic ROI lesson: The wrong diagnosis multiplies cost. The right one compounds value.
Insight as a Strategic Asset
In both examples, the pivotal moment wasn’t a new plan — it was a new way of seeing the problem.
Rumelt would call this the “diagnosis phase” of strategy. Design thinkers call it “reframing.” Reeves calls it “external sensing.” Whatever the term, the principle is consistent: insight reduces waste because it prevents organizations from solving the wrong problem efficiently.
This is why the world’s best strategists don’t start with answers; they start with genuine curiosity. They invest in understanding context — markets, communities, and people — before allocating resources.
Consider three mechanisms by which insights create strategic ROI:
Sharper focus. Insights narrow the field of action, concentrating capital and attention on what truly matters. This argues for focus, not volume, as the source of strategic advantage.
Faster adaptation. Curiosity and insight accelerate iteration. It lets organizations pivot early, before costs compound.
Deeper coherence. Insights create alignment between diagnosis, policy, and action — the Rumelt kernel that keeps initiatives from fragmenting.
In a world of data abundance, insight is the rarest resource: the interpretation that reveals meaning and directs movement.
The Economics of Understanding
It’s tempting to think of insight as a luxury — something to pursue when time allows. But that view reverses causality. The more complex the system, the more expensive ignorance becomes.
A McKinsey study found that only 30% of organizational transformations achieve their intended outcomes. The reasons mirror what we see in practice: leaders underestimate cultural and contextual factors, misdiagnose the challenge, or fail to connect their goals to lived experience.
Insight pays for itself by avoiding rework — the invisible tax on every failed initiative. It is the single most reliable predictor of strategic efficiency.
And unlike capital investment, insight compounds. Once an organization learns how to see differently, it makes every future decision faster and more accurate.
Building Insight into Strategy
How can executives institutionalize this discipline? Three practices recur across successful organizations:
Integrate exploration into planning. Borrowing from design thinking, begin every major initiative by reframing the question. Ask, “How does the challenge look from the viewpoint of different stakeholders?” and “What is the core human need or desire driving this problem?”
Blend data with observation. Numbers reveal what is happening; people explain why. Quantitative models without qualitative insight risk elegance without accuracy.
Make reflection routine. Martin Reeves calls this “adaptive capability.” Establish feedback loops that test assumptions, gather new signals, and revise strategy continuously. Insight isn’t an annual event; it’s a management practice.
Understanding as Efficiency
In an age of dashboards and KPIs, it’s easy to conflate information with insight. But information only describes. Insight explains — and that difference determines whether your next investment compounds or erodes value.
Leaders who treat understanding as a strategic discipline spend less, move faster, and build trust that endures beyond a single initiative.
Because insight isn’t a cost. It’s the first dividend.
Shift Group Consulting helps executive teams turn understanding into advantage — building strategies grounded in real insight and designed for execution that lasts.
