Cognizant Buys Stake In 70-Person Behavioral Consulting Firm

Cognizant has purchased a minority interest in a consultancy that has helped companies like Ford, Adidas, Intel and Samsung apply behavioral insights to business strategy.

The Teaneck, N.J.-based company, No. 8 on the CRN 2015 Solution Provider 500, said acquiring a 49 percent stake in New York- and Copenhagen-based ReD Associates will give the Cognizant a more complete understanding of what clients really want and need.

"If we get a better understanding of human beings, we will develop better technology," Christian Madsbjerg, co-founder of ReD, told CRN. "Understanding human sciences deeply and articulately is the way forward."

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Terms of the deal, which closed last week, were not disclosed. ReD's nine partners -- including Madsbjerg -- will continue to own a 51 percent stake in the company, and the 70-person company will continue to operate independently.

Before the exclusive partnership with Cognizant, Madsbjerg said, ReD's anthropologists, sociologists and ethnographers would make recommendations about how human beings would interact with cutting-edge technology, such as self-driving cars, but lacked the digital and technological chops to build what they were recommending.

ReD therefore had to hand their work off to other companies for the implementation phase, which was less than ideal and could sometimes result in miscommunication.

"It's frustrating to look at the future of the car or the bank without the ability to implement it in a way that's right," Madsbjerg said. "Cognizant's technology capability gives us the ability to build the work we see when we look at people."

ReD has worked with solution providers such as Accenture and Wipro on developing design capabilities, and Madsbjerg said pretty much every IT consultancy or management firm was interested in acquiring a stake in the company.

But ReD opted to go with Cognizant, Madsbjerg said, because the company's digital capabilities are core to how the company does business, rather than an add-on, as is the case at some other advisory firms.

"They feel like a company of the future, and I think it's quite exciting," Madsbjerg said. "They respect that understanding people is part of evolving technology."

Cognizant’s Digital Works division had a little human sciences expertise before the ReD partnership, but ReD's decade of experience and rigorous methodologies and processes for deriving meaning from data set them apart, Paul Roehrig, global managing director of Cognizant’s Center for the Future of Work, told CRN.

"They are talent magnets for some of the top social scientists that have an inclination to work in business," Roehrig said.

The customer bases for Cognizant and ReD already have some overlap, Roehrig said, with ReD tasked with setting the strategy and informing product design while Cognizant provides the actual technological services. By pairing ReD's insights with Cognizant's technological muscles, Roehrig said, he expects the company to develop a more consistent approach to building out digital processes and technologies.

ReD has gotten acquainted with Cognizant over the past year, Madsbjerg said, and the two companies have already gotten to work on ways to digitize the health-care model to make the experience cheaper and more efficient for doctors, nurses and patients alike.

Roughly 18 months ago, Roehrig said, Cognizant launched its Digital Works practice, which has been focused on identifying new capabilities and pulling together existing capabilities to provide customers with a one-stop shop for digital processes and experiences.