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You Can’t Manage What You Can’t See

January 5, 2019

I always tell my children that life is not linear. Neither is business. Things rarely go in a straight line, and companies can never sustain super-normal growth in either sales or stock price. Yet we were somehow surprised this week that Apple reported significant declines in iPhone sales. But should we have been that shocked? Apple has been making superficial changes to the iPhone now for several years. Didn’t Apple urge us to “think different”? Had they done any research to anticipate this obvious shift in consumer preference?

 

I continue to be amazed at the perceptual blinders that companies, or financial analysts, wear. The pattern is very familiar: management ignores any initial signs of trouble, they reassure themselves (and consumers, employees, and financial analysts) that all is well. In Apple’s case, they try to deflect by saying “look over here” (for example, by refusing to release unit sales). Denial and the refusal to believe the facts are powerful forces of inertia in every organization. Denial is a basic human instinct.

 

It is also the innovator’s dilemma (see Clayton Christensen): entrenched interests force managers to set aside obvious facts in favor of perpetuating the status quo. History is replete with examples. Hewlett-Packard never wanted to introduce ink-jet printers (the margins were too low). CVS, not doctors, conceptualized Minute Clinic (primary care that was “good enough”). Intel is overshooting processor power even though most consumers will never need it (although AI may change this dynamic). Chevy recently dropped the Volt, an electric car for which there was minimal underlying consumer demand. And why didn’t Sears become Amazon?

 

Apple is a great company and they will probably recover. A reset was needed eventually. But it raises the larger question of why companies stubbornly ignore facts about their customers, markets, and competitors? Why do managers assume that they already know everything that could potentially affect their business?

 

Great research is needed now more than ever.

 

I believe that it comes down to one basic factor: fear. But what does that really mean? Fear of having to think outside of normal patterns… a fear of disruption, which may force people to behave differently, which can be uncomfortable… a fear of having to adapt to a new way of working... a fear of a job change, or even worse – a job loss.

 

But you can’t anticipate or plan for what you can’t see. Don’t assume that you know everything that might affect your business. If you are in a position to recommend marketing or customer research, advocate strongly for it. Your company’s survival depends on seeing what is happening out in the real world!

 

I suggest a few simple rules for paying attention to what is going on in the world:

  • Actively listen! Talk to as many of your customers as you can, qualitatively or quantitatively.

  • Construct honest and non-biased questions to uncover real understanding, and identify the real dynamics in your market.

  • Validate your findings with enough respondents to give you the confidence you’ll need to make the hard decisions. Individual or small group feedback is a great start, but always verify, verify, verify.

  • When doing external (non-customer) research, work with reputable sample providers who have the expertise to manage consumer or business panels. To use a gardening analogy, the sample is the soil. If the sample is wrong, everything else is compromised.

  • Have an opinion about what your research results mean and implications for the business. Get out in front of the story; add value. If you abdicate your role, others will write the story for you - and then wonder why you’re there.

  • Let management question the results – but also make sure that they accept the findings. Management buy-in is essential.

 

Management philosopher Peter Drucker preached that all organizations have two functions: innovation and marketing. Marketing research is at the heart of both. Never stop asking questions, and do so with the frequency required for your industry.

 

Follow these simple guidelines and you will have an insightful, productive, and happy new year!

 

Learn more at https://www.safllc.com.

 

 

 

 

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