Market research often falls short when it comes to innovation. Here’s why:
Modern market research methods, like Lean Startup, do a great job of focusing on customer-centric discovery. It accepts that we don’t have all of the answers and shifts initial focus to finding them. In one of our article about the innovation imperative, we discuss how focusing on learning before executing is vital to innovation.
It generates insights through empathy (one of the 3 E’s of Lean Innovation). In lean startup, before beginning to test solution ideas, one focuses on developing empathy through customer development interviews. In market research, this is often done through qualitative one-on-one interviews, observation, prototyping and other methods. But, once we dig deeper some common problems emerge.
1. Market Research and Product Silos vs. Cross-Functional Teams
For starters, product and market research are usually two separate activities. They require two separate teams. Market researchers generate insights from potential customers that are reported to the product team. Sometimes it’s an agency that gives a report to an innovation lead, and then to a product team.
Two bad things happen when this is the case. First, there’s an inevitable knowledge transfer fail. No matter how pretty and insightful the report, it contains explicit knowledge. There are chunks of (implicit) knowledge that only the people doing the research pick up on.
This is why we’re such a proponent of cross-functional teams, where everyone builds empathy. Not only does this help teams build better products (like in this example with NCARB), but it does so by creating a deeper connection with the customer. Engineers and designers are better at engineering solutions to problems, not to specifications or secondhand (or third-hand) observations.
2. Generate Insights, Scope Out a Product, Then Build vs. Testing, Learning, Iterating
The second shortcoming to additional layers between research and product is the increase in cycle times. Instead of a product team generating insights from interviews today, and testing out a new iteration tomorrow, market research teams work in multi-month research cycles.
After they synthesize their findings into a report, only then can a product team can get their hands dirty. Unfortunately, when a product team “gets their hands dirty” it usually means building out a scoped out product and shifting from discovery to execution even though there is still likely tons left to learn. More on that here.
We’re still stuck in “deliverables” mode, which is a linear, non-iterative process that results in tremendous amounts of waste when circumstances change, whether the result of errors or simply economic, social or technology trends.
3. What People Say vs. What People Do
In older-school market research, it’s common practice to ask questions pertaining to the future — what we refer to as aspirational questions. Questions like ‘would you buy this?’ ‘how much would you pay for this?’ Even in more quantitative market research studies aspirational questions exist. Take propensity scores for example — they ask respondents to assess their likelihood to purchase a product in the future on a scale of 1-5 (not very likely to buy to very likely to buy).
Unfortunately, there is a major flaw when it comes to aspirational questions.
People’s perception of themselves in the future is fiction. What’s more insightful? How many times are you going to the gym this month, or how many times did you go last month.
As a result you have to judge what people do (or have done), not what they say they will do. If you’re looking to generate empathy, this is done through behavioral questions that uncover what people are already doing, and why they’re doing it.
When looking to (in)validate solutions, this is why we do currency testing. Even when it’s not money, customers must be willing to give up something that proves they’re in.
Market research has an important role to play in product development. There’s a time and a place for everything.
When it comes to innovation and new product development, learning fast and taking action upon insights is the key competitive advantage. Leaving that up to one siloed department can be setting yourself up for failure.