Avoiding 'I told you so' moments: When good facts go bad
As researchers, we're in the business of facts, insights and intuition. But sometimes everyday business pressures can lead to bad decisions, despite good research. What are those pitfalls?
We all know horror stories of critical research being overlooked, misunderstood or even ignored. It doesn't usually end well. But no one sets out to fail, or to make bad calls. It's just surprisingly easy to fall into these sneaky little business traps. So as a researcher, how can you help your business avoid these pitfalls? Here are four mistakes to look out for:
1. Stretching brand extensions just a little too far
Brand extensions can be a sound strategy to enter new markets. There's all that extra revenue, with your existing trusted brand to give you a head start.
But there's extending a brand and there's pushing it right off a cliff. You can imagine the PowerPoint deck (or overhead projector transparency) that led to these dubious decisions: Look at the enormous revenue opportunities, right there on the far side of the market! Why check with customers? We're wasting valuable time!
- In 1982, Colgate, the brand that evokes brushing your teeth with minty toothpaste, launched a range of frozen TV dinners. Was the connection "better for your teeth"? All consumers saw was 'Toothpaste Food,' and they avoided it like the dentist.
- Jell-O headquarters, 1965. Salads are a thing. Jelly dessert is a thing. So, salad jelly – that would be a great thing, right? Do it! Sadly, a celery-flavored wobbly jelly appealed to no one. Instant flop.
- Bic, the makers of reliable and cheap pens, launched a range of perfumes in 1988. No sales. For some reason, people didn't want to smell 'reliable and cheap'.
- In 2000, Heinz's leadership felt their tomato sauce (aka ketchup) was a little tired. Always the same: red, red, red! So they dialed up the fun with Z Squirt: ketchup in purple, green and 'mystery' variations. Initial sales were good. Resales were zero. Purple slime on your favorite food can end all sorts of relationships – and the first one is with the Z Squirt brand.
2. Strong leaders can make strange decisions
Sometimes, like a Greek tragedy, a great leader's strengths carry the seed of disaster. People love courageous leaders who take risks and give firm directions. But if you're a rational thinker grounded in facts, you would sum up "courageous" decision-makers in three words: Recipe. For. Disaster.
"Our role as market researchers is to look out for the "icebergs" and make sure our stakeholders steer well clear of them. A strong researcher, with solid evidence, can guide a business away from a dangerous course."
Here's an example. When the Titanic sailed in 1912, it was iceberg season. There were reports of icebergs before it sailed. Other ships on the same route radioed iceberg locations ahead of the Titanic's route. But the captain pushed on at full throttle, or 21 knots. (That's fast enough for water skiing, if you like your water sports with a side of hypothermia.)
Why so reckless? Because the White Star line had built their reputation on fast Atlantic crossings. On its maiden voyage, the Titanic had clear orders: make record time. It would cement White Star's brand value and make huge headlines.
Hello iceberg, and hello big headlines. Unfortunately, not the ones they wanted.
It's an extreme example, but some business decisions are just as misguided. Our role as market researchers is to look out for the "icebergs" and make sure our stakeholders steer well clear of them. A strong researcher, with solid evidence, can guide a business away from a dangerous course.
3. The success trap - it's a thing
When a company has spent years succeeding in a particular way, they can get stuck in a rut. We see it all the time. Record shops clinging on in the face of Spotify and iTunes. Mainframe computers missing the arrival of personal computers. And... Kodak. Kodak, Kodak, Kodak. The name that launches a thousand head shakes.
Ironically, Kodak started out as a market disruptor. In 1888, photographers stood under a hooded tripod-mounted camera, and made images on expensive glass plate negatives. Then George Eastman, of Eastman Kodak Co. invented a handheld camera. Instead of glass plates, it used light, cheap, non-smashing celluloid film. Photography was now something for everyone.
But the real genius was the business model. Kodak sold their revolutionary cameras super cheap. They also sold the film, the developing chemicals and the photographic paper – at a huge margin. And what a success. By 1976, Kodak sold 90% of the film and 85% of the cameras in the USA. They owned the entire value chain: camera, film, chemicals, and even one-hour photo booths.
It's a classic success trap: after decades of profitably exploiting a market, why explore new opportunities?
To Kodak's credit, they did explore. In 1975 they invented and patented the digital camera. It was a watershed moment, and the pivotal decision point for controlling their future. But all Kodak could see was a threat to their profitable consumables business. Like the princess in the fairy stories, the digital camera was locked in the tower and never spoken of again.
Until Nikon brought out their own digital camera 11 years later. Panic. The princess had escaped. Kodak did the right thing and commissioned an exhaustive and exemplary research program. It concluded Kodak had ten years before digital photography threatened their business. So yes, they'd squandered an 11-year head start, but there was still lots of time to prepare. Right?
Right – except for the success trap. Digital photography, with its blasphemous disregard for film, didn't just threaten their business. It threatened their whole identity as the dominant force in photography. So for ten years, Kodak buried its head in the sand and proceeded to make a series of puzzling decisions. They bought a drug company at a premium price and then sold it for far less. They introduced a digital camera that produced film rather than digital files (umm?). They sued Apple and others for using their digital camera technology.
And then in 2012 they filed for bankruptcy, before emerging a couple of years later with a new identity as a provider of (take a deep breath) "hardware, software, consumables and services to customers in graphic arts, commercial print, publishing, packaging, electronic displays, entertainment and commercial films, and consumer products markets."
The research had been spot-on with its ten year prediction. But the facts couldn't pull Kodak from the success trap. How do you help a brand avoid the same pitfall?
In some instances, it might really be an impossible task. You can present all the indisputable, rational facts you like and a particularly stubborn group of decision-makers may still choose to ignore them. But what if you involved them in the research process? Let them make some of the discoveries themselves? In our experience, letting clients have their own "aha!" moments can help them reach a deeper understanding of the significance and meaning of what the research is saying.
4. Developing a serious case of market niche blindness
Slow-moving things are always hard to notice. Like the frog in the slowly heating water. Or the cousin who never cuts his out-of-control hair 'because it never grows'.
It's the same with markets. Like the success trap, strong sales make it easy to assume you've nailed your customers' needs. But sometimes there are customers who are just putting up – or switching off all together.
The runaway success of Rihanna's makeup range, Fenty Beauty, was all about tapping into a market that has been ignored by big beauty brands for far too long. Rihanna knew first-hand the difficulties involved in sourcing foundation that matched her skin tone. So, with a huge fan-base and highly valuable personal brand behind her, she made the savvy decision to create her own line of make-up specifically to address that huge gap in the market. Her target market was, in a nutshell, everybody. Rather than the 'fifty shades of beige' most big brands provide, she released a range to suit the palest skin to the darkest, the pinkest to the...olivest. (You heard me.) And everything in between.
It was a revolution in make-up – inexplicably missed by all the dominant manufacturers. It makes good business sense to focus on existing high-value customers. But take care not to miss the enormous crowd behind you. As researchers, it's our job to push our stakeholders a little. What is it they're really asking for out of their research? Digging a little deeper into what a stakeholder wants to understand, before we even begin the research process, can lead to some surprising – and profitable – results.
Beating the business traps
It takes clear thinking and corporate self-awareness to avoid these traps. And, of course, the facts and insights of great research.
At Infotools we specialize in helping research teams put insights at the heart of their organization. Better knowledge leads to better outcomes. We might not have been able to save the Titanic, but we can save businesses from titanic failures of their own.