Market Research in a VUCA world

A VUCA world – Volatile, uncertain, complex and ambiguous.  While you may not have heard the term VUCA itself, I think most of us resonate with those descriptors of today’s world.

The term VUCA was originated in the military in the 1990’s and is now being used in management circles.  One of the first steps an organization can take in ensuring that it responds appropriately to VUCA situations is to understand what is going on.  That is exactly what Market Research is so great at!  But how well does Market Research take into account the VUCA dynamics?  Let’s look at the various components of a VUCA world and think about how Market Research can help.

Volatile

A lot of times in Market Research we work with averages.  We describe the majority of responses and use terms like most and many.  That is valuable work and we shouldn’t stop doing it.  However, volatility comes from the non-majority.  Volatility comes from the outliers that may have been there to read but we might be ignoring them if we only focus on the norm.  A scan of the social media universe would be helpful in uncovering some potential volatility. After all, we know what one well placed tweet can do to upend a long term strategy.

One of the studies I did for a client illustrates the kind of work that might help in a VUCA world.  In the year 2000, there were starting to be rumblings about vaccines causing autism (today’s equivalent might some tweets).  A large scale segmentation study was able to identify how many people held these anti-vaccine attitudes and how those attitudes fit into their life view.  This group was a potential VUCA type event waiting to happen and we can hypothesize that that group has grown in size today.  (This study was published by the client, Merck, and can be found in the journal Vaccine in March 2005.)  Conducting these types of studies to understand the entire landscape and then following negative groups can be the key to understanding the potential sources of volatility.

Another area to consider is how we forecast trends.  We spend a lot of time uncovering potential events (competitive new product launches, potential legislation, etc.)  We take trend curves from various other historical launches into account and then adjust them for those events we anticipate.  That’s useful, and well and good.  But those are for things are continuations of what is going on today.    What are the things we can’t know about?  Perhaps this is only a topic for war gaming but is there anything market research can do to uncover what some potential sources of volatility might be?

Uncertain-This would be an interesting area to explore how well Market Research can pick up the uncertainties.

Complex- We all want things to be simple, we want to understand.  But we need to walk a fine line between creating a comprehensible story line so people can make sense of what is going on and simplifying too much, so that they lose the texture of the events.

Ambiguous- Market Research can certainly help reduce ambiguity.  We can describe the world as it is and try to figure out what might be.

So perhaps a plan for Market Research in a VUCA world should include an annual scan of the social media world, followed by a large scale custom study to assess the resonance of the negative items, if any were found.

I’m just beginning to think about the types of studies that we would need to help management better understand the VUCA world of today.  I’d love to hear some more ideas from readers.

Solving the problems of the technological underclass and the geographically challenged (Part 2)

One idea for a potential solution

I’m going to assume if you are reading this you’ve already read part 1 on this topic, if not, please go back and read it.

How can we apply the ideas of crowd sourcing and “ideas having sex” to services, increasing the diversity and usefulness of services, AND at the same time, foster this type of thinking among the technological underclass and help them out of this pit they are in?

Here’s the beginning of an idea:  What if we created a new type of “franchise” company that took  a service area (say lawn care) that has an unmet need (like organic lawn care)?  This hypothetical company would become expert in organic lawn care (for example).  They would enact this by recruiting those from the underclass who had lawn care skills but who didn’t realize that organic lawn care was a need or didn’t know how to do it, and educate them on the additional knowledge they needed to do organic lawn care.   They would pair them with a local investor/angel who would put up the cash for “franchise” and meet with them regularly.   Perhaps there would be a sweat equity portion that could be earned by the franchisee as the business become successful.  Then periodically, there would be a gathering of the “franchisees” and Investors to share knowledge of best practices and brainstorm how to innovate to provide better practices. 

This would solve a bunch of problems. By providing a service that meets an unmet need, the service will be able to charge more. By continuing to innovate, they will be able to maintain a lead and not be in a race to the bottom on price.  And we all would benefit by getting better and better services.

How to start? Not sure – need a deep pocketed angel investor who wants to make this happen.  And an expert in organic lawn care (not me, I am a market researcher).

I’ve come up with other areas this can be applied to (maid service anyone?).  What other ways can we work to provide a leg up for the technological underclass? Or the related problem of the geographically challenged.  I’d love to hear your ideas or offers to help.

Solving the problems of the technological underclass and the geographically challenged (Part 1)

First, the problem:

As Erik Brynjolfsson stated in his TED talk entitled, “The key to growth: Race with the machines” one of the major problems facing our economy is the portion of our population that is not prepared to participate in this growth, those who are not technologically adept. Let’s call them the technological underclass.    Here’s a link to Erik’s talk for those who haven’t seen it:

http://www.ted.com/talks/erik_brynjolfsson_the_key_to_growth_race_em_with_em_the_machines

Erik and colleague Andrew McAfee have expanded on these ideas in their book Second Machine Age. It’s worth reading, and they’ve also invited readers to discuss these ideas in their website:  http://www.secondmachineage.com

Erik and Andy review several reasons why the technological underclass is being left behind.  One of which is their skills, and their lack of ability to participate in the combination of ideas, which is the source of innovation. If you want a quick primer on this concept, Matt Ridley’s TED talk, “When ideas have sex” gives a provocative title to a talk that is fun to watch. 

http://www.ted.com/talks/matt_ridley_when_ideas_have_sex

A related idea is raised by Enrico Moretti in his book, The New Geography of Jobs.   Enrico’s point that this combination of ideas takes place best in person, not over the internet and not over the phone.  (He proves it with data too!)  Thus, despite the explosion of ways to communicate, these new ways don’t substitute for talking to people in person.  This is why new IT firms start up in Silicon Valley or other developing IT hubs and not in a farmhouse in the middle of nowhere.  (Or if they start in a farmhouse, they soon move to Silicon Valley if they want to grow fast.)  Those geographic areas not participating are left behind.  Even those in the technological underclass are better off when they live near those hubs than if they lived elsewhere.

I think this problem is worth trying to solve.  This problem doesn’t affect only those without jobs now, it affects us all.  Those with jobs will need to pay for additional benefits for those who can’t find jobs and jobs that could be filled if they had the right training may be going unfilled. And who knows what wonderful things are undiscovered because these folks don’t haven’t the skills needed.  

One solution I just read about in Time magazine (Feb 24, 2014) that gives me hope for the future is P-Tech (Pathways in Technology Early College High School) schools.  These are pilot programs of six year high schools that combine high school and community college, and a school/industry partnership.  Industry helps craft the curriculum, and provides work for the students (both as a part time job during school, and recruiting after graduation).  Students have a goal, and they come to understand the ways in which what they are learning will help them in their future employment.  They learn that education matters.  The really interesting thing is that these schools are NOT rarefied academies which only accept the best of the best – there is no entrance exam at the first P-Tech in Brooklyn. Only three years in, juniors there are already taking college level math!   These kids will not be in the technology underclass!  This is even better than the program I heard about at Audible, which brings in kids from the surrounding economically depressed area of Newark NJ and picks a few to put through training on careers and gives them college scholarship.  But these type of programs are longer term solutions, and don’t address those adults already in the underclass.

It strikes me that what is happening in products isn’t happening in services.  There is no combination of ideas, no “ideas having sex”.  I see new nail salons and massage places opening but no advances in services, just copies.  But just because they are services and not technology doesn’t mean that there aren’t unmet customer needs. There must be benefits to getting people together to talk about these.  And is there an organizational structure that can help diffuse these ideas and help enact them?

But how can this happen?  And will it lift up the technological underclass?  See my next post for my inkling of idea, I’d love to hear yours, and perhaps you can build on mine.  Lets crowd source this solution. 

Will Groupon and Living Social drive small merchants out of business?

I’ve been actively participating in the Groupon economy by getting massages with coupons.   Yesterday, I had a salon owner tell me that the proliferation of these coupons is changing her business, and in fact, could run her (and others) out of business. It raised some questions about the effect of these deals on both Groupon/Living Social and on those small businesses who have deals with them.

This salon owner was an early adopter of Groupon/Living Social.  It was a way to bring in new customers, and it has succeeded in doing that.  The price set means she loses money on each new customer- which would be a reasonable cost of acquisition if she was getting the repeat business at the higher price.  But it does not appear to be doing so. She is not alone – a google search turns up plenty of articles who agree about the lack of repeat customers. This has driven down her margin  on massages dramatically.  In her words, customers are no longer loyal to the masseuse but instead are loyal to the price.  In other words, Groupon and Living Social have increased the price sensitivity of the massage customer and eliminated brand loyalty.

Beyond this, she feels tricked by Groupon and she is stuck.  When she first signed up, she was asked for how many units she would sell.   Since this was a new concept, she had no idea, so she agreed to their suggestion.  Well, it turns our that she was agreeing to was to sell that quantity at the reduced price over an indefinite time , not just the limited time she thought she was agreeing to.  So, she is stuck selling the quantity she agreed to a while ago, with no control over her pricing.  This raises a question about how much of Groupon’s revenue is from these old deals that they are still selling?

Further, this salon owner feels stuck because she feels it is the only way to market her massage business. She predicted that some salons and restaurants who got caught up in this will go out of business as a result of these deals.

Two years ago, Bill Bice raised this issue on CNBC – the issue hasn’t gone away

http://www.cnbc.com/id/49092709

So will be the final Groupon effect be to drive merchants out of business?  And what does this mean for similar new business models?

As a market researcher at heart, I am itching to study this. Contact me if you are interested.

 

Can Religion be a part of Business Life?

Over the past 25 years, I have been searching for ways to apply my faith to my business life.  But what I found was unsatisfying.

I wanted help in making the difficult decisions when there was a conflict, such as dealing with outsourcing, automation, layoffs, environmental issues and many more.  But much pastoral counseling and theological work is done by people who don’t understand the business world and their suggestions and potential solutions weren’t helpful to me.  I found more help in the business world than in my faith community, which saddened me.

In studying early Quakers, I have found an example of how religion may be helpful in work life.  Since George Fox (and other Friends) had many things to say about the hypocrisy of merchants and traders, Friends who were traders had to find a way to carry on their business life in such a way that was consistent with their profession of faith.  In those days, there were three main ways in which Friends expressed their faith:  one price, honest weights and measures and keeping one’s word in contracts and debts.

These principles found their way into various writings by Friends, such as merchants who wrote their memoirs or sermons given, in the minutes of the local meetings and eventually in the Yearly Meeting Faith and Practice.  The Biblical basis for these practices were drawn from both the Old and New Testament, such as from Proverbs  22:7: “the borrower is servant to the lender,” Matthew 5:37: ‘let your yea be yea and your nay be nay,” and Matthew 7:12: the Golden Rule.   These were the foundation of what we Quakers today call the Testimony of Integrity.

Another important Quaker principle of the day was simplicity, which has also become one of today’s Quaker Testimonies.   This was not an abstract principle.  Quakers behaved this way for two reasons.  One was to be in solidarity with everyone in the world, including the poor, and the second was that everything had to be used for a good purpose.  Any money that wasn’t spent on gaudy cloth or jewelry was to be invested in their business or donated to the poor.

What I loved about this example was that Quakers struggled with how to make this work. It wasn’t the first messages that eventually became the basis of the Advices, it evolved as those who had to apply it worked on it.  This is what religion is not doing today.

This struggle was the topic of my thesis (The Theological Basis Behind Quaker Businesses: A Comparison of the First 150 years to the beginning of the 20thCentury) and will be the subject of a workshop I am facilitating at Friends’ General Conference Gathering in July.

But I want to do more than just study history, I want to think about how to apply these principles to our business life today.  I don’t want philosophy or business to take the lead in how to ethically conduct business, I want religion to have a voice. To kick that off, I am participating in the first US meeting of Quakers and Business, which will meet in California, PA on the weekend of July 27-9.

If this topic interests you, I would love to connect with you as part of my ministry, or come join me at either event.

For more information about the Quakers & Business Forum, click here:

http://quakerbiz.org/

For more information on my workshop on early Quakers, click here:

https://www.fgcquaker.org/connect/gathering/workshops/early-quakers-business-debt-and-one-price

I hope to see you in the future.

Quakers and Business

This summer, I will conducting a workshop at Friends General Conference Gathering in California PA on the topic of Early Quakers and how they applied their religious principles in their business life.

For more information about that workshop, click here:

http://www.fgcquaker.org/connect/gathering/workshops/early-quakers-business-debt-and-one-price

click here for more information about the Quakers & Business Forum to be held June 27-29, 2014

http://quakerbiz.org/

I won’t complete customer satisfaction surveys

It’s a matter of principle for me.  I know that the field of Loyalty research has shown that understanding what your customers think of you help you improve your business.  Business with high loyalty scores do better than those with low scores.  Sounds good.  But it doesn’t convince me to actually complete them.

I used to try.  As a former Marketing Research Professional, I felt obligated to try.  But I found it annoying and unfulfilling.  It didn’t seem to matter what I really thought, the people who designed the survey were just after me to pick a number.

Plus, I have some other problems.  First, there is the manipulation problem.   A cashier asking you to fill out the survey to document the “wonderful” service she provided is manipulative.  The crew on the cruise ship who tells you that they are trying to reach 100% satisfaction on the survey is trying to make you feel guilty if you give them anything less.  I get why this happens, it’s because the surveys are used to determine bonuses.  But what does that say about their validity?  Would you trust the 100% from the cruise ship?

Second problem:  This contributes to the inundation of consumer with surveys.  It is one of the reasons (I believe) for the decline in response rates for surveys.

Third problem:  It measures the execution part of the equation, one that has less leverage than strategy and tactics.  It uses up some of the good will of declining number of consumers who will complete surveys on measuring execution.  But that means they will have less tolerance for surveys that help inform strategy and tactics.

Unfortunately, I have no say on this matter except in my behavior.   So, I am boycotting any loyalty surveys but I will gladly complete a true market research survey   (which I can now do, having left my career.)  I hope you consider joining me in making that distinction.