The CEO Gut: Beyond Market Research

CEOCEOO GUT| BEYOND MARKET .com RESEARCH FOR EVERYTHING CO No matter how much money companies spend on market research, there is DOMO always a risk of misinterpretation. The most successful CEOS know that market research numbers alone can be risky business. CEOS of top brands often go with their gut. EXPERT INTUITION "EXPERT INTUITION is not a decision per se, nor is it a hunch: it is A REFLEXIVE AND INSTANTANEOUS REACTION to a familiar situation on the basis of vast SPECIFIC EXPERIENCE, KNOWLEDGE, and PRACTICE. e Daniel Kahneman and colleague Amos Tvesky - From research by psychologist and Nobel Experts aren't always right, nor are customers. Steve Jobs is well-known for eschewing market research in lieu of his own intuition. StilI, Jobs was more qualified than most to make the decisions that made Apple thrive; he had expert intuition. According to a 2011 survey by the MIT Sloan School of Business: OF BRAND AND MARKET MANAGEMENT DECISIONS BY 80% TOP-PERFORMING COMPANIES ARE PRIMARILY BASED ON INTUITION. RESEARCH RETURNS Market research is often misleading. Surveys, focus groups, and interviews can all lie. Because no answers are ever 100 percent guaranteed, the key to getting the most out of research is interpretation. 90% Market testing often gives high confidence ratings to failing products of new 80% products fail 50% of ad campaigns never show a 0% Market research gives no guarantee of good decision making return in sales CASE STUDIES IN FAILED MARKET RESEARCH Coca-Cola BANKS BRITISH AIRWAYS RESEARCH: A survey of business fliers in the early 90s had scarcely any mention of power outlets on planes. RESEARCH: Two years of RESEARCH: In the early days of extensive market research and $4m for 200,000 taste tests seemed to the internet, market research found consumers were not interested in ensure the success of New Coke using the internet to manage their bank accounts. over Pepsi. RESULT: Now essential for big airlines, their continued absence from many planes is glaring. RESULT: Large banks struggle to meet expectations for online access. RESULT: New Coke lasted a mere 87 days on shelves. There are other dangers of relying solely on market research: IT IS DIFFICULT TO TIE INSIGHTS GAINED VIA SUCH LARGE EXPENDITURES TO A COMPANY'S BOTTOM LINE. AGENCIES, CLIENTS, AND POTENTIAL CONSUMERS HAVE INSIGHT THAT MAY NOT SHOW UP IN RESEARCH. DECREASING RESEARCH PROVIDES SIGNIFICANT COMPETITIVE ADVANTAGE BY REDUCING TIME-TO-MARKET. THE SWEET SPOT Market research will always have its place, but it must be coupled with human instinct. Good decisions are led by a successful marriage of the right and left sides of the brain. LEFT BRAIN RIGHT BRAIN Numbers Intuition Logic Cause and Effect Superstition Emotion Instinct Research Informed decision-making. DOMAIN KNOWLEDGE + SELF-KNOWLEDGE CEO GUT "THE SWEET SPOT FOR BUSINESS DECISIONS IS WHEN BOTH DOMAIN KNOWLEDGE AND SELF-KNOWLEDGE ARE HIGH." -Dr. Modesto Maidique, Center for Leadership, Florida International University SOURCES: THE CICERO GROUP, CMO.COM, FORTY, GLOBAL CHANGELTD., HARVARD CEU BUSINESS REVIEW, IBM INSTITUTE FOR BUSINESS VALUE, KORN/FERRY INTERNATIONAL, MIT DOMO .com SLOAN MANAGEMENT REVIEW, RUBINSON PARTNERS, INC.