Qualitative research and innovation
Qualitative research is not generally considered "real" research, and this has terrible implications for innovation. Companies' thirst for operational effectiveness begs for quantitative data. But quantitative data does not and cannot form strategy. Qual data are a key ingredient to strategy, or the development of new and differentiated products.
Many people are familiar with Michael Porter's famous paper, "What is strategy?" Porter famously argued that many companies mistake operational effectiveness for corporate strategy. Operational effectiveness, according to Porter, is about quality, productivity, and speed. It is about doing the same thing as others, but doing it better.Strategy, by contrast, is about being different. It is about doing entirely different activities to deliver value to customers.
“Competitive strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value.
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Other authors have called this the "blue ocean" or finding a place in the market that is calm, unoccupied, and yours for the taking. A "red ocean" is full of competitors, doing exactly the same thing as you are, and demanding ever higher performance. Framed this way, it is clear that operational effectiveness relies heavily on quantitative data. How efficient are we? How do we stack up against the competition? How good are our products? How fast do we make them?
Operational effectiveness simply begs for quantitative data, and now that we have access to petabytes of passively collected data relating to productivity, quality, and speed, it is easier than ever to be operationally effective. Or it should be. We know that quantitative data requires a great deal of cleaning, massaging, and managing, not to mention analysis, to make it useful for operational effectiveness. The shift to data-driven operations has demanded a great deal of companies' attention, mostly because data collection and analysis is not as easy as most think it to be.
But let us not mistake this for strategy. There is nothing inherent to benchmarking performance that lends itself to strategic advantage.
Quantitative data does not reveal how or in what ways customers are making their own workarounds. Quantitative data shows us how many products meet a particular standard, how many products are produced or sold, or how fast a company makes them. It can tell you the average satisfaction a customer may have, but it cannot reveal any of the detail behind that satisfaction.
In their insightful Harvard Business Review article, "An Anthropologist Walks Into A Bar," Christian Madsbjerg and Mikkel Rasmussen argue that qualitative research gives companies the ability to bridge the "complexity gap," or what a study of 1500 CEOs revealed as their main challenge.
Why do customers do what they do? You must do qualitative research to find out. And, by extension, you must do qualitative research to innovate. Qualitative research is explicitly about revealing detail. Qualitative research shows how people are using products, or how these products sit and gather dust in the corner of the kitchen. Qualitative research, particularly field-based research like ethnography, offers that path to delivering truly different products.
Companies that do ethnography regularly uncover entirely new or different ways to deliver value to customers. Oftentimes, this is done unsystematically. Skillful product and brand managers know that observing everyday life can reveal the how and the why of product failure.
Nike is a great example of a company that is in touch with culture. Its marketers are largely acknowledged to be among the best in the world. Its product innovation is continual, and its brand equity is unparalleled. Even their lab-based researchers like the fabulously named Gordon Valiant are active members of the running community. His lab-based practice is complemented by regular participation in running events, where he comes into contact with other runners. Valiant conducts in-lab studies systematically, but observes human behavior in an ad hoc way.
Imagine the advantage to companies that do this research systematically. Imagine having a steady stream of insight into real people and why they do what they do. Imagine having thick description of painful workaround work, and regular replenishment of unmet customer needs.That can only come from systematic, regular, and rigorous qualitative research. Compare that to a company tirelessly benchmarks its quality, productivity, and speed. The company with qualitative insight into human behavior will have almost limitless potential to do things differently, to deliver new products or services, to find entirely unexamined oceans of product innovations.
Yet we spend almost nothing on qualitative research. Esomar, the international market research association, estimates that in 2013, corporations spent $6.6B USD on qualitative research, worldwide. The vast majority of money spent on qualitative research is on focus groups, but Esomar estimates almost $1.6B is spent on the more interpretive methods of in-depth interviewing and ethnography. This amount is dwarfed by the $32.4B USD spent on quantitative market research. It could be argued that many companies need to start with operational effectiveness. Fair enough. But no company can survive on quality, productivity, and speed alone. It is too competitive a marketplace. Qualitative research, therefore, is a cheap way to guide the company toward different product offerings, and ultimately, toward innovation.
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