Evolving Client Side Research for Innovation

Evolving client-side research for innovation or dealing with the horse problem

In our last article, The Agile Researcher: A Survival Guide, we spoke about the need for innovation. This raises the question, how does a client-side research evolve to drive innovation?

The OECD observes that innovation is the implementation of a new or significantly improved product (good or service), or process, a new marketing method, or a new organizational method in business practices, workplace organization or external relations. Further, innovations are rated on how novel they are. New to the world, your market or just new to your company.

The challenge of innovation for primary research with customers is that talking to customers who have a frame of reference of current products experiences will not really help with what innovations to bring to market. The adage attributed to Henry Ford, “If I had asked people what they wanted, they would have said faster horses” highlights the point.

Note one is actually sure he said this about Henry Ford saying This does not mean research is not required, but the client-side researcher needs to expand the repertoire for the innovation. There are three things that a client-side researcher needs to do for innovation. Develop a foresight program, prototype, test & learn and monitor market & consumer changes.

A foresight program

With innovation moving at such a pace, there is an abundance of information about what is changing industries. Client-side researchers need to scan for the latest changes in products, services, and customer behaviors globally. This is easily done by identifying global best practice competitors, monitoring them and subscribing to vendors that monitor markets & technology.

It’s likely people in your company already do this to some extent. I know that I have seen many business leaders go overseas on study tours in the past and effectively run their own foresight program. This Innovation Tourism obviously ground to a halt in Covid but you don’t need to get on a plane to learn. If stakeholders are going o/s, bail them up and ask what they learnt!

There are two main things you should do with the foresight program:

1. Use it to analyze where your industry is “heading” and identify innovation trends. It’s possible that what you are seeing globally may not have been executed in your market yet, but it is on its way so you have the opportunity is to be a fast follower or “first here”.
2. Use new ideas and features identified as inspiration for testing new products & features with your own customers. Do this by feeding the Design and Product teams with the foresight outputs.

Prototype, test & learn

Innovations diffuse through an industry over a period but changes the way industries and consumers buy and interact with your products, services, and experiences. A lot of researchers are taught, believe, or assume that the customer will tell them what they want, and therefore can keep you informed about innovation.

How can they do that if they are only aware of how they have been meeting their needs to date. It is a little more nuanced than that. Customers can tell you, and you can observe their needs and “jobs-to-be-done”, though they will not tell you the solution. You can however “co-create” with customers, but they will need some inspiration for the task and you will need some creativity to prototype solutions with them.

The role of prototyping in innovation is to understand the different ways of meeting those needs. Often-times companies need validation that specific new products are experiences are desired by the customers to be confident in investing. When testing new propositions and concepts you are looking for a signal that the proposition is desired on an emotional level and practical level by the customer. If it takes a long time for the customer to understand the new concept, that is an issue. They need to understand it instantly. There are various research products and methodologies that can do this.

Utilizing norms that relate to in market results i.e. sales and usage with new ideas can provide the confidence that clients need in order to invest. It is important though to also overlay the signals from the market detected from the Foresight program. This type of desk research will be respected in the decision-making process and is important supporting evidence. Not everything needs to be primary research. A sign of a strong testing cohort is having many ideas that don’t work. More often than not the prototype to emerge cab be a “Frankenstein” of few different prototypes, utilizing the best of a range of ideas.

“When testing new propositions and concepts you are looking for a signal that the proposition is desired on an emotional level and practical level by the customer.“

A second important dimension of test & lean is experimentation with existing products and experiences. This can be a powerful source of evidence for innovation and allows for live “in market” development and validation. This is particularly relevant on experiences and features that used regularly. The way customers behave with your product is habitual, that means that innovation can be faster. Innovation with existing products and features will provide a steady stream of reliable validation.

For example, many people do interact with their bank accounts most days, so how they use and experience them can evolve quickly and be the source of experimentation, test and lean. The implication of this for researchers is that they need to work with product and channel colleagues and use internal data teams on adoption, usage, and experience as a source of evidence. This is not “primary research” in the traditional sense, but a source of “revealed preference” which is a well understood concept in research theory and practice.

Monitoring

This neatly follows on from test & learn. This a multi-dimensional concept though. Research on usage and behaviors can be considered quite boring and inconsequential, but in fact monitoring the way consumers do things is critical for understanding how fast norms are changing. This leads me to problem with measurement.

By the time syndicated research vendors are aware and start measuring new trends, it is usually old news for the client-side researcher. On the other end of the spectrum, they usually do not offer long enough time series in data they make available to clients to effectively show a full cycle of and innovation or a behavior change.

For example, in banking, people will open new accounts on average once every 3-5 years or so up until a certain age depending on type of product and need, so there is no point in only three years timeseries if I am trying to understand an innovation or market change. There is a genuine window when the new product or behaviors are exhibited by so few people it is very difficult to pick up in national samples. However, I tend to find that inertia creeps in and Research companies have to prompted to modify their research tools to capture market changes.

A good example of this in Banking savings behavior is large topic of focus, but many syndicated research companies have only focused on whether people have a savings account, the type and the approximate balance? There is very little in syndicated research about saving behaviors.

What does this mean for the client-side researcher?

1. Monitor competitor annual reports, investor presentations, venture capital reporting and media for new product & experience and activity. Most companies like to talk about what they perceive to be successful. Regulated industries have reporting and disclosure obligations, and that can be a good source of information.
2. Monitor customer behavior with internal sources. An important part of this is looking for extreme behavior. This can give clues about opportunities and unmet needs.
3. Encourage syndicated research providers to keep their research tools “current” with consumer behavior.
   In summary, in the context of innovation, the core role of the researcher in providing evidence and confidence for decision making is still a requirement. There are however a few different sources that are required to do this. Synthesizing these sources of into a coherent “house-view” will greatly assist in the innovation challenge. My article on synthesis speaks about the importance of Data Synthesis and Meta-Analysis in Market Research.