Market Research Meets Philosophy

Traditional market research people might want to turn the page right now. They’re not going to much like what Roger Martin, dean of the Joseph L. Rotman School of Management, University of Toronto, has to say about the way the practice is ordinarily done.

If you’re one of them and you’re still reading, you’ve been warned.

“I think there is too much amassing of vast quantities of what turns out to be non-indicative data and too little of getting rich, non-statistically significant data. Most companies would be better served if rather than having the market research department take a random sample of 10,000 customers and do a multiple choice questionnaires—the multiple-choice, check-the-box type—they would be better served by the CEO doing 100 personal interviews of customers in the place where they use the product or service. Even if that 100 isn’t statistically significant, and even if the CEO is making his or her own interpretation, they are better served because it is rich data, rather than attempting to intuit what they mean. First you’re scoping down the field of inquiry to multiple choice questions and then your saying that’s consistent with how they will behave when they’re in the richer situation of actual use . . .”

Which is to say that Martin is a supporter of validity, while most organizations prize reliability. What the CEO discovers may be valid. It isn’t reliable in the sense that it is something that one can prove.

And before we go any further, here’s another comment he makes: “This is why clever guys like Lafley say that the research doesn’t tell you what to do, it only gives you a good idea of what might be a good idea.” That’s as in A.G. Lafley, chairman of the board of Procter & Gamble, and a man with whom Martin has consulted.

Which is to say that the professor has more than a little street cred to go along with his Harvard MBA.

In 2007, Martin published The Opposable Mind: How Successful Leaders Win Through Integrative Thinking (Harvard Business School Press), and in ‘09, The Design of Business: Why Design Thinking is the Next Competitive Advantage (Harvard Business School Press). Martin explained that the two books are connected in that whereas the first takes the individual as the unit of analysis, the second has more of an organizational focus. Yet as organizations are made up of individuals, The Design of Business is certainly applicable to on a personal basis.

And both are germane to those who do product development—including the market research that is a part of it.

In The Opposable Mind he explains a way of thinking that is different from the general approach, which is typically either-or. For example, he tells the story of how the now renowned Four Seasons hotel chain was developed by Isadore Sharp. Sharp’s first venture was the Four Seasons Motor Hotel in 1961, 125 rooms in what Martin describes in the book as “a rather seedy area outside the core of downtown Toronto.” In 1972, Sharp opened his fourth, but this one was downtown, a 1,600-room hotel, which proved to be financially successful, although lacking the intimacies of the first hotel. So what would he do for his fifth venture? Sharp didn’t choose one or the other, but came up with a third alternative, which is the Four Seasons hotels that now exist, where it is sufficiently large for cash flow, yet small enough to ensure service.

Notice how this is a consequence of how Sharp imagined what could be. To be sure, it was based on market data from the two venues, but it was projecting to the future.

In The Design of Business, Martin writes about two different approaches to business. In one—which is most common—it is primarily a matter of exploiting what exists. Someone establishes a company based on a product or service, and then the role of the company is to make money based off of that. There may be improvements along the way, but these tend not to be substantive changes. Martin describes this as “honing and refining existing ideas.” There is a second way, which is exploring. This is primarily about coming up with new ideas.

Now while you might have thought that the last time you would think about philosophy was the day you received your diploma, think again. Martin tells me about Aristotle, whom we’ve all heard of, and late 19th/early 20th century American philosopher Charles Sanders Peirce, whom not all that many philosophers know about. Aristotle, as you may recall, wrote about deductive and inductive reasoning. While these are useful tools, they are limited. Students are taught these methods, “then go into the business world, where they are rewarded for those things.”

Which brings us to Peirce and the third way. Martin says, “Peirce maintained that no new idea in the world has come about by inductive or deductive logic.” So he codified abductive logic, or “inference to the best explanation.”

The issue, Martin explains, is this: “The bad thing about the future is that you cannot subject it to inductive or deductive logic, so anything about the future is not relevant or doesn’t have any meaning for the reliability of an exploiter.” Simply stated, you can’t prove anything about the future from a statistically valid point of view. This is why so many companies base their plans on the past.

“Somebody who wants to engage in abductive thinking uses inductive and deductive logic,” he says. But then goes beyond that to project something about the future. “Is that a statistically valid inference? Probably not. But if they try to make it a statistically reliable result, they won’t be able to do the experiment required to actually test it, which is what most market research does: It asks questions that are answerable in a multiple-choice question that obscures what is really important.”

Or, as he says it more simply: “They have created an experiment that is non-life-like”—we don’t live our lives in a way that’s codified in multiple choice checklists—“but is statistically valid. Then when the product fails, they say ‘How can this be? We had proof.’ No you didn’t. You created a surreal situation.”