Four Ways To Spot Markets Ripe For Disruption

[This is the second post in a three-part series of excerpts adapted from Luke William's book Disrupt: Think The Unthinkable To Spark Transformation In Your Business. The first excerpt is here.] People often say, “Apple doesn’t do consumer research.” This usually precedes an argument against the need for market research of any kind. But the designers at Apple do conduct research--it’s just not the traditional kind found in consumer-behavior textbooks. It’s informal, impromptu, and driven by acute observations of the context in which their products are used. Being insightful isn’t a question of talent; it’s a question of awareness. Awareness is essentially being mindful of the cultural and social constructs that surround you and the people for whom you are creating something new. You’ve felt it before. The moment you decide you’re going to buy a yellow MINI Cooper, you start seeing them all over town. Of course, they were there before, but the difference is that now your awareness has been focused.
Ive's conclusion? “You’re seldom intimidated by something that you can feel."
All the Apple designers I’ve met share this awareness of context, which may explain why they’re often sensitive to critical details that their competitors overlook. They examine the context for themselves rather than having it described by someone else. Jonathan Ive, Senior Vice President of Industrial Design, describes his observations of people interacting with Mac computers in an Apple store: “When people are looking at Macs in stores, they’re drawn to them in a very physical way. They don’t mind moving them around or touching them.” That observation lead him to an important insight: “You’re seldom intimidated by something that you can feel. If you’re intimidated by an object, you tend not to want to touch it.” So, for Apple, there was an opportunity to give people a tangible sense of control over the technology by establishing an immediate physical connection between the user and the computer. Think again about the statement “people are seldom intimidated by something they want to touch.” That’s an insight that wouldn’t have been possible without close, unobtrusive observation of people interacting with technology. To cultivate insights and uncover opportunities, you need to observe the telling moments that reveal what consumers actually feel and do (as opposed to what they say they feel). My previous post explained how to identify a number of business clichés, get rid of some of them, invert and exaggerate the scale of others--and come up with disruptive hypotheses. But, hypotheses don’t exist in a vacuum. The people you expect to experience the shift you’re describing must believe that the change delivers value. So, when you consider how to put your hypotheses into action, you must stay focused on who’s involved in the situation and their needs. Why is this important? Because disruption for disruption’s sake is just annoying. The reason most hypotheses fail to make it past the “what if” stage isn’t that they’re too radical; it’s that the advantages of the disruption aren’t clear. Or, put a little differently, it’s not their lack of creative differentiation; it’s their lack of customer insight. Being truly insightful involves immersing yourself into the world of your customers to try to see how things look from their viewpoint. The focus is on watching, not on talking. Start by looking at the real-world context your hypotheses will exist in. Who lives there now? What do they need? What motivates them? It’s all about using customer insights to translate your hypotheses into actionable opportunities. Think of it this way: Hypotheses feed observations. Observations feed insights. Insights feed opportunities.

What, Exactly, Am I Looking For?

The most common question I hear when people are new to contextual research is, “What am I looking for?” The most common answer is “pain points.” Unfortunately, in most cases, that’s the wrong answer. Business people are trained to focus only on problems--things that don’t work and need fixing. They live by the motto, “If it ain’t broke, don’t fix it.” The most highly rewarded managers are often those who can quickly identify critical problems, analyze complex sets of data, and apply razor-sharp reasoning to come up with a solution. Most managers have become experts at this process, and they’re motivated (often by hefty performance bonuses) to reach an end-point or conclusion as soon as possible. Most researchers are trying to identify problems to solve. But those researchers also become so preoccupied with spotting the big “broken” problems that he or she completely ignores everything else. Problems are also seductive because they’re usually clear. The customers’ frustration is visible and, even as an outsider, it’s easy to empathize. But, more often than not, it’s the small, seemingly unbroken aspects of a situation that provide the richest opportunity areas for innovation. These are often the nagging issues that never get much attention. We ignore them, precisely because they don’t change.
“Tension points” are things not big enough to be considered problems.
Consider the humble can of house paint. For years, cans of paint have been made of tin and opened the same way: pried open with a screwdriver. But then, Dutch Boy Paint came along and introduced the Twist & Pour, an all-plastic gallon container featuring an easy twist-off lid and a neat-pour spout, which reduces the spilling and dripping typically associated with traditional paint cans. A molded handle allows for a more controlled pour and easier carrying. Adam Chafe, Dutch Boy’s director of Marketing says, “Consumers told us the Twist & Pour paint container was a packaging innovation long overdue.” As this example shows, a satisfactory way of doing something (like opening a can of paint with a screwdriver) may be far from optimal. So, instead of large pain points, you should spend your time looking for--and addressing--something much more subtle: small “tension points,” the things that aren’t big enough to be considered problems. The challenge, however, is that tension points are usually hard to spot, because the symptoms are easy to overlook. They’re not screaming for attention the way “real” problems are. They’re typically little inconveniences that people have grown complacent about. Tension points are a lot easier to identify after you have an idea of what to look for. Here are four specific types:

Workarounds

These quick, efficient-seeming solutions address only the most obvious symptoms of a problem, not the underlying problem itself. Workarounds can actually be dangerous because, when symptoms clear up, people lose any incentive they may have had to deal with the real issues. Over the long term, the problem gets worse and, eventually, someone will have to come up with another workaround.

Values

People’s values play an important role in their motivations. What do they value? What’s important to them? What’s not? Tension is often present when a product, service, or experience is in conflict with the values people find desirable. In his article for Wired magazine, “The Good-Enough Revolution,” Robert Capps outlines a change in consumer values that he calls the MP3 effect: We now favor flexibility over high fidelity (that is, MP3s over CDs), convenience over features, quick and dirty over slow and polished. Having it here and now is more important than having it perfect. These changes run so deep and wide, they’re actually altering what we mean when we describe a product as “high-quality.” Look for high-priority and low-priority values. Has there been a change in what consumers’ value in the products and services they buy? Has that change revealed a gap between what consumers want and what’s actually available?

Inertia

Generally, the more established people’s habits, the higher the inertia, meaning they’re less motivated to consider alternative choices. Many banking customers, for example, say that they dislike their bank and would be delighted to switch. But, the prospect of closing all of their accounts and reopening them somewhere else is so overwhelming that it’s easier to just stay where they are. Wherever customers feel trapped by inertia in a situation they find less than desirable is where you’ll find tension. Keep an eye out for situations in which customers act out of habit. Opportunities can be created to either break or leverage that inertia. In October 2005, Bank of America identified a key point of inertia--people often round the amount of their financial transactions up to the next dollar. The result of leveraging that inertia is Keep the Change, a program in which the bank rounds up a debit transaction to the nearest dollar and transfers the difference into your savings account. Since its launch, over 700,000 have opened new checking accounts, and 1 million have set up new savings accounts.

Shoulds versus wants

People often struggle with the tension between wants, which are things they crave in the moment, and shoulds, which are the things they know are good for them in the long term. In their column for Fast Company, Dan and Chip Heath make the case that “People need help saving themselves from themselves, and that presents a business opportunity.” They reference the work of Katherine Milkman, a doctoral student at Harvard Business School. Milkman has studied the way customers wrestle with wants and shoulds, and she suggests bundling the two. For example, the Heaths write, “exercising is a should, so what if your gym offered to receive your magazine subscriptions? That way, if you wanted to read the new Vanity Fair (a want), you’d have to drop by the gym. Or, what if Blockbuster offered you a free tub of popcorn (a want) for every documentary (a should) that you rented?” Look for the tension that lies between wants and shoulds. Do your customers need help “saving themselves from themselves”?
I’m not claiming that this process is comprehensive. It’s not supposed to be. It is, however, an effective way to start developing qualitative observations. This research is designed to be quick, informal, intuitive, and above all, accessible. It shouldn’t take you more than two or three days and, in many cases, it can be done in as little as two or three hours. You’ll know early on whether it’s working. If it is, you move on to the next step. If not, you can go back, tweak it, and do it again without losing much time or money. Of course, you could go out and spend several months and tens of thousands of dollars on detailed demographic and psychographic market segmentation, focus groups, and quantitative studies. But, I think you’ll get much better information--particularly while you’re at the beginning of creating something new--by simply watching what people do and asking a few well-planned questions. That’s something you can usually do for free, or close to it. Click here to purchase Disrupt: Think the Unthinkable to Spark Transformation in Your Business [Top image by Erin Sandler]

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