Big news today as Ron Johnson, CEO of J.C. Penney “resigned”. He did so following a series of decisions designed to make the staid Penney’s brand more hip. Sadly, thus far these changes have chased away existing customers without attracting enough new ones to turn around the store chain’s long decline.
Johnson’s decisions, like those of his mentor Steve Jobs, were made from the gut…no need for any market research. Jobs of course had an almost magic touch. Carefully choosing the markets to enter, when to do so and producing products that were seen as cutting edge. Often his decisions were seen as counter intuitive (such as the opening of retail stores in the Internet age), but time and time again he was proven to be right. So, why didn’t it work for Mr. Johnson?
First, Mr. Jobs was producing products for Apple, not J.C. Penney. Apple was known as a producer of fine computers that were easy to use (intuitive is a word often used). Some of the luster came off that reputation when Jobs left the company, but when he returned there was little doubt what Apple stood for and the types of products to expect. From the moment he returned he looked for places where that reputation (intuitive electronics) might find a market. Mr. Johnson, by contrast saw the J.C. Penney reputation as a problem and looked to change it…a far tougher task.
Second, Jobs often had success by leaping into relatively new markets and then using the power or Apple design and engineering to dominate it. He didn’t create the first digital music player, but he created one that was intuitive and he backed it up with a legal way to buy digital music. He could do this without giving up the existing Apple business (computers). Johnson needed to focus resources on shoring up the flailing store chain…perhaps if he’d had the luxury of creating small J.C.Penney Boutiques it would have worked.
Third, I am reminded of something that I once heard the legendary Warren Mitofsky say with regards to flawed sampling, “Results will be right until they aren’t”. Mr. Jobs was not always right. He left Apple the first time a failure (one could argue that others were at least as much to blame), started a new company that was largely a failure and then started his run, first at Pixar and then his triumphant return to Apple. He was clearly brilliant and had incredible vision, but he was not always right. Of course, it goes without saying that not everyone has the same skills (me included).
So, why did Mr. Jobs and Mr. Johnson go with their gut instead of Market Research?
Mr. Jobs said, “People don’t know what they want until you show it to them”. This is often true…this is why we are not all inventors. The best ideas can only come from the mind of someone who can see a need, often one that people are not even aware of, and find a way to meet it. That doesn’t mean that market research is unnecessary or of not value.
First, it can in fact identify needs. Tools like Smart Incentives™ which seek to get creative ideas flowing by creating a competition or many of the Gamification methods out there can, in fact, unlock needs that were previously unrecognized. Most of us at some point have said, “there ought to be a way!” A good needs assessment study should get us to share those ideas.
Second, concept testing can help to assess the market potential of a new idea. It certainly isn’t perfect. If you asked me a decade ago about a concept for a phone that would allow me to check email or surf the web, I would easily have seen a dozen ways it would make my life easier. At the same time, I would not have valued it as highly as I would today (since I have found many dozens of ways to use my phone). My guess is that even then there would have been a niche in the market that would have seen the value and been open to paying it.
Third, I think the reality is more that people can’t tell you what they want, not that they don’t know. Too often market research uses techniques that force people to answer questions that are foreign to them. The over use of rating scales and endless attribute batteries come to mind. Choice techniques like Conjoint and MaxDiff ask questions that people are used to answering and with that unlock what they really want.
Fourth, I think Mr. Jobs’ view of market research was probably tainted by past perceptions. He no doubt saw it as expensive and, worse still, slow. Today, neither is true. Thanks to the increased availability of broadband, and yes of Smart Phones, market research today can be fast and efficient. More important because we can more easily do “in the moment” research, we can have even greater success in unlocking those unknown needs that consumers have.
So, I wish Mr. Johnson luck in the future. I hope he’ll continue to think creatively and to try to drive change. I also hope he does so with a proper respect for what Market Research can do.
Rich brings a passion for quantitative data and the use of choice to understand consumer behavior to his blog entries. His unique perspective has allowed him to muse on subjects as far afield as Dinosaurs and advanced technology with insight into what each can teach us about doing better research.