The Secret Ingredient of Using Market Research to Drive Innovation: Design Research

I regularly find myself in conversations with Australian clients who are keen to build innovation capabilities into their organisations, and believe that they already have all the in-house research capabilities they’ll need to generate the powerful customer insights that are part and parcel of being an innovative company.

However, it is frequently the case that their research capabilities fall short, often due to the fact that their market research groups have yet to embrace (or even be exposed to) the emerging practices of design research.

Market Research: A History of Asking Questions

Almost every business today conducts some level of research as part of business-as-usual. Typically, this research capability lives in the Marketing Department, or has grown out of a marketing expertise.

Marketing has a rich history of research, stretching all the way back to the 1920s, it became standard practice in the latter half of the 20th century. Coming out of the world of social survey research, market research began as a way to test the effectiveness of advertisements and other marketing materials. Soon afterward it brought onboard the gathering and analysis of demographic information. It became the best way for an organisation to answer the perennially vexing question: “Where and how should I spend my marketing dollars to better build demand?”

From there, businesses began to expand the questions they asked and started using market research as a way to divine customer satisfaction with not only their marketing endeavours, but the actual products and services they put into the market as well. Businesses now had a way to answer the question: “How satisfied are our customers and would they recommend us to others?”

When the ability to answer these questions was combined with competitor analysis and other market analytics, market research could help businesses begin to confidently answer the question, “What is the current state of play of our industry?”

But with the advent of the need for innovation to become a core competency of business, companies are faced with a new question: “What new things do my customers want?” Unfortunately, traditional market research as practiced in most Australian companies isn’t equipped to powerfully answer this question on its own.

Adding a New Ingredient

To answer the question of “what do customers want?”, we must consider a new way to ask questions, we must consider the methods of design research.

Design research originated in the mid- to late 20th century as a way to ask more nuanced, indirect questions to uncover new opportunities regarding what customers wanted. These methods have more recently been combined with those of anthropology, ethnography, and human factors, and focus on deeply understanding what the customers’ world is like as a way to derive what customers want and need.

Design research wants to understand what makes customer tick. How do they act? What motivates them? Where do they derive their identities from and what is meaningful to them? Design research wants to know: “What will make people’s lives better?”

Design research takes an open-ended approach. Rather than using the tools of traditional market research such as quantitative surveys designed to achieve statistically significant results, design research relies on in-depth customer interviews, observations over time, diary studies, and photographs. Design research needs the richness of experience and exposure to discover the unarticulated, and un-articulate-able, needs and wants of customers.

Research to What End?

Design research spends so much time with customers because, frankly, most people are very poor at answering the question, “What do you want?” Henry Ford may have been right when he said, “If I’d asked people what they wanted, they would have said ‘a faster horse’.”

However, when design researchers spend time with customers, they do more than just ask that question (in fact, they rarely ever ask that question directly). Instead, they build a sophisticated understanding of what could better support customers in their lives, using conversation and observation to pick up on clues and spot patterns. These understandings then get translated into insights, and become the critical fuel that runs the innovation engine of the business.

And here we find the reason to do design research in the first place. In order to be truly innovative, a business needs to have a way to gain proprietary knowledge of its customers and markets. The critical differentiator will come from the ability to discover insights about what customers want and need, what will make their lives better and their experiences with a company more delightful and memorable. These insights are then fed into a design process, a way of thoughtfully coming up with new ideas, refining them, testing them with the business and with the customer, and then teaming with the business units to marketise them into a profitable offer.

Design research alone would have a very difficult time answering the question, “Where should we spend our marketing budget to build demand for what we offer?” But then again, that’s not the question it intends to answer. Likewise, market research alone has a tough time answering the question, “What new things should we make for our customers?”

For many years, market research has reached varying levels of success trying to answer that question with its traditional methods of surveys and focus groups. We can now add another practice, one specifically concerned with answering the question, “What new things should we make?”, to the mix. We can add design research to market research.

If you want to build an innovation capability, you have to know how to get the right answers. And to get the right answers, you have to know how to ask the right questions.