Thursday, November 10, 2011

TMRE 2011: The Trend Report: Clusters of Innovation

This guest post was written by Jeffrey Henning.  He is the Chief Marketing Officer of Affinnova, an innovation software and services firm exhibiting at The Market Research Event.

Jeremy Gutsche, founder of Trendhunter.com and author of Exploiting Chaos, gave the second keynote Wednesday morning at The Market Research Event. His presentation answered some fundamental questions:
  • • How do we make market research more successful?
  • • How do we get our companies to win based on the work we do?
“Market research makes chaos such an interesting thing,” Jeremy said. “In times of chaos, what people buy becomes a challenge. Chaos creates opportunity, but market research makes success happen.” During times of chaos, some companies topple while “new giants are born”. Peter Drucker said, “It’s not the questions that change, it is the answers that do.”

Jeremy sees two trends in research: the supremacy of culture and the tragic return of gut instinct.

Market research used to be driven by product, but product research is now ubiquitous. “Now research is about experience.” What does Harley Davidson sell? If you ask their head of marketing, he’ll say, “What we sell is the ability for a 43 year old accountant to ride through small towns and have people be afraid of him!”

Jeremy showed a 1950s ad for Old Spice that focused on product, price and maker and contrasted it with their most recent ad campaign.

“Popular is not cool, so you are ultimately trying to find what other people can’t see. Cool is unique, cutting edge, the next big thing. Because of that, it generates word of mouth and viral attention. What happens when we hunt for cool?” While new ideas surround us, it is not tough to find a new idea. When researchers think about customers, competitors and strategy instead of innovation, they skip steps and rely on gut instinct for innovation. “People are less innovative and more focused on innovation – we lack the inspiration.”

This can be rectified by following a methodological approach to innovation:
  1. 1. Trend hunting
  2. 2. Adaptive innovation
  3. 3. Infectious marketing
  4. 4. Culture
As a negative case study, Jeremy highlighted Smith Corona. Smith Corona had done the market research and knew the trends but they didn’t reinvent themselves out of the typewriter industry. Smith Corona had 100 years of innovation, hitting $500 million in revenues in 1989 while continuing to grow. “Who needs computers?” they might have asked themselves, especially given the example of their competitor, Remington Rand Typewriters. Remington Rand had expanded into computers in 1975 but went bankrupt by 1981. In 1985, Smith Corona had a personal word processor (like a laptop with a built-in printer). “Many people believe that the typewriter and word-processor business is a buggy-whip industry, which is far from true,” their CEO, G. Lee Thompson, said in 1992. “There is still a strong market for our products in the United States and the world.” Smith Corona was focused on being the best typewriter company in the world rather than on serving a broader mission. They had a chance to acquire Acer but declined. Acer is one of the largest PC makers today. “If you don’t fail, you will become the best typewriter company in the world!” Unfortunately, Smith Corona declared bankruptcy in 1995. “Situational framing dictates the outcome,” Jeremy said. And he asked, again, “What are you trying to do?”

“Successful organizations innovate to ‘optimize’ position on their ‘hill’, but to find bigger ‘hills’, most fail.” Because you can become a little bit more successful, you do. Trying to become much more successful risks failure. When Smith Corona tried computers for the first time, it wasn’t successful in comparison to their established business.

How do you succeed in the long term? You have to become obsessed with what customers are about. Iron Eyes Cody (an Italian actor who starred in the America Is Beautiful litter campaign) made an emotional connection with viewers but had no impact on how frequently people litter. Does emotion alone matter? If we are thinking about how to get people to stop littering, what should we do? The continuum of impact is:

  1. 1. Function is a baseline. Old-school marketing was about function, telling people how something worked
  2. 2. Benefit comes next, motivating people; for instance, pointing out that littering has a fine.
  3. 3. Connect is third, making an emotional connection.
  4. 4. Culture is the ultimate in impact. You have to create a Cultural connection to empower people to act and change. That is why people tattoo corporate logos on themselves – like Harley Davidson. If you Google “I love ING” you will find many customer stories, because their customers see ING as being part of the same team. “You will set your team on a mission if you can make an authentic cultural connection.”

Back to reducing littering. Who litters? A Texas agency did the research. Young males (18-30 years old) who drive pickup trucks litter the most; they have a “King of My World” culture. So the Texas agency GSD&M came up with the campaign “Don’t Mess with Texas™”. One of their first commercials featured two Dallas Cowboys football players saying to a litterer, “Don’t mess with me. Don’t mess with Texas.” The campaign spoke to people and their culture. It resonated, and Texans actually now go to YouTube and upload their own commercials for the campaign.

“When you think you have done something memorable or remarkable, like that Iron Eye Cody commercial, you haven’t succeeded if it hasn't created impact,” Jeremy said. “Don’t Mess with Texas” had impact. The goal was to reduce litter by 5%. From 1986 to 1990, litter was reduced by 72%!

What lessons can we learn as market researchers? In all companies, observe customers, interact with them, watch them choose, observe usage – not ethnography per se, but spend time with customers so that you can internalize their attitudes and create a connection out of your research. Culture is key. “Culture eats strategy for breakfast” is a sign outside Ford’s Strategy War Room. Ask yourself, “What are you trying to do?”

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