Be careful of that research you gather. You might only hear the voice in your own head!
It turns out we’re not so good at doing our own market research. According to experts, even when we think we have separated our personal viewpoints from the data gathering, we’re very likely to confirm our original bias.
We see what we want to see, and hear what we want to hear.
This was highlighted recently in a study by four university researchers looking at investors who gathered stock market information from popular sites such as Yahoo! Finance. They found that the investors’ information gathering was actually counterproductive, causing them to make worse decisions than without the online research. Investors who were enthusiastic in their particular investment philosophy became even more confident, aggressively trading while making less.
This is called confirmation bias, a tendency to seek information that agrees with our previous view of the world while ignoring contrary data points.
It could be a serious problem for many budding entrepreneurs–who may be tempted by both time constraints and lack of resources to become their own market research team. C’mon, didn’t you personally do a lot of information gathering from colleagues, advisors and prospective customers as you formulated your business plan?
“There is no bad time to be an entrepreneur, assuming you have a market and a product that addresses a demand.”
Yuen Yung grew up in Chinatown in Manhattan. Sons of restaurant owners, he and his brother Peter worked as young boys in the family business, peeling shrimp and sweeping floors. “I guess we were the reason child labor laws were written,” he jokes.
The experience impacted the two young men differently. Peter grew up to be a sushi chef, but Yuen swore he would never work in the restaurant business again. He got his finance degree at McCombs, and became a certified public financial planner, a typical Type A focused on making money.
That focus wavered a bit as Yuen and Peter discussed where to go to lunch one day. “We were in the mood for good sushi, but just didn’t have time for a sit-down restaurant,” he recalls. As we talked about that experience, we came to realize there was a market opportunity.”
Seeing a chance to merge his restaurant background and his financial expertise, Yuen decided that his original pledge to stay out of the food business needed a redo. Thus began “How Do You Roll?,” a sushi bar dedicated to bringing the world sushi rolls without pretension.
Market research? Try talking to customers.
Speaking at ProductCamp Austin this week, he spoke about the challenges of being an entrepreneur in a down economy. One of those dilemmas is how to do market research without a marketing budget.