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?
Such an approach would generally be considered valuable. Startup guru Rob Adams encourages entrepreneurs to make 100 Phone Calls before launching an enterprise.
A few weeks back I wrote about Yuen Yung, one of the founders of the How Do You Roll sushi franchise. Like many other entrepreneurs, Yung and his brother make it a point to talk frequently with their customers, in part because they haven’t been able to afford formal market research.
Adam’s hundred phone calls seems like a solid idea, and Yung’s approach of talking to customers is hard to criticize, but the danger of letting confirmation bias slip into the equation is a valid concern.
Over the years I’ve been involved in dozens of market studies conducted by outside professional firms, and I recognize that even in that environment marketers may choose to acknowledge only what they hope to hear. And who is more enthusiastic in their opinions, hopes and world view than an entrepreneur?
So a word to the wise, be careful of that market research you gather. You might only hear the voice in your own head!
I’d be interested in your experiences in this regard.
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