Power in the business of tomorrow, will flow to those who have the best information about the limits of their information (Alvin Toffler)

Market research is awash with case studies and anecdotes from behavioural economics. The top line on over 40 years of diverse academic study has gone mainstream. Try Googling ‘behavioural bias’ or ‘cognitive bias’ and you’ll find you are spoilt for choice from lists that mercilessly confront us with the fallibilities of human decision making. The big list of behavioural biases is at 136 and counting…

So the evidence is out there. The question is whether market researchers possess the will to use it to its full potential.

My favourite behavioural economics anecdote isn’t based on a creative lab experiment or randomised behavioural trial. It’s from Bazerman and Moore (2013) who tell the story of how Richard Thaler (co- author of Nudge) came up with the idea of starting two new consulting firms:

“One of them called ‘Yes Person’ would respond to all requests for advice by telling the client that all their ideas were great…. The other consulting firm called ‘Devil’s Advocate’ would disapprove of any plans currently being considered by the client” (Bazerman & Moore, 2013, p. 49).

Thaler was sure that there was much more need for ‘Devil’s Advocate Consulting’ than ‘Yes Person Consulting’. But he was equally convinced that neither start up would get off the ground. ‘Devil’s Advocate Consulting’ would struggle to find any clients and the market for ‘Yes Person Consulting’ was already far too crowded!

Thaler concluded that both start-ups were doomed to failure because of the power of confirmation bias. You’ll find this on any of the big lists of biases. It’s the tendency to interpret evidence to support our prior beliefs and ignore evidence that contradicts these beliefs. And it’s all-pervasive in business. As Bazerman remarks: “Our desire to confirm our initial ideas is so strong that we will pay people to back us up!” Of course, there are many other biases that have a profound impact decision making and, therefore, on the practice of market research. Here are a few more. Do any of these sound familiar?:

  • Over-precision: it’s about being too sure that you know the truth and being overly certain that estimates are accurate: see ‘predicting behaviour’ and ‘getting under the skin’ of consumers
  • Over-estimation: is the belief that you are better at something than you really are: see ‘brand love’
  • The availability heuristic: the tendency to think that the most available information in mind is representative of the larger pool of possible events that exists in the world: see hothousing research findings…

At the end of my last blog on the innovation fallacy I left some big questions hanging. What might paradigm innovation look like in market research? And how might we achieve it?

I suspect many of the answers are right under our noses in that big list of behavioural biases. But we have a long way to go. Researchers’ behavioural lenses seems permanently fixed on building better mousetraps to understand the ‘irrational’ people we choose to call consumers.

Of course business people are real people too. So if we are serious about behavioural economics we should be shifting the lens to our own behaviour and that of our clients.

The first step is to understand our own biases and how they are getting in the way of our own innovation efforts. Like everyone else we are risk and loss averse. We remain more concerned with maintaining our ‘illusions of control’ than with challenging them.

We need to achieve a deeper understanding of behavioural science as a framework for managing and overcoming bias in decision-making and a source of business transformation for researchers and their clients rather than seeing it as simply another data collection tool or analysis technique.

Avoiding the myriad biases that limit our potential requires self-regulation and careful monitoring. Bazerman & Moore (2013) use a wide range of behavioural insights to propose seven strategies for improving decision making:

  1. Use decision analysis tools
  2. Acquire expertise
  3. De-bias your judgement
  4. Reason analogically
  5. Take an outsiders view
  6. Understand biases in others
  7. Nudge wider and more ethical decisions

You can also read more in this article from Daniel Kahneman in the Harvard Business Review.

Market research needs to find a far more prominent role in driving and supporting these strategies. It’s certainly closer to ‘Devil’s Advocate Consultancy’ than ‘Yes Person Consultancy’. The only thing stopping us getting there are our biases…