“If I’d asked people what they wanted, they would have said faster horses.” Henry Ford
As I was listening to a podcast this morning, I heard some very powerful points that reaffirm my “theory” that most market research is a bunch of bunk.
At the Open Source Business Conference in 2004, Harvard Business Professor Clayton M. Christiansen, explained his theory of disruption and how it relates to success in business. Although it is a few years old, his explanations about theory and market research in this keynote hit me with a big dose of reality: managers of business are constantly making decisions based on theories.
However, most managers don’t regard their “theories” as “theories” if the theory stems from “evidence” or historical data. In that case, managers seem to think of their theories as fact. Not so.
When a decision is based upon historical data, why is it deemed to be much more valid than a decision based on speculation about the future? In this presentation, Professor Christiansen confirms what I have believed for a long time – that decisions based upon historical data are likely to be highly inaccurate. I would go so far as to consider them dangerous for most business decision making.
This excerpt from Professor Christensen’s presentation explains his take on the concept of “theory.”
“The word “theory” gets a bum rap amongst some managers because it is associated with the word theoretical which connotes impractical. But a theory is actually a very practical thing because it is a statement of causality – a statement of what causes what and why. It’s like gravity is a theory and it allows you to predict that if you jump out of a window of this hotel, you are going to fall. And you don’t have to collect experimental evidence on that question.
And what this means is that every time a manager takes an action, it is predicated on a theory in her head that if I do this, I’m going to get the result that I need. And every time you put a business plan into place, you are actually employing theories in your mind that if you do these things, you will be successful. It’s just you don’t know quite often what the theories are that you are employing and whether they are good or bad.”
In a future post, I will share an example that Professor Christensen used about the Harvard Business School that further illustrates how looking at the “data” is a very dangerous thing to do in business.
The link to this recording and other related information is posted here:
Gina Carr
Gina Carr works with business leaders who want to get more great reviews and fewer bad ones. A serial entrepreneur and business growth expert, she has an MBA from the Harvard Business School and an engineering degree from Georgia Tech. Gina is the co-author of the McGraw-Hill book, Klout Matters - How to Engage Customers, Increase Digital Influence, and Raise Your Klout Score for Success. Schedule a free strategy session today to learn easy ways for you to get more great reviews ... and, more great customers! www.ginacarr.com/strategy-session.
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