Don't Guess, Test: How Exploratory Research Can Help Your Business Make Better Decisions
The Kenyan business landscape is littered with tales of triumph and tragedy. Some companies have gone from strength to strength, while others have crumbled under the weight of their own ambitions. So, what separates the successful from the unsuccessful? The answer may lie in research. For the Strategic Edge today, I will advocate for exploratory research...hold on to this, I will come back to it in a bit.
Research is the key to unlocking the potential for any business. It is the process of gathering information, analyzing it, and using the insights to make informed decisions. It is a powerful tool that can help a company understand its customers, identify trends in the market, and make strategic decisions.
One of the best examples of a Kenyan company that has profitably used research to its advantage is Safaricom. The telecommunications giant has dominated the Kenyan market since its launch in 2000. This success can be attributed to the company's commitment to research. Safaricom invests heavily in research to understand the needs and preferences of its customers. This has allowed the company to develop products and services that meet the specific needs of its target market.
On the other hand, there are companies like Nakumatt Holdings, which once held the title of the largest supermarket chain in East Africa. The company's rapid expansion across the region was fueled by a lack of research and strategic planning. Instead of conducting market research to understand the needs and preferences of its customers, Nakumatt Holdings focused on expanding its physical footprint. This led to a lack of focus, poor inventory management, and ultimately, the collapse of the once-great supermarket chain.
Back to my line of thought, let's look at exploratory research and what it can mean for your business.
Exploratory Research: What Is It?
Exploratory research is a way of learning about something new or finding answers to questions we don't know much about.
"Exploratory research might be the missing link between a successful business and a flop."
Exploratory Research: Why Is It Important?
Exploratory research is important because it can help businesses:
Exploratory Research: Success Stories and Failures
Many global companies have experienced success and failure due to their approach to research. Let's take a look at some global examples.
Success Story: Apple
Apple is a company that is known for its innovative products and design. One of the reasons for Apple's success is its approach to exploratory research. Apple is known for conducting extensive research on its target audience, competitors, and market trends before launching a new product or service. For example, when Apple was developing the iPhone, it conducted extensive research to understand how people used their phones, what they liked and disliked about their current phones, and what features they wanted in a new phone. This research helped Apple develop a product that was not only innovative but also met the needs of its target audience.
Failure Story: Blockbuster
Blockbuster was a video rental company that dominated the market in the 1990s and early 2000s. Blockbuster failed to adapt to changes in the market and the emergence of new technologies. Blockbuster did not conduct enough research to understand its customers' changing needs and preferences, or to anticipate the impact of new technologies like online streaming. As a result, Blockbuster failed to develop a digital strategy and was eventually outcompeted by companies like Netflix.
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Success and failure Story: Coca-Cola
Coca-Cola is a company that has been successful for over 100 years. One of the reasons for Coca-Cola's success is its approach to exploratory research. Coca-Cola is known for conducting extensive research on its customers' preferences, behaviours, market trends and emerging technologies. Coca-Cola has conducted often used research to understand how its customers' taste preferences are changing, and has developed new products like Diet Coke and Coca-Cola Zero to meet these changing needs. They have not always been this lucky. In the 1980s, the company attempted to introduce "New Coke" to the market. The company failed to conduct adequate exploratory research, and as a result, misjudged consumer preferences. The backlash from consumers forced Coca-Cola to bring back its original formula, costing the company millions of dollars.
Failure Story: Kodak
Kodak is a company that was once a leader in the photography industry, but failed to keep up with the changing times. Kodak was slow to recognize the shift from film to digital photography, and as a result, they did not invest in the development of digital cameras. This lack of exploratory research ultimately led to their downfall, as their competitors were quick to develop digital cameras and capture a significant share of the market.
How can you conduct an Exploratory Research?
We have now established that research might be the silver bullet to unlock your revenues. Let's look at a practical step by step approach to how you can conduct this research;
Here are the steps a business can take to conduct small-scale exploratory research:
Step 1: Define the problem or question you want to answer. Before conducting any research, you need to know what problem you are trying to solve or what question you want to answer. For example, if you are a coffee shop owner, you may want to know what type of drinks your customers would like to see on your menu.
Step 2: Choose a research method. Once you have defined the problem, you need to choose a research method that will help you find the answers you are looking for. Some common methods include surveys, focus groups, and interviews. For example, you may choose to conduct a survey of your customers to find out what drinks they would like to see on your menu.
Step 3: Determine your sample size and population. Your sample size is the number of people you will survey, interview or include in your focus group. Your population is the group of people who are relevant to your research. For example, if you own a coffee shop in a particular estate or neighbourhood, your population would be the people who live in that estate.
Step 4: Collect data. Now that you have chosen your research method and determined your sample size and population, it’s time to collect data. This could involve sending out surveys, conducting interviews, or organizing a focus group. Make sure you keep track of all the data you collect and organise it in a way that is easy to analyse later.
Step 5: Analyse your data. Once you have collected your data, it’s time to analyse it to see what patterns or trends emerge.
Step 6: Draw conclusions and make recommendations. Based on your analysis, you can draw conclusions about what your customers want or need and make recommendations for how your business can better serve them. For example, if your survey shows that your customers would like to see more vegetarian options on your menu, you could start offering more vegan-based food and drink options.
The Take-away
In conclusion, the importance of research cannot be overstated in today's business landscape. By investing in research and analysis, companies can make informed decisions, identify opportunities for growth, mitigate risks, and drive innovation. Neglecting research, on the other hand, can lead to missed opportunities, catastrophic failures, and irreparable damage to a company's reputation and bottom line. Don't be the next Kodak. Embrace exploratory research and use it to your advantage. Your company's success depends on it.
About the author: Leo Ngatiah is a sales and distribution expert with a keen interest in strategy and innovation. He is currently pursuing his Masters in Strategy at The Strathmore Business School, and also serves as an Area Manager for Kenya Wine Agencies Ltd, where he oversees sales and distribution in Nairobi. With years of experience in the industry, Leo has developed a deep understanding of sales and distribution dynamics, and is always looking for innovative ways to improve business outcomes.