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March 23, 2009 (12:54 PM) by Javier Flaim
Warren Buffet’s most recent shareholder letter — a “bible” read for some in the investment community — had this warning:
Investors should be skeptical of… models. Constructed by a nerdy-sounding priesthood using esoteric terms such as beta, gamma, sigma and the like, these models tend to look impressive… [But] Our advice: Beware of geeks bearing formulas.
(Warren Buffet, Shareholder Letter, 2008)
Honestly, the same advice goes for us “marketing research analysts bearing formulas”. Sure, I could go on about the benefits of using K-means clustering versus CHAID/CART or the different types of discrete choice models for determining optimal concept scores (and I reserve the right to blog about this in the future!) but that is not the point and doesn’t move the conversation forward.
Here’s what does: Asking the critical question that empowers you to know you’re making the right innovation and research methodology decision. That question is as follows: “What outcome am I trying to reach from this research?” Generally, the methodologies fall under two categories: divergent and convergent.
Divergent research questions are expansive in nature. Questions such as: “What else might my customers expect from my product?”, “What are the unmet needs in the marketplace?”, and “How can we transform our category?” are those that seek to broaden our knowledge. A rule of thumb is that divergent questions generally require qualitative and observational research techniques — in-depth one-on-one interviews, focus groups or ethnographic research — which are longer, open-ended and conversational research techniques.
Convergent research questions generally want to narrow down the set of choices. Questions such as: “Who is the right target market for my services?”, “What is the right price for my new product?”, or “Which product should I launch?” are examples of convergent questions. Typically, these types of questions require quantitative research tools — sampling hundreds (if not thousands) of customers or consumers to make the right convergent decision.
Of course there are exceptions to the above, but this is a good starting point as you think through your innovation challenges and research/insight needs.
So our advice is the same as Buffet’s: Beware of (researchers) bearing formulas. Ask the simple question, demand the simple answer.
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David McAughan 
