Does transformational thinking make sense for small businesses?

I recently came across some musings on market research from the vice president of marketing strategy and insights for Coca-Cola.  His main points were that too much money is spent on “rear view research”; it makes up to 80% of research budgets. Understanding what happened in the past helps understand mistakes, but he believes that we need a change of mindset.  “It’s not about following the change as quickly as possible, it’s about helping companies to shape the change. Large companies have a responsibility to shape the change, not just respond to change.”

Research departments must therefore shift from providing insights to provoking transformation; from quantifying the expected to listening for the unexpected.  Researchers need techniques that observe, listen, synthesize and deduce in ways we haven’t in the past.

It seems to me that the various tools and techniques that are becoming available within social media will be very relevant to this change in emphasis.  But the real issue won’t be the availability of the tools – that’s process.  The real issue is the ability of clients and researchers to change their perspective and the way they think about managing their businesses.

And this is where there may be a big divide between:

  •  Large businesses, such as Coca Cola, who have the resources (including bright people) to think in a visionary way, obtain the appropriate information, and then incorporate their findings into how they run their business.
  • Large businesses that have the resources but don’t have the ability to think in a forward looking, transformational way (Kodak?).  They are large, but arguably ‘small minded’.
  • Small businesses that have neither resources nor a transformational capability.

As I’ll cover in other blogs, the great thing about social media, as I see it, is that will enable small businesses to do social listening and ‘market research’ at little cash cost.  So they will be able to gain information about customers’ views and behaviour that they have previously been unable to obtain.

The aspect of this that interests me is to what degree does the concept of ‘providing insights to provoke transformation’ make sense in the context of small businesses?

One situation in which small businesses are clearly transformational is when a new one is started offering a distinctive new product or service.  Google for instance, or Innocent, or Howies.  But these are started by bright people who have already done their development work.  And who arguably have keeping close to customers deeply embedded within their culture.  So this begs the question of how representative they are of small businesses in general.

But how willing and able to think transformationally will the great bulk of small businesses be?  Or need to be?  Does it actually make sense for existing small businesses to try to act in this way?

In my experience decision taking in small businesses tends to be simpler, more incremental and short term in nature.  But on the other hand small businesses are generally more flexible and adaptive than larger ones.  So perhaps an approach that makes sense is not attempt to be proactively transformative, but to monitor what innovative big companies are doing and then quickly respond to any initiatives that are successful: a ‘fast follower’ strategy.

This could be implemented by:

  •  Carry out social media listening, to ‘hear’ what customers are talking and complaining about.
  • Set up a customer community, so that customers’ can be asked about issues and provide their reactions to possible developments.
  • If they exist, identify innovative large businesses that are operating either in the same market, or in ones that are comparable in some way.
  • When these innovative businesses implement a new development, ask members of the customer community what they think to it.  How would they react if the small business was to offer something similar.
  • Implement the developments that gain a positive response.

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