--BY ARVIND SHAKYA, MBA & RABIN K. ACHARYA, PHD
Competition is inevitable in a capitalist economy and socio-culture global society. Whether it is an idea, individual or an institution,there is always a daunting challenge for survival. With fierce rivalry, comes the need for making superior decisions. However when it comes to taking a course of action, the majority of executives tend to follow their intuitions in most cases. Intuitions carry past exposure and perspectives which could be counterproductive in taking decisions, as they do not carry any research. Now, the question arises how a decision should be made. The solution is proper research, which could be a guide to making mature decisions.
Research is an essential tool for management whether it is for profit or not-for-profit;for problem solving and opening avenues for the future. It is a simple protocol of searching, collecting and analysing the information, and then communicating the findings and their implications. All of us understand the main objective of research is to use the available information to formulate the overall strategies of an organisation. Whether it is before launching the product, seeking feedback after market penetration, forecasting the future individual or social need, research is a must.
There are simple ways of doing research on the basis of secondary information, which is easily available or through primary data like surveys, observation, or interviews and many more easy tools. The success of all ventures is based on thorough research, which assists them to understand the context in advance and decide the course of action, minutely choreographing the strategy in the same manner. Global giants like P&G and Ford maintain their social networking sites to discover key information about their products through social discussion forums. Some like to open a contest and make the consumers give their feedback for a prize in return. Jelly Belly once had a Jelly Belly Dream Bean Contest where they received strange flavours such as Dill Pickle, Rotten Egg, Taco and Burned Bacon. Voting was done after these flavours were put on the website to decide the winner. This is an innovative approach to research which not only promotes the new flavours in the market, but adds a brand value too.
Research on the basis of secondary information is also an equally powerful tool. A company can compare its financial ratios with the top competitors of the market and the industry average. In 2010, BASF had 20.06 percent in Return on Equity and 7.65 percent Return on Assets; DuPont had 31.1 percent and 7.5 percent compared to Dow Chemical’s 7.73 percent and 2.14 percent respectively. Clearly, the numbers indicate Dow’s lack of efficiency in using its assets and equity to generate profit compared to its top competitors. Such statistical research helps Dow to improve on its financial weaknesses.
Moreover, business research is an ongoing process. Even the term re-search means to search again. According to Business Week, the top 10 US companies have increased their Research and Development spending by 42 percent since 2000, whereas the capital spending on tangible goods has risen by a mere 2 percent. This shows that ideas, information and relations are becoming more important nowadays than production plants and products. These companies are working to bring products that best solve the market needs.
Moreover, a company needs to balance both exploration and exploitation. Exploration is done for innovation whereas exploitation improves the existing business model. Hunger to explore helps a business widen its reach. On the other hand, persistence to exploit helps to deepen the business. A company without continuous market research would lack in both areas making sales saturate. Once famous DVD rental chain, Blockbusters filed for bankruptcy in 2010, as they could not compete with Netflix. Blockbuster could not adjust to the shifting consumer behaviour of watching movies online. They resisted change and made minor adjustments only. Netflix membership was priced at USD 9.99 with thousands of online streaming movies whereas Blockbuster had expensive rentals and high late fees. This shows why you need continuous business research in order to study the dynamic market.
Business research is also a strong mechanism in getting regular feedback from the market. The fast food industry as a whole is evolving as people are becoming more conscious about their health. So, doing a proper market research on consumer’s changing behaviours, which includes preferences, taste and quality, could increase the product sales. Likewise, some researchers recently did a small research forecasting in Nepal, the trend for take away coffee would slowly pickup and grow steadily in the years on the basis of life style. If one carries out further research in a correct manner, this could bean enormous opportunity in the coming days. Such types of market research could be done by oneself, with the help of well educated teams of executives or even with the assistance of research professionals. Is there a guarantee that all research will forecast the future correctly? Certainly the decision made on the basis of research has less chances to fail than that based on intuition. Research says only a 10 percentage of decisions made on the basis of research fails whereas in other decisions only 10 percent survives. The choice before us is to make a decision by chance or not miss out to change.
The practice of society stereotyping research as an activity performed just in the beginning strongly prevails. In our context, there are few institutions applying proper research whether it is a pre-establishment or a recurring research. It is one of the reasons why so many of the startups fail badly at the very initial phase. A burning example is the Futsal business. People perceive that a starter is making money, hundreds of others will follow, the ‘me too strategy’ without understanding the situation. Unfortunately, only a few will be lucky enough to survive.
In order to benefit from research, individuals or institutions must be honest with the researcher in the same way as with a doctor or a lawyer. Another important thing is how to maintain trade secrets? There could be an agreement for maintaining confidentiality or else one could be severely penalised financially, boycotted professionally, or criminal charges leveled for unauthorised disclosure(s).What is required at this point in time is a research culture- encouraging, applying, and participating in research. This will increase the playing field for all all activities.