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How Market Researchers Can Avoid The Fate of Tower Records, Borders and Kodak.


By David Rabjohns

Every so often an industry-changing chasm opens up in your path.  Just like an unexpected earthquake, you have to quickly decide if you are going to bravely leap across before it gets too wide or totter and fall.

At ESOMAR Congress 2012, a global conference of market research buyers and suppliers, I saw one of those chasms appear. The chasm emerged from a discussion of the future of market research and the impact of big data.

One of the presenters, Lenny Murphy of the GreenBook Blog, presented a chart that shows the new competitors to market research. These included companies like IBM, HP, SalesForce, Facebook and Google–companies that would never have been considered competitors to market research before.

What struck me is that the market research category is going through same sort of transformation that many categories have gone through in the past when new technology comes along and massively transforms the world.

When Apple introduced iTunes, it revolutionized the music business to the point where Tower Records was left scratching its head wondering, “What the hell happened?”. Digital cameras transformed the digital imaging business to the point where Kodak went out of business, something that was unimaginable 10 or 15 years ago.

The most dangerous factor is that, when these new technologies arrive, it doesn’t immediately impact business. It takes about 16 years from the arrival of a new technology to the complete transformation of the category. Sixteen years after the arrival of Amazon, Borders was gone.

Sixteen years after the arrival of the digital camera, Kodak was gone.

My sense is that many people in the market research industry today still feel fairly secure. They’ve still got customers giving them business; they’ve still got clients asking for help; they’ve still got contracts carrying on.  In that environment, it’s hard to imagine a world that’s going to be transformed in the way that the music, book and film categories were.

But if you’re in the market research industry, the lesson is be careful–because while you might feel safe and secure at the moment, things can change dramatically. Yes, it takes a little while for people’s habits to change—but once they start to change, your category can transform rapidly.

If you’re in market research today, don’t carry on and do business as usual. Instead, ask yourself: “If I were Kodak and I saw the digital camera arrive, what are the questions I should have been asking that would have saved my business? If I you were Borders and I saw Amazon launch, how could I have protected my customers better? What are the new ways I should be looking at my category and my business model that will allow me to survive?”

Closely aligned with asking those questions, you need to think about the value of what you provide, as opposed to the product or service you provide. For example, if you’re in the music business, you don’t provide records; you provide musical enjoyment or music management.

If you see yourself as being in the musical-enjoyment business, you might be able to transform and make the leap from one side to the other of the chasm. If you see yourself as being in the record-making business, your vinyl is about to be smashed

The way you frame the business you’re in has huge implications for the way you look at today’s challenges and the way you think about the future of market research.

How are you thinking about your role in the research industry? Will you make the leap—or fall into the chasm to join the folks at Tower Records, Borders and Kodak?

As you ponder the question remember this:

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7 responses to “How Market Researchers Can Avoid The Fate of Tower Records, Borders and Kodak.

  1. Wonderful article @David! I’m part of the innovators/ technology enthusiasts group and agree 100% with you that Market Research is going through same sort of major transformation other industries have gone through when new technology comes along and massively transforms the world. As says Vivek Wadhwa, a respected global IT opinion leader, “many industries are going to be impacted by exponential technologies–greater disruption than what globalization caused”.

  2. @David – great analogies, and beautifully written. While most of reasons you cite is common knowledge, it is incredible how myopia can cloud one’s vision, and create conditions that lead to the Borders, Kodak et al going out of business.

    I do think, however, the core competence of a market researcher will still be in very high demand but will need to incorporate a much more generalist view on how the convergence of consumers and technology affect their research data (collection & finding).

    Thanks again for a great topical read.


  3. Good overview. I think many of the traditional companies have passed the chasm and are now maturing in terms of their products and services. Will facial recognition, neuroscience, image/heat mapping, MROCs, netnography etc be able to pass the chasm either on their own or inside the former organization? It’s disruption not transformation. Let’s check back in 5 years to see who “won?!

  4. There’s an old expression, “You can’t leap a chasm in two bounds.” This article leads me to feel you need to be “all in” on the direction our industry is taking. I think the changes are occurring faster than we realize.

    I also think we’re mistaken if we think our current client contacts aren’t going to change. We need to be able to meet the needs of the new decision makers. And that isn’t to provide data, it’s to provide insight and direction into new revenue streams.

    All in all, I feel our industry is going through a very exciting upgrade in status and responsibility.

  5. David,
    Good article. To buld on it, I would add another lens. To me the chasm concept made famous by Silicon Valley’s Jefferey Moore is about how new technology is adopted and its diffusion into the mass market. While this is a helpful lens to examine disruptive technologies coming into the market research arena, I think Clayton Christianson’s Innovator’s Dilema, provides a better representation of what happened at Kodak and what is happening today in the market research industry. Essentially, the Innovator’s Dilema looks at the flip side of disruptive technology. That is, what is the impact on conservative companies and industries from disruptive technologies. As you rightly point out, they go on for a number of years without seeing a significant impact to their financials and stock price (Arguably, we’re seeing this with Oracle right now as it is being attacked by the cloud and NoSQL movements, respectively). In fact, Chistianson argues that companies become more profitable on less volume since the last to leave (i.e. the laggards) usually provide the fattest margins. According to Christianson, Kodak clearly should have cannabilized its own markets with innovations of its own making. I would argue the same is true of the market research industry today. As it’s data collection arm is cut off by commoditization, it will still be able to feel the limb for some time. During this time, the industry should focus on innovating a replacement limb rather than rationalizing how to work with one arm….As an aside, it’s interesting to look at the Kodak timeline above, because I sent Mike Lotti, the now retired VP of Market Research (and a true gentleman), a copy of Christianson’s book. I thought it was an important read for Kodak at the time. Arguably, there was plenty of time for them to do something. I sent the book in 2001. Mike, if you are out there- all my best.

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