This morning we looked at Error Three: choosing the wrong initiatives or the wrong ways to work on them.

Error Four: Using Market Research to Know and Design for Your Customers

Why is this an error? You fool yourself into thinking you know your market and lose the most critical opportunity for success—real, caring connections to your customers.

Standard business practice is to hire or draw on third parties for research on existing and potential customers and markets. That aggregated information is handed off to those who contract and oversee the research, most often a business’s  marketers. It is further digested and made available to other functions for product development, packaging design, operational improvement, and a myriad of other uses.

There are several errors here. The first is that the number of translations causes the information to become terribly flawed. From customers to researchers to interpreters to functions which use the information—this is like the game of Telephone we played as children, lining up and whispering a phrase, child to child, until at the end of the line it was radically changed. As the distance grows between your customers and the people in your business who wish to know them, the research results become more and more abstract, and eventually distorted. Work designed from this output is generic because the connection to the final user has become remote.

The second error is believing that customers know what they want. As Steve Jobs famously pointed out, it’s useless to ask people what they want because they don’t know it until they see it.  Harvard Marketing Research Institute reports that 80 percent of new launches fail because, even after extensive market research, they are off the mark and they aren’t differentiated. A third error also works against differentiation. If customers can tell you what they want, they can tell it to everyone. No new understanding is gained from what everyone knows. Relying on it is equivalent to buying your sweetheart a gift from a list of most popular items just because it’s what the average person is giving.

New Business Acumen: Know each of your business’s customer groups. Learn their unique ways of living and being and design for them based on your distinctiveness. Do not rely on the demographic categories used in market research. This is what I call learning to create the “essence-to-essence” connection. It is not data driven; it is on-going, meaningful relationships between customers and all of the people in your organization.

To be continued . . .

There are a few hundred more ridiculously common errors, all of which spring from good intentions. At The Responsible Entrepreneur Institute, we educate and develop people in the core business acumen needed to avoid them. Our track record includes building successful small businesses and growing them with strong financial and responsible platforms. Learn more about our programs and get an introduction to the five new business acumen arenas on January 10, 2013 at 5 pm Pacific Time. The call is free but space is limited. You must register to attend. If you register and are unable to attend, you may receive a free recording of the call within a few days after January 10.