Since the first human beings traded goods in ancient times, the holy grail of business has been to know what the customer wants. No other goal in business has occupied more brains, exhausted more resources, or confounded more leaders.
The most recent trend in the quest to learn from customers is known as ethnography, an offshoot of anthropology that traditionally was used to study remote populations in their natural habitat and learn about how they live. This was typically done in places like the jungles of New Guinea, but now it’s being used in advanced cultures like our own to gain a better understanding of the wants and needs of customers ? and it’s turning into big business.
According to PC Magazine,1 Intel is one company that has invested heavily in ethnographic research. Microsoft has also been using ethnographers to identify new markets and to improve its product line.
Various social sciences have been used in business, at least informally, for many decades, going back to studies in the 1930s of how to make workers more productive. But in an age when customers are more and more in control of the transaction, it’s essential to have some way of knowing not only what they want but also how they live. According to
BusinessWeek,2 that makes ethnography a perfect tool for market research.
It’s one thing to get a customer to tell you what he wants or how he uses a product. It’s another to watch him in his own home or office and see the subtle nuances that sometimes cannot be articulated. This has led to a boom in the anthropology business. IBM has a dozen such experts on staff.
Steelcase, which makes office furniture, uses a full-time ethnographer to learn how people use its products and to develop new ones. The hottest consulting firms, such as IDEO, Jump Associates, and Doblin Group, are all employing social scientists. This in turn is leading to a revolution in product design.
It used to be that a company would market from the inside out. They would think up a product and then go looking for a market that would buy it. Now researchers go out into the world to discover what the market wants, and then design products to satisfy that demand.
This boom in the ethnography business has also created a boom in the social sciences departments of universities. In addition, business schools and schools that turn out product designers, such as the Illinois Institute of Technology, have begun putting anthropologists on staff. In an interesting twist, a discipline that was once purely academic has migrated into the business world. And it is already paying off in opening up new opportunities and avoiding costly blunders.
For example, General Electric, which makes plastics for cell phones and cars, wanted to expand into the fiber industry to make materials for bullet-proof vests for police officers, and fire-retardant coats that protect fire fighters from flames. GE hired Jump Associates to help learn about that industry. Jump in turn employed ethnologists, who learned something GE didn’t know. GE thought the fiber business was essentially a commodity industry, where being able to make lots of material cheaply would help them dominate the market.
On the contrary, the anthropologists found that this exotic fiber industry was far more like a small cheese maker that sells to a few fine restaurants: It was an “artisan business.” The customers wanted to have custom-designed fibers and be in on the process from the start.
Based on this, GE quickly reformulated its strategy and began working much more closely with the engineering design staff instead of top executives. In this way, they could help the customer control the process and get exactly what they wanted. Without the help of anthropologists, GE might have made a very costly entry into that market with a misperceived idea of who its customers were and what they wanted.
At Intel, part of the push to learn from the social sciences involves the strategic initiative that the new CEO, Paul Otellini, is overseeing to transform Intel from a chip maker into a consumer products company making high-tech devices ranging from entertainment systems to medical devices. They are essentially betting the entire company on getting this right, and are carefully deploying ethnologists to learn what customers want and how they live their lives in various settings. Intel now has ethnologists among its senior management positions.
In part, using cultural anthropologists to design products and marketing campaigns is an extension of a broader trend away from traditional research methods. This trend includes techniques like using “cool spotters” ? people who hang around in shopping malls, nightclubs, or particular neighborhoods to see what others are wearing, what music they’re playing, or how they’re styling their hair.
These methods give insights that can be used in design and marketing. They’ve simply become more systematized by the use of academics in the field. In part, this trend has arisen because of broad dissatisfaction with methods such as focus groups, which can give misleading results.
This dissatisfaction has spawned new companies with names like House Visits and Ethnographic Solutions, which, according to a recent report on Minnesota Public Radio,are revealing some deep flaws in focus groups. For example, Whirlpool conducted focus groups that suggested there was a market for high-end appliances for the garage. People in those groups said their garages were outfitted with couches, comfortable chairs, and refrigerators and functioned like a “home away from home.”
When Whirlpool sent the ethnologists out to check, however, they found that the garages were a mess and hardly a place to put a high-end appliance. The people in the focus groups wanted their garages to be a home away from home but hadn’t been able to make that a reality. In response, Whirlpool set out to market a storage system for the garage so that people could eliminate the mess. A year after that successful product, it launched the appliances, and the strategy worked.
Likewise, according to a recent report on Business Wire,3 Xerox used ethnographic research to develop software that categorizes documents in a much more dynamic and human way. It reduced the time it took technicians to categorize repairs from a week to a few minutes.
Another ethnographic development, reported recently in the Financial Times,4 changed the way advertisers are looking at DVR-type technology that allows people to fast-forward through commercials. Before the research, it was assumed that the viewers would simply miss the commercials they fast-forwarded through.
Ethnographic researchers, however, found that even at high speeds, the viewers paid attention to the ads, remembered them, and slowed down to pay even closer attention to those ads in which they were interested.
In light of this trend, we foresee the following four developments:
First, we’ll begin seeing a growing stream of better products and services defined by ethnographic research. Companies that take advantage of these methods will make fewer costly blunders and bring out products more effectively targeted to the real desires and needs of consumers. As a result, American corporations will maintain their edge in this global economy.
Second, employing cultural anthropologists in the creation and marketing of products and services is more than a passing fad. For decades, cultural anthropologists have labored in obscurity to produce valuable knowledge about “foreign” cultures. Their techniques have been well honed to those uses. With the rise of the Internet, the customer has gained unprecedented power. Companies are now admitting that the only way to differentiate their offerings is by knowing more about the customer. Soon we’ll be seeing experts who are able to harness those skills and modify academic methods to produce better customer research.
Third, those who can use ethnographic methods to generate actionable insights about modern consumers will find the business world falling at their feet. Expect to see a spate of best-selling books on the subject and a handful of new companies, largely derived from university anthropology departments, bursting onto the scene with great fanfare. With a great deal of money to be made, there will certainly be a flurry of start-ups and a shakeout. Traditional marketing and consulting firms will buy up the cream of the crop.
Fourth, corporate funding will pour into university anthropology departments, as they ramp up to train a growing number of students in this new discipline. They’ll be readying ethnologists not for the jungle but for the world of business. And, the top business schools will begin offering more anthropological education for tomorrow’s executives so they can “hit the ground running” in the real world. References1. PC Magazine, May 9, 2006, “How to Build a Better Product ? Study People,” by Bary Alyssa Johnson. ⓒ Copyright 2006 by Ziff Davis Media, Inc. All rights reserved. 2. BusinessWeek, June 5, 2006, “The Science of Desire,” by Spencer E. Ante, with Cliff Edwards. ⓒ Copyright 2006 by The McGraw-Hill Companies, Inc. All rights reserved. 3. To access the Business Wire report on Xerox’s use of ethnography, visit the FindArticles website at: www.findarticles.com 4. Financial Times, October 23, 2005, “Fast-Forward Puts TV Advertising to the Test,” by Patrick Barwise and Sarah Pearson. ⓒ Copyright 2005 by The Financial Times Limited. All rights reserved.
