Shedroff talks about the power of design research and dissects the differences between quantitative and qualitative thinking, pointing out that both are important but at different times. During the innovation process you need to listen to one more than the other. For example, design research focuses on qualitative and uncovers critical things that quantitative can’t identify.
- So, when it comes to design thinking, there are aspects of this process like ambiguity that can be a little challenging for business people. Are there other things besides ambiguity that are challenging for business people? Or is that really the big one? - That's a great question. Well, ambiguity's a big umbrella. (chuckles) There's a lot about the design process that falls under ambiguity.
I think that, so there's a lot about design elements, and color meaning and symbolism that would fall under that, and that's just still part of ambiguity. There is another thing that is really difficult for business people to understand and that is that, two, actually. One is that people are not rational-actors, and this is drummed into them in their econ classes. Neo-classical economics, people are rational-actors. Sounds great.
My response to that is, name one. Show me one person who's rational. This is justification for only looking at the financial value and the functional value. Price and performance, price and features. That's what the history of product development has been built on. And then, along comes, you know, a company, whether it's an Apple, or a Hermes, or a Nike or a whatever, and people pay more for things. Why are you paying more for that? You're an idiot to pay more for that! It's not that that company is hoodwinking us and, you know, telling us a bad story that makes us be convinced it's worth more.
It is worth more, or we wouldn't part with our money. It's just that the value that's being derived is not on this column, it's on this column. It made me feel good. Well, if you're a rational-actor, you're not going to buy the thing that makes you feel good in this world, when you look at it. But if you look at people as wonderfully irrational, like, that's what's good about people, of course you're going to buy the thing that makes you feel good because that's the value, that is a function on one level.
Right? But business people, traditional business people, especially the sort of ones way out here on the edge, called quantitative optimizers, they have a huge problem with that. It just doesn't make sense. You're just a fan-boy, you'll buy anything that they make. No, but I see value here, and I feel value that it's providing me that you don't see. That doesn't mean it's not there. And so, when traditional business people look at design, they have to understand that there is value there that is real value, it ends up being dollars and cents, but it doesn't fall into the categories that they're used to.
And many of them just won't believe it. Dogmatically, will not believe that that's the case. Does not happen. Because they've been told their whole business career that it doesn't exist. So when someone says to you, people won't pay more for that, we've got to get the price down, that will be too expensive, people won't buy it. I tell my students, look at what they're wearing. Do they have, like, slacks from Kirkland, you know, the Costco brand? Are they wearing the cheapest, no-name, or, you know, inexpensive Timex watch, do they drive a Kia or a Hyundai? No! They're probably driving a Porsche or they want to, they want to have a Porsche.
They might have a TAG Heuer watch, or a Nike. They're not buying the cheapest-- I mean, even the people who say people won't pay more for things, don't act that way themselves, but they don't see it and sometimes pointing that out gets them really upset because it shows them that they don't know everything. Okay, the other way that business people have a problem with design is that the very purpose of business has to be questioned. Especially in this country, especially in the U.S.
Business is not just there to make a lot of money, that's not the only reason. We teach our students that there's nothing wrong with profit, nothing wrong with money. Go make money and go do great things in the world, but, if that's the only reason you go into business, you will not ultimately be satisfied, and you will likely make a lot of decisions along the way that will dissatisfy a lot of other people. Recently, we just saw the examples of, you know, Volkswagen cheating on its emissions tests, right? And that slimy guy who owns Turing Pharmaceuticals who raises the price from 13.50 for the AIDS drug pill to $750, right? And, yeah, they talked him back, but, those are businesses run by people who only see the money.
They don't see anything else. And usually, that's a recipe for, at least over time, destroying a business. That's what happened to General Motors in the 70s. The bean counters who only saw the quantitative ran those brands into the ground such that nobody wanted them anymore. Barely saved them to this day. So we have to help business people realize that there are other reasons to be in business than just to make money.
You still have to make money, you got to stay in business, but those other reasons can be illuminated by the processes that we use in design. Not only, but design research, talking about the qualitative, getting from customers their deepest values, meanings, emotions, et cetera, can help a company be successful, have great relationships, create great experiences, make money, but also have a reason for existing beyond just the money.
Because it's ultimately dissatisfying and unrewarding and it leads you to make these terrible decisions that either ruin your brand, or ruin your customer relationships, or ruin your employee relationships, ultimately. - There's qualitative data, there's quantitative data. Traditionally, you're using both in any design research, any research project. Is one more important than the other, one stronger than the other? - Let's see, that's an interesting question.
I'd say that both are important. I will not say that they're both equally important. I will say that both are important at different-- Any can be more important at different times. If you're a finance guy trying to figure out a problem with your accounting system, or if you're a Six Sigma guy trying to optimize the quality in a factory, probably the quant data's going to be a little more important, is going to lead you to solutions faster.
If you're trying to message to customers... Or maybe you don't have customers, maybe you're a non-profit or you're a government agency and you have constituents and there's no money changing hands, the financial may be out of it, therefore the quant may be reduced somewhat and it's all about the qual. Often in aid relief within the NGO world, people will throw away the food that you drop to them from the plane because they're starving, because they don't know what the food is, or it's not the food they eat, or it smells really weird.
Right? They don't understand the problem the same way you thought they did. They'll take the blanket out and put-- because they can figure that out, right? Often, the qualitative issues are biggest ones that determine success or not in those kinds of situations. So, I don't think that you can say one's more important than the other, but, certainly during the innovation process, you need to listen to some of it more than the other until you, you know, until it's the right time when you need to validate something.
So, in brainstorming, forget the quant, let's go wild, let's go wide and see how many opportunities we can uncover. When we start converging on one, we may really need the quantitative to help us figure out where there's a market for that. Is there, yes, these three people loved this idea, but it turns out they're the only three people that can ever afford it, so maybe we don't listen to them, maybe we listen to the 1,400 people that told us this. That's where the numbers can really help us validate.
You can't ever lose balance, but you can raise one or the other at different times. And, being a designer, we have to check ourselves about when those times are just as much as business people, non-designers, have to check themselves, and suspend their disbelief at certain points of time. - So you say 95% of market research is worthless. - Yep. - What is the difference between market research and design research? - Design research focuses on the qualitative and uses techniques that uncover pieces of information and types of information, critical stuff, that could never be uncovered with quant techniques.
And I'll give you a couple quick examples. Some people can't even articulate what their desires are, or what their hopes are, or their dreams, or even what their needs are, so how are they going to tell you on a survey, right? You're not there, you can't interpret it. The biggest problem with research is you can't ever ask anyone the thing you want most to know from them. Because you can't trust their answer. Famous examples of market research that polled people to say what's your favorite television station, right? And it always was PBS! Everyone wants, their favorite station is PBS.
But if you look at the Nielsen ratings, and watch what people watch, now it's almost impossible, because there are so many channels. It was not PBS. So were they lying to you as a researcher? Well, kind of but not really. They were telling you their aspirations. They wished that they were the kind of person that watched PBS more. Well, that's actually really important information, but that's not the answer to the question you asked, right? You can never ask something that, the thing you want to know, you have to triangulate it.
And so you have to use qualitative techniques to triangulate that information. It's not easy, it's ambiguous, but it's worth a lot more because it gets you the understanding of your customers or your constituents on those qualitative levels that have the most value, than on the quant levels. I'll give you another example. Thankfully, this is a technique that's not used very much anymore. It's called a mall intercept. It was really big in the 50s, 60s, 70s.
And it makes so much sense. It's all the wrong decisions for all the right reasons. You want to poll a lot of people. Someone had the idea of saying, well, you know, someone's sitting at home, or you call them up on the phone, they're not shopping, they're not in a mindset of shopping, we're not going to get as good of answers. Why don't we go somewhere where people are shopping and then ask them questions about what they want and what they need, because it's a better context. Makes a lot of sense, we'll go to a mall. Then the quantitative optimizers engage and say, well, the survey has to be the same for everyone because it has to correlate, right? You can't ask these three questions and not have these three-- How are we going to mix the data together and figure out what's going on? So we'll have a standard survey and they have to be simple questions because you can't have a complex conversation, especially if it's going to be controlled.
And, really, that doesn't take anyone special. We can save money by doing this by hiring people at minimum wage, but instead of paying them by the hour, because we know they're all lazy, we're going to pay them by the survey, so we're getting our money's worth, right? They don't ask a lot of people a lot of questions, they don't get paid very much. Now, this sets up this wonderful situation that is why people are not rational-actors. Nobody likes to interrupt any other people, when they're in the mall they don't like to be interrupted.
So already, there's sort of a social constraint against doing this. And they're getting paid by the survey so their time's really valuable, they've got to get through this stuff, what if they can't get someone to ask, that wants to have questions asked of them, or, they're taking too long to answer questions, right? You've set up a perfect situation where, the smart guy is going to do what? You're laughing, you know exactly what's going to happen, don't you? - They fill them out. - They go to the food court, they get the giant Pepsi, they sit there and fill them out.
But they're not dumb, they can't all be the same answers because then it's obvious that they filled them out. So they're going to vary the answers, right? Okay, what's the value of that? It's all fiction, none of it's real. It's randomized, just put it right in the trash, don't even look at it, right? Now, that's a funny example, and it didn't happen in every situation, right? Like, some people are more honest than that. But there's an example of quantitative research being controlled in quantitized ways to optimize it that totally misses the point.
In fact, not just missing the point, it generates terrible data that's going to run you down the wrong direction, right? And it's not even getting at the stuff that really drives people. If you have time, I have another story for you about this. - [Woman] Yes! - Okay. So, there's a man named Michael Perman who was the head of marketing, VP of marketing at Levi. And he told this story to me in my business class where he and his team are out, I think they were in the hinterlands in Texas, nowhere near anywhere.
And they were out on an expedition to meet customers and talk to them, they were doing qualitative research, design research. And as he tells this story, if I have this right, they're in this car driving, like, driving in the middle of nowhere because the woman they're going to meet next that's on the interview sheet, she lives in a mobile home, she's, like, an hour away from the nearest Walmart, and she's another hour away from any place that she can buy a Levi's. So she's out there, right? And they're looking over her, the answers to her questions, you know, her sort of, survey identity.
And they're not mean, but they're kind of joking around that, like, this woman has no reason, you know, like, no business buying Levi's. Levi's is a premium brand. She clearly can't afford these jeans. Why isn't she buying whatever the house brand is at Walmart? This is what's wrong with America. You know, people being fashion conscious, and spending beyond their means, and (speech trails off) So they end up meeting her and she invites them into her home and what they discover is, it floors them, and when he starts telling this story, at this point, he actually starts crying in my classroom.
Because, when they figured out why she's willing to drive two hours, an extra hour to go buy Levi's, and it's important for her to get Levi's for her kids, it stuns them. She says, "I don't want my kids growing up "thinking that they're poor. "Because if they do, they're never going to get out of here. "They're never going to make anything of themselves.
"And I don't want their friends thinking they're poor either "because kids are terrible to each other. "I need my kids to feel like, to believe "that they can have a better life "and build something more than I have." And this was one little way that she could help make that happen. That's astounding. She's not buying them because they're Levi's, because the commercial was cool. She's buying them because what she cares most about in life, beyond most of her means, is that her kids build a better life than she has.
You don't get that out of a survey. You get that out of meeting people, having a conversation, and using qualitative techniques. He talks about when they get back to the office. First of all, this is the VP out there, that almost never happens, other people can do that, because your time's valuable, right? They get back and he talked about how they had a, sort of a completely renewed commitment to their own company, because they're not just working for the shareholders, and they're not working for the bottom line, and they're not working for their bonuses, they're working for this woman's kids.
Because they don't want to let them down. And that, to me, speaks of the power of design research. You don't get that out of market research. Now, it doesn't mean that market research can't be good. What we teach our students to do is, you do the qualitative research first, which you can't afford to do a ton of, you speak to way fewer people, but that uncovers what's important. You take those learnings and now research the hell out of it with quant. You can go wide with 15,000 people if you want.
But now you're asking the right questions. Take the results of that, put it back into quant. Go do deep research. So, deep, wide, deep, wide, and you just go back and forth. But if you start with the quant and you start with the easy questions that are easy for people to answer and, oh my God, if you start with demographics, who cares if someone's between 15 and, you know, 21 or 22, and, it makes no difference. It never made a difference, and it makes even less now. You want to know what drives people.
Because that's what drives their decisions. And any good salesperson will tell you, like, if the conversation is about price, I've already lost the sale, because there's no way I can undercut someone's price. My conversation is about aspirations, needs, desires, et cetera. That's how you make a sale. And it sounds kind of, um... (exhales) It sounds negative that you would be selling someone based on their aspirations, it sounds manipulative.
But the reality is, we want to feel engaged and empowered, and that our desires are being met. We want meaningful experiences. We're willing to pay for them. But we can't do this accidentally anymore. And we can't do it intuitively anymore. We have to do it deliberately. And to do it deliberately, to help this woman's kids have a better life deliberately, we have to take in new kinds of information, we need new tools to build the things that actually do improve their life, not just have the patina of improvement, to give them back to them.
And that's a different set of skills. That's the best of what design can do. It's not all design can do. Sometimes design really is about trend and appearance and whatnot. But that's the best of what design can do. And you marry that with smart business techniques, and that's how you can be successful, make a lot of money, and lead change in the world that's positive and meaningful and sustainable, et cetera. - Awesome. Nathan, thank you so much for being with us today.
It's been a total honor. - It's my honor as well to be here.
Nathan explains what business has to learn from design (tolerance for ambiguity) as well as what design has to learn from business (comfort with data and communication skills). He also touches on redefining the word "value," design thinking, and deliberate design that improves customers' lives.