Lessons from The French and The British Concurrence that Rescued the Market Research Industry

After a string of horrific polling related mistakes, the market research industry can bask in new found success after getting the French and British election right. For once the British and the French worked in concert and it helped the market research industry.

On the day after the US elections, I remember speaking to a colleague and saying “if only we had a dollar for everytime the opinion polls were wrong we would be laughing our way to the bank”. So on the day Theresa May called a Snap election, I decided to put money on what I thought would be the outcome of the election – a hung parliament. I put £50 with odds of 11:2, odds for a Tory victory was 1:7.

I told some of my colleagues about my bet and was told, in polite language, that I had lost my marbles. Having put my own money I followed the election campaigns quite closely. There are three lessons that that I see being relevant to the Market Research Industry

1. History repeats itself -

“All men make mistakes, but only wise men learn from their mistakes”. Winston Churchill

A quick look at history shows that snap elections have in only half the occasions resulted in a win for the party that called the election. A snap election, however, for a “mandate” has on both past occasions resulted in a hung parliament. Clearly, the British public expect the leaders to go ahead and do the job. They have little respect for politicians who “ask them for permission to do their jobs”. Why would 2017 be different – it wasn’t.

Year	Status	Reason for snap election	Outcome
1923	Tory	Mandate to raise tariffs	Hung parliament
1951	Labour	Increase majority	Tory victory
1955	Tory	Called by new leader post Churchill’s retirement	Tory victory
1966	Labour	Increase majority which was reduced to two	Labour victory
1974	Tory	Mandate to face down miners strike	Hung parliament
1974	Labour	Win a majority – Labour were a minority government	Labour victory

Learning for market research – It pays to look at history to identify learning's that could help in designing the study and more importantly explaining the results from the study. I am not saying that  you cant change the outcome but being aware of pitfalls and opportunities gives you a leg up. To draw an analogy – if you are trying to put a man on the moon it would be foolish to ignore gravity. Acknowledging gravity does not act against putting a man on the moon. If anything acknowledging its presence aids in achieving the desired outcome.

2. Experience does not guarantee expertise  –

“It is a mistake to speak of a bad choice in love, since as soon as a choice exists, it can only be bad”. Marcel Proust

I ignored the 18% point “lead” that Theresa May had on the day she called the election – why? One reason – Context. 

Context is the reason why more luxury cars are sold at yacht shows than at car shows. If you ask me if I would like a car that can reach a speed of 100mph in 1 second – the answer is yes of course. But that is the wrong question – since I live in London I rarely, if ever, reach more than 30mph and so the feature is irrelevant to me. Brexit was done and dusted, it was not relevant in the elections. People are now concerned about rising prices, the state of the NHS, trains etc - those are what they want politicians to solve.

Learning for market research - Market research is a specialised area where expertise can’t be automated and must not be ignored.

I have not seen anyone who is not a Doctor, looking at an MRI scan and offering a diagnosis or a prescription. But there are enough people who look at a statistic (18% poll lead) and offer a conclusion and advice. I often hear people say “numbers tell a story” but funnily I have never heard number 5 have a conversation with number 9!!!

In the market research industry, expertise is required to frame questions and interpret the results. I am not talking about knowing about the interpretation of interaction in contingency tables (also known as the Yule-Simpson effect) – it explains how you can gain share in every segment of a market but lose marketshare at the total market level (I’ll let you think that one through J). Of course, knowledge of the Yule Simpson effect is useful but not enough (or necessary) to qualify as an expert.

A prediction of the future on the basis of the past assumes ceteris paribus which is not a real life possibility.  The tack that Theresa May took i.e strong and stable vs chaos was identical to what David Cameron had taken two years back but the context had changed, hence the result changed.

  

You do need to have expertise to understand the context in which questions have been asked, read the numbers correctly and advice on the basis of that. The research industry needs to reposition itself as the consultants who speak for consumers. The larger question is whether it is a consumer insights industry or a market research industry.

3.  Forecasting works but is dangerous under uncertainty and for the long term –

“You can always trust the untrustworthy because you can always trust that they will be untrustworthy. It is the trustworthy you cant trust” Captain Jack Sparrow, Pirates of the Carribean

A year before the French elections Alain Jupe was headed for victory with Emmanuel Macron not even in the fray. How things change in a year !!!

Clearly the long range forecasts were wrong and a lot of it had to do with the volatility. By contrast, once the candidates were chosen for the runoffs, the forecasts were remarkably accurate and consistent over time – probably because of the lack of volatility.

Learning for Market Research  - In his seminal book , The General Theory of Employment, Interest and Money, Keynes said we need to “devote our intelligences to anticipating what average opinion expects the average opinion to be”. He was speaking about the stock markets but the same holds true in market research when dealing with stable conditions. When we are looking at the 20^th flavor of a well established brand of biscuits or the 15^th color of a sports shoe, its easy to make a prediction.

However, looking at the demand for VR in the future is tough. As a reminder (history teaches us lessons!!!) here are a few famous predictions gone awry

·        “We don’t like their sound and guitar music is on the way out”. Decca Records about The Beatles

·        “The world potential market for copying machines is 5000 at most”. IBM to Xerox in 1959

·        “There is no reason anyone would want a computer in their home”. Ken Olson, Co founder of Digital Equipment Corporation. 

If those sound prehistoric remember how Steve Balmer (CEO of Microsoft) wrote off iPhones “....is the most expensive phone in the world and it doesn’t appeal to business customers because it doesn’t have a keyboard which makes it not a very good e-mail machine….”

The market research industry needs to assert its expertise to differentiate between situations. In situations that involve volatility precision would demand a range of options rather than a precise estimate. It might be better to be approximately right rather than exactly wrong. 

The French and the British concurred, the reputation of the market research industry has been redeemed and I made a decent sum on my wager. My values, dictated by my small town lower middle class upbringing, makes me equate my financial gain to gambling which is a huge no no. I have hence decided to donate all my "earnings" to charity.