Many companies seem to find themselves reacting to changes occurring outside of their own environment. This may be because leadership is informing their decisions with reactive rather than proactive information.

If organizations develop products and solutions in response to what customers tell them they should do, by the time a large organization processes that information, develops a plan and implements it, the opinions of customers may have totally morphed.

For a business to be sustainable, they must be able to understand the dynamics at work in their commercial environment and define their own path strategically based on the areas of greatest opportunity over time.

Innovation has the greatest potential impact when it is translated into products or solutions that either address, or are perceived to address, the needs customers have that they themselves can’t yet articulate. Then the direction of impact moves from external factors defining the organization to the organization offering solutions that impact the external factors.

Think back to the last 2-3 projects you worked on. Were the projects focused on uncovering implicit needs, or were they focused on validating preferences that are already clearly articulated? Did the project result in learnings that were new or added value to the company’s ability to be innovative in either offering or communicating a solution? Whether or not the methodology you used was innovative, did the learnings help your company to be innovative?

How strategic you are perceived to be as a function correlates strongly with how the results of the research you perform help the company to make and implement innovative decisions.

Let’s look at an example of how external change can influence an organization and how an organization can respond with specific strategies. We will then have a better context for some of the principals we’ve raised so far.

We are all familiar with the theory of supply and demand; when products are in short supply and high demand, value goes up, and vice versa. There have been many challenges to this underlying concept, but the number of real world examples continues to be compelling.

Let us consider the adhesive bandage. When Johnson & Johnson first developed the Band-Aid, it was revolutionary. For the first time, we had an all-in-one solution to protect wounds from contamination and infection that was simple and easy to use.

Over time, J&J introduced different sizes for different types of wounds. Soon other companies were introducing adhesive bandages as well and capturing their own piece of the market. Over time, the adhesive bandage market became “saturated.” There was more supply than there was demand, and prices started going down.

But thanks to innovative companies like J&J, this saturated market was revalued when J&J chose to actively “fragment” the market. They introduced the concept and licensed the rights to a number of cartoon characters that had unique appeal for a generation of children who were the ultimate “end users” of adhesive bandages. They looked beyond the features and benefits of the adhesive bandage and looked to the market dynamics.

Children were being raised by a generation of parents who tended to indulge their children’s preferences. We don’t need to get into an analysis of the social drivers of parenting behaviors to understand that if a child is enamored with the super hero Spiderman, and they suffer a “boo-boo,” nothing will solve the situation quite as effectively as that Spiderman Band-Aid.

J&J understands and anticipates their end-users’ behaviors based on a deep understanding of their implicit needs. Nobody could have articulated a need for an adhesive bandage with Spiderman on it. It should come as no surprise to any of us that market research has been one of J&J’s areas of excellence since the company was founded.

Their approach to market research helps them to uncover and interpret implicit needs, and then to successfully develop, position and communicate their products in a way that maintains value in their markets. J&J has become so effective at capturing these subtle insights that they actually understand what will influence their targeted customers’ behaviors better than those customers understand themselves.

[This post has been adapted from Vivisum’s 2014 Research (R)evolutions consortium led by Shirley Stoltenberg]