Why Your Business Needs Discovery Research

Discovery research is exploratory research we need when we don’t know in which direction to go to find solutions to a problem. This is nothing new. In market research, we call this “exploratory research,” but I’d admit that “discovery” sounds more exciting.

“Build The Right Thing” is a good motto to describe the essence of this type of research in contrast with research used to validate hypotheses or solutions. Research for hypothesis validation should come after discovery research to support objectives that fall under the “Build the Thing Right” motto.

Discovery research is about how we define its goals, not about data collection methods to accomplish them.

Barriers to Discovery Research

Unfortunately, there is much confusion about these two types of research, often driven by, egos, hubris, short deadlines, small budgets, and lack of knowledge of research fundamentals.

One of the main barriers to discovery research is the belief among many C-suite executives and team leaders (product development, sales & marketing, customer service, etc.) that they already know what needs to be built, who the customers are, what they need, etc. This belief is often based on anecdotal evidence and accumulated industry experience fueling confirmation bias and “gut-feeling.”

Discovery research can be threatening in a business culture that doesn’t see failure as an opportunity to learn. This also happens in businesses where questioning assumptions and the status quo sounds like a foreign language.

I have seen this in teams inside established businesses, but it is also very common among startups with founders enamored with a solution based on personal experiences. They think they represent all the users, which is often very far from the truth.

The driving counterfactual question behind discovery research should be “What would be the cost of going in the wrong direction by skipping discovery research?”

The Solution and the Biggest Obstacle

The biggest obstacle, however, is that to fight this belief we need to deal with counterfactual hypotheses to assess the risks of not doing discovery research. Essentially, we need to estimate opportunity costs. This is a hard mental exercise for many decision-makers. It is representative of Daniel Kahneman’s System 2 thinking process (effortful, logical, calculating, conscious, infrequent).

Thinking in counterfactuals takes time and threatens deadlines.

The driving counterfactual question to trigger discovery research should be “What would be the cost of going in the wrong direction by skipping discovery research?”

This estimation requires thinking in terms of wasted time and money, among other things, by:

• Investing in the wrong product (s) and features.
• Targeting the wrong market segment.
• Setting the wrong prices.
• Committing to the wrong brand positioning.
• Launching the wrong marketing strategy.
• Hiring the wrong talent.
• Investing in equipment, tools, and processes that may be misaligned with customers’ needs.

To do this exercise in a productive way, we need to go beyond a thinking exercise. It often requires internal data gathering to get an accurate estimation of the opportunity cost.

Strategic vs. Tactical Discovery Research

Discovery research can be strategic or tactical in nature depending on the unknowns we are trying to discover across different user experience (UX) touchpoints (product development, pre-sale, point of sale, and post-sale).

Strategic Discovery Research

To decide on a long-term strategy for product development, marketing, and internal operations to support business growth, companies may need to conduct discovery research to answer questions such as:

• Is there a need in the market for our products and services?
• Which products and services should we develop to meet unmet needs?
• Which market segment(s) should we target?
• Who are our current customers in terms of needs, attitudes, and behaviors?
• How should we position our brand (s), product (s), service (s)? How are we different from our competitors in current and potential in customers’ minds?
• What are the gaps in our internal processes and systems to support a good customer experience across all UX touchpoints?

Strategic discovery research requires the involvement of stakeholders from different areas and at different levels in the company so the insights can really inform the next steps in the company strategy.

This type of research can be large in scope and requires a champion at the highest level, a team lead that can coordinate and move the initiative forward, and guidance from experienced researchers (if they are not the team lead).

Skip Strategic Discovery Research at your Own Peril

A good example of what can happen when discovery research is skipped is the failure of Quibi. This was a short-form streaming platform that generated content for viewing on mobile devices. It was founded by two well-known Hollywood names (Jeffrey Katzenberg and Meg Whitman), raised $1.75 billion from investors, went live in April 2020, and was forced to close in December 2020.

In a letter to employees and investors, the founders acknowledged there were “one or two reasons” for Quibi’s failure: The idea behind Quibi either “wasn’t strong enough to justify a stand-alone streaming service or the service’s launch in the middle of a pandemic was particularly ill-timed. Unfortunately, we will never know, but we suspect it’s been a combination of the two.”

The most amazing aspect of this case is how they were able to convince investors to give them $1.75B without providing evidence there was a need for another streaming service. How could they ignore market saturation we saw already in 2020 with services like Netflix, HBO Max, Hulu, CBC All Access, YouTube, and Peacock? My hypothesis is that hubris and egos were the driving force behind this epic failure.

Tactical Discovery Research

We also use discovery research to uncover solutions to problems at a more tactical level where the scope may be limited to specific areas in product development, marketing or operations. For example, we may want to explore:

• What are customers’ unmet needs in this particular area?
• What needs is this particular product meeting?
• What is the path to purchase for customers trying to buy product X?
• What are the purchase drivers for this specific product category? Which ones are driving customers to our products/services?
• What barriers to good customer service are we putting up for our customers?
• Why are customers not willing to pay for this product or service? What is missing in the value we are trying to offer?

Validation Research Confusion

It is at the tactical level where many teams confuse discovery research with validation research. For example, the C-suite or an internal team may have already decided on a solution and even created a prototype, and they want to find ways to make it fit for the target user, develop add-on features, or improve it. They may still have questions about the viability of the solution. They may not know how users will react to it or use it, but these are not discovery questions. These are hypothesis validation questions.

Any research done with a solution in mind is done under the assumption we already know this the right solution for our target user, and we just need more insights into how to make it better. We are trying to test hypotheses about how the customers may use it, what may be missing to improve the experience, the appeal of new feature ideas, etc.

When a team only engages in validation research, there is a high risk of going deeper in the wrong direction.

I have been involved in research projects in which the clients had resisted doing discovery research because they were already committed to a particular solution. Under the spell of the sunk-cost fallacy bias, they kept plowing ahead into a lost cause.

Sometimes, I have been able to break the spell by embedding discovery research questions into the validation research design. Unfortunately, at times, the spell is so strong they simply ignore parts of the results or keep rationalizing their decision to avoid the pain of recognizing failure.

Discovery Research Need & Frequency

Discovery research is often seen as a one-off event done at the beginning of a project or strategic initiative. However, businesses need to do it more often than they realize.

Iterative discovery research is central to the user-centric agile process that allows companies to align their strategy and tactics for product development, marketing, and internal operations with what customers need.

Short-deadlines and small budgets often conspire against the good intentions of executives and internal teams to include discovery research in the development and implementation of their strategies.

Furthermore, validation research “feels” more actionable and concrete, which leads to favoring research such as product concept testing, positioning concept testing, usability testing, pricing optimization, etc.

To determine the need and frequency of discovery research we should ask these questions:

• Do we really know which path to follow?
• Is there reliable evidence to support our assumptions that this is the right path to follow?
• What would be the cost of following the wrong path, if our assumptions are incorrect?

At every step of the process, if we are not sure we are embarking on building the right thing, or if there no sufficient and reliable evidence suggesting we are building the right thing, or if the cost of building the wrong thing is high, we need discovery research.

The cost criterium is a tricky one. It requires thinking of long- and short-term consequences. The initial cost of going with the wrong solution may be low, but long-term it may turn costly for the company.

Discovery Research Data Collection Methods

Discovery research is often associated with qualitative research given its exploration goals. However, we shouldn’t confuse methods with goals. Although discovery research is exploratory in its goals, we can use both qualitative and quantitative research methods to achieve them.

For example, a quantitative market segmentation looking to uncover target segments of interest in a particular product category is an exploration of that product space. We don’t know which segments will emerge if any. We would also need to do qualitative research to identify relevant variables before jumping into designing the segmentation survey, which would also be discovery research.

If you already have defined segments by specific criteria and what to learn whether your product is appealing to those segments, whether they would pay for it, how they would use it for improvement purposes, you are venturing into validation research.

Validation research can also use qualitative and quantitative research methods, although different methods provide different levels of validation. For instance, usability testing, both moderated and unmoderated, qualitative or quantitative is more about validation than exploration.
Even in qualitative usability testing, we are trying to confirm or deny hypotheses about the use of physical or digital products.

For example, if we are testing the navigation of a website, the initial design assumes that users will follow a particular path to find a certain type of information or the shopping cart. As we observe and ask questions, we are finding evidence of how easy or difficult it is for users to accomplish the tasks we give them. Those insights are then used to make design changes that help users to do what they wanted to do.

If the hypothesis underlying our design is correct, the users will have little trouble doing what they came to do on the website, so our hypothesis is confirmed. If, on the other hand, they can’t find information, our design hypothesis is incorrect, and we need to make changes.

To summarize, the data collection methods we can use for discovery research may include:

• In-depth interviews (IDIs), sometimes called user interviews among UX practitioners.
• Diary studies.
• Ethnography (Digital or traditional).
• Contextual inquiry.
• Online bulletin board discussions.
• Focus groups.
• Surveys.

When we do validation research, we test specific solutions to measure their viability and to make improvements. The most common methods used, often based on survey methodology are:

• Quantitative concept testing.
• Product user testing.
• Qualitative and quantitative user testing.
• A/B testing.
• Qualitative research with a focus on specific solutions, complementing quantitative research, before or after this is conducted.

Again, do NOT you confuse methods with goals. To reiterate, discovery research is about how we define its goals, not about data collection methods to accomplish them.

Conclusion

Discovery research is necessary to explore problems to help us decide on a potential solution. It can help mitigate risks and save time and money. Consequently, it should be seen as an investment for both long-term and short-term effective business decisions. It can guide decisions related to the next steps in product development, marketing and company organization, operation, and investment strategies.

If your business wants to survive long-term, you need to make sure you are building the right thing, and for that, you need discovery research.