Human Phenomena as the Basis for Business Decisions - 2

Following on from the first post...

https://ryan-reason.durumis.com/ko/human-behavior-becomes-the-criteria-for-corporate-decisions-1-7q9sdmrd

Here, we introduce the phenomenon-driven approach.

A. The 'Phenomenon' at the Focus of Analysis

If we focus too heavily on megatrends, it becomes difficult to explain specific, situational details. When taking a value-centric approach to products, overemphasizing the size of the market and target group can make it difficult to focus on understanding customers' needs and desires, leading to a lack of crucial information for determining what new products to offer in the future. Furthermore, a product-centric approach can quickly shift into problem-solving mode in the early stages of the process, increasing the risk of developing products similar to existing ones or investing in products that fail to address market needs.

To avoid these pitfalls, I propose a phenomenon-driven approach. Phenomenology focuses on the "meaning" of everyday life, namely the intentional relationships between people and the things they are interested in and experience.meaning. How is the role of the automobile changing for drivers? Why is our relationship with money abstract? Why do patients create their own medication strategies? Simply put, phenomenology helps us understand that we are not simply looking at a glass bottle containing Coca-Cola. We are seeing a Coke bottle that evokes emotions and their associated thoughts, leaving us with feelings of confusion, nostalgia, joy, or disgust.

In this regard, three basic understanding elements become essential.

• Understanding what it means to be human
• Research methods for understanding human behavior
• The process of reasoning that can discover new insights

The primary challenge of the phenomenon-driven approach is that it necessitates more analysis before specific concepts and solutions are developed. However, this approach is rewarded with richer, more differentiated, and potentially unique growth opportunities.

B. Abductive Problem Solving: Inferring the Best Explanation from Observational Results

Hypothesis-driven problem-solving is already widespread in the corporate business strategy world. This approach is often effective in providing a fast, simple, and structured framework. However, it is clear that it cannot be used to develop innovative ideas in other situations with high uncertainty. Considering human confirmation bias, hypothesis-driven problem-solving is limited to exploring conceivable hypotheses, and can only help determine which of our existing biases is most likely to solve the problem.

On the other hand, abduction is the process of actively seeking data that may contradict existing assumptions and biases and then attempting to understand it.Therefore, the form of inference is as follows: A surprising fact, C, has been observed. But if A were true, C would be a matter of course. So there is reason to suspect that A is true. In this regard, successful abductive problem-solving is characterized by data overload, continuous pattern recognition, and open and critical discussion, a process that is far more intense than expected.

C. Data Collection Using a Variety of Complementary Methods

In line with the principle of abductive problem-solving based on observational results of phenomena, it is necessary to collect data from various sources to uncover previously unseen blind spots. This process requires a perspective that is based on a rich and nuanced understanding of humanity. Such a perspective can only be obtained through in-depth qualitative research, validation of massive amounts of data, and rigorous financial analysis. However, many companies struggle to apply qualitative data with the same level of confidence and rigor as when calculating NPV or determining the size of customer segments. Therefore, simply collecting data from various sources is not enough. Instead, one must be cautious about when to collect that data.

• First, define the phenomenon that should drive the analysis. (For a company in the home appliance industry, it could be 'home,' and for a company in the wine industry, it could be 'banquet.')
• Conduct internal interviews and open-ended surveys to define the company's DNA.
• Identify long-term drivers for future change and define potential hotspots using socioeconomic data.
• Utilize qualitative data (interviews with industry, adjacent industry, and academic experts) to identify signs of new customer/consumer behavior changes in related phenomena.
• Find new commercial possibilities that can test business opportunities on each potential growth platform.

D. Concrete Implementation from Abstract Data

Now, let's address the fundamental challenges facing business leaders within the company. Decisions must be made regarding which possibilities to invest in and how to ensure these changes impact the direct organization. To achieve this, we present the following five stages based on the gathered data.

1. Conduct ethnographic in-depth analysis in a specific market to identify the unmet needs and goals of customers that will drive the proposed offering.

2. Utilize customer/consumer insights to generate ideas and then select the best ones.

3. Create prototypes of the top ideas.

4. Test prototypes with real customers.

5. Evaluate the impact on the market and then deliver the new products and offerings to the internal direct organization or sell them to external partners. If the confirmed results do not meet expectations, they must be discarded.

This process not only provides a structured framework but also aids in a more agile process execution. In other words, poor ideas can be eliminated early on, allowing more time and resources to be allocated to good ideas.

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Finally, it should be clarified that stepping away from the comfort of certainty is not a meaningful investment for all businesses. However, it is my conviction, in writing this post, that the analytical difficulties associated with the introduced phenomenon-driven approach will ultimately be rewarded with the discovery of more appealing opportunities, serving as a source of competitive differentiation for years to come.