Is there still a place for market research startups?

Startups bring energy and fresh ideas to our sector. They also encourage the bigger agencies to keep innovating. But, market research startups have to be on their metal to keep a firm grasp on this real estate – we know how many don’t make it. They have to play to their strengths, recognise their weaknesses, and ensure they’re offering something that’s not only different, but that’s actually needed.

The David versus Goliath argument

Market research startups that move quickly on new initiatives, adapt their strategy and the fluidity of the team, and practice agility are carving their mark in the industry. That doesn’t mean it’s an easy win, though, or that startups should feel secure that their place will always remain.

Bigger companies will always have the scale and resources to stake their ground more firmly. They have deeper pockets, larger workforces, and long-standing reputations. But that’s OK. Because startups serve a different purpose – they have a different role, and they can offer different benefits to make up for what they may lack in comparison to these bigger market players.

Before Netflix became a household name, it was a small startup with big ambitions and it played the long game incredibly well. In 1997, no one would have thought a player like Netflix could stand a chance against growing industry giants like Blockbuster. If the team behind Netflix had asked questions like ‘what’s the point when Blockbuster already dominates the market?’, the industry would look completely different.

Instead of questioning whether there was a place for startups in its sector, Netflix went ahead anyway. And eventually, it was able to leverage its agility to disrupt its market with enduring success. It couldn’t have done that if it hadn’t taken its place at the starting line before the millennium.

Startups really have to be on their metal

The Harvard Business Review talks about how most startups don’t succeed – 90% will ‘fail’ and more than two-thirds of them never deliver a positive return to investors. The startups that stick around are interrogating their value proposition – taking it through problem definition, solution development, and solution validation to really test their metal.

Sure, you could argue that some of it is serendipitous – right time, right place, right people. But that viewpoint really takes away from the relentless determination, grit and sacrifice that it takes for market research startups to stake their ground. For one, the founding team have to be able to recognise these opportunities when they arise and navigate them strategically.

Bigger ships take longer to change direction when something isn’t working

The best market research startups aren’t afraid to make mistakes, because when they do, they learn from them quickly. Falling down hurts harder, but startups are faster at getting back up. Mature businesses often have less of a culture of experimentation – they can suffer the weight of more overheads, more stakeholders, more hierarchical structures, more-risk averse opinion leaders.

Here’s where this idea of neuroplasticity comes in. The brain’s ability to adapt and rewire itself in response to learning and experience, whether consciously or unconsciously, underpins all forms of learning, from deliberate efforts to automatic behaviours. We all have it, but not everyone taps into it as effectively as they could. The same can be said for a lot of businesses and market research companies. Because more often than not, it’s the startups that have the agility to change course.

The dangers of tunnel vision

Startups that suffer from a case of tunnel vision and don’t understand their weaknesses (in general and compared to big competitors) will likely find that their place is not so secure.

The right strategic foundations need to be built, along with the right individuals in leadership, leading the wider company to be aligned in the same direction. Research startups that are going to keep their place – and hopefully, move beyond it – have to be thinking about the future, not just the moment.

Some other rapid-fire learnings from a founder in their second year:

• Practice self-awareness – know your strengths, yes, but more importantly than that, know your weaknesses. Interrogate your business and its offering. Get under the skin of the things you don’t do so well, or can’t. Learn your blindspots.
• Don’t give time or resources to every client equally – dedicate more to your closer relationships that are your biggest assets.
• Focus on the ‘why’ behind the company, from which all your values and offering can be built upon – without the ‘why', it’s like building a brick wall with no cement. 

Challengers are good for the ecosystem

Naturally, there will always be challenger agencies joining the mix. Without challengers, the system breaks.

There has to be a place for challengers, and startups often square up to this role nicely. They create and extend space by innovating – be that in the product delivery or the product itself – and prompt mainstay players to reevaluate. To step up their game and perhaps innovate themselves. Without that threat, others would get complacent, and the industry itself would grow stale.

Whether these early-stage companies continue to grow, decline, or get acquired (which happens often in our industry) depends greatly on the leadership team and growth strategy.

Ultimately, yes, there will always be space for new startups in any industry – not just market research – because they serve their own unique purpose. If their foundations are laid well, as they scale and transition through growth and maturity, they can keep some of the qualities that set them apart in the first place.

But it’s equally true that new players have to know the game well if they want to keep off the sidelines – the position might always be open, but who fills it is up for debate.

Ross Cafferkey is founder of Research Clever