Last year I told this story to a class of MBA students:

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Before releasing a new music player, a large consumer electronics company did market research. They conducted a survey by inviting over a hundred young people to answer a series of questions. One of them was,

“Which color should the music player be: black or yellow?”

Unanimously, most people answered, “YELLOW”, perhaps because it’s a young and happy color.

At the end, the company didn’t pay the participants with money, but with goods. They told the kids,

“Please go to this room and pick any music player and it’s yours. It’s almost the same as the one we surveyed you about, just last year’s model.”

All music players were identical, except for the color: there were black and yellow ones, each in similar quantity.

Unanimously, most people picked up a BLACK music player.

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This reminds the proverb:

“In theory, there is no difference between theory and practice. But in practice, there is.”

So why in the world do they still conduct surveys? Because of fear of the unknown. When the product flops (at best it will become totally unremarkable), they can say, “Whatever happens, we did our homework!”

No, they didn’t.

Nobody knows how a product or a service will be perceived by the market, until it’s… on the market. That’s why more and more startups are increasingly embracing a new paradigm of releasing even crappy products as early as possible in order to get feedback, then come back and improve, release again, improve again, etc. as a disciplined self-improvement loop, until it’s just right.

Such methodology is nothing short of revolutionary. It allows for unmistakable knowledge about what the market is ready to accept, about the specifications, market audience, distribution, viral-marketing potential… and even pricing, which is one of the hardest things to get right.

Large companies can’t do that, except a couple of them that have enormous discipline in coming up with hundreds of ideas internally and throwing away 99% of them in order to stay focused on their vision, keep their product-line clean, create industry-changing services that leverage their products, build synergy between products. I can name only 2 large companies in the world that do that. A few dozen startups do that too, and it’s growing fast.

And yet…A couple of weeks ago, I get an email from one of my favorite non-profit organizations. The guy introduces himself as a top business student who, along with his classmates, is doing “consulting” for this org.

“Hi!”, he goes, “We would like to conduct a survey for blah blah blah… Can you give us 15 minutes?”