Research and innovation are topics that go hand in hand. Or do they? As designers and developers we spend hours researching, sometimes without even knowing it. We care about real estate market values, the state of workplace design (a tricky subject right now), trends in hospitality and residential, marketing and social media analytics, and so on and so forth indefinitely. Little bits of data are all around us and the temptation is certainly there to think that the answers to our questions are out there in the form of some statistic, or fact, or case study. But what if they aren’t?
Lately, we’ve adopted the belief that data can’t possibly hold the key to success based on two critical factors: data analysis is never current and past scenarios are never replicable. Sure, you have “real time” analytics capturing human behavior instantaneously as people swipe, click, or scroll, but by the time you digest those figures and convert them into anything useful for future decision-making, they are out of date. And that’s assuming that you are the one going directly to the data source, as opposed to consuming info the far more common way-- by reading or watching a report by someone else who did the actual analyzing. If you’re hearing about it on a podcast or reading it in Bloomberg, how long did the authors of that content have the data before it was time to publish?
Our point isn’t to criticize research and analytics, which are both very important parts of society and the creative process. The point is to ask this question: How often does the need to “prove” something based on data get in the way of actual innovation or hinder creative and economic growth?
Let’s look at a very simple example. When we bought 306 Grear Alley, a small office building in Cincinnati, Ohio in 2017, we did our homework as we started plans to renovate and open the space as a luxury rental called The Carriage House. The worlds of real estate, property renovation/construction, and short-term renting are chock full of data and we couldn’t help but dive into the research. We looked at real estate comps, construction costs per square foot, AirBnb average nightly rental prices and occupancy rates.
And then we thought, how much of this applies to us? The answer was almost none of it. Our projections for the project, based on our own instincts and understanding of design and human behavior, overshot the existing data in every category. We projected doubling the property value in two years, booking at a higher occupancy rate than the local average, and charging significantly more per night despite only having a one bedroom. All of our projections were accurate. The data would have told us to build two bedrooms instead of one, spend nowhere near the cost per square foot we put into the building, and keep our rental pricing on par with the competition.
You may be thinking, ok, there’s an exception to every rule, or perhaps we got lucky. Sometimes risk brings reward, other times it brings total failure. We’ve been thinking about that a lot lately too. How do you identify when to trust your own judgement more than your research? We don’t have an easy answer for this, and we’d love to talk with more entrepreneurs who have taken a leap outside of the safety net of data-supported decision making, but we suspect it has something to with the following: identifying a void, understanding real value, and forecasting with empathy. Let’s break these down really quickly.
Identifying a void: When there is a void in a market, there isn’t data for you. If you are “the first” there is no one else to research or learn from the mistakes of. Is this a scary place to be? Yes! Is it exactly where you need to be to innovate? Also yes! It would be a mistake to hesitate or succumb to doubt in a situation where you can’t find data to support your theory because no one else has done what you are doing yet. Watch out for these situations and learn how to see a lack of data as a sign of opportunity for innovation, not a warning.
Understanding real value: When you’re looking at data related to you or your business, ask yourself, “does this data capture the value of what I’m bringing to the table?”. We run into this one all the time with design. Everyone wants to know how home improvements convert to real estate value, or in hospitality, how upgrades convert to increased bookings or nighty rates, or in workplace how amenities convert to employee retention. The reality is, believe it or not, there are such things as intangibles.
We recently opened a bar and have been learning a lot about operations, collecting great feedback from our guests along the way. Rest assured, it isn’t the ingredients in a cocktail that make someone willing to pay $12 for it. It’s the combination of the lighting, the music, the weight of the glass, the smile from the bartender… none of which can be captured in our monthly reporting. The takeaway here is to know where your value comes from. If it comes from a measurable factor like speed, price, or accuracy-- analytics might be really valuable for you. If it comes from the intangibles, understand that you might not be able to “prove” your worth on paper, but that doesn’t mean it isn’t there.
Forecasting with empathy: As mentioned in the beginning, when you look to the past for answers you are only ever going to find so much. As Ferris Buehler put it, the world moves pretty fast. Arguably too fast to expect that what worked for someone else yesterday is going to work for you today. No one knows what the future holds, but who is to say that you might not have a pretty good guess? If you’re an expert in your field, while you may not have a crystal ball, your prediction is likely much better than someone else’s. Why not lean into your own prediction and let it influence the vision you set for the future? Our theory is that they key to this is of course part knowledge, but also part empathy.
One more quick example from the AirBnb since now we’re all a little familiar. During the first months of Covid 19 we closed The Carriage House until we felt it was safe to reopen. Before listing it online again, we did a little quick research and found that many other hosts had lowered their prices. The logic makes sense-- many people have been out of work, taken pay cuts, etc. Lowering the price might increase bookings. Then, we set the research aside and made our own prediction based on empathy, by asking “if I were looking for an AirBnb right now, how would I feel about it?”. We predicted that while yes, some people might prioritize budget, others might prioritize quality, cleanliness, and escapism from the reality of having been trapped in their homes. All three of these things we felt would more likely be indicated by a higher, not lower price. We increased our prices just slightly and our occupancy rate has been higher post covid shut-down than prior to the pandemic.
We wrote this article mainly with our fellow creatives in mind, in hopes that some of this may resonate with your own struggle to balance the desire to innovate with the need to back up every single idea with research. That said, we would love nothing more than for this to end up in the hands of any of the people we consider to be the gatekeepers of innovation. You know who you are. The bankers, investors, underwriters, and executives who are pitched to everyday and get to choose which ideas get the green light and which are too big of a risk.
If you are in one of these roles, it is your obligation to understand that the future will not be shaped by safe ideas that have already been proven in the past. In fact, too much data could be a clear sign that you have missed the boat. We can appreciate the difficult task of having to make the choice to either support an idea that may very well crash and burn, or reject it and miss out on a huge opportunity. Our challenge to you, is to ask yourself, before making such a decision, am I looking at the whole picture? What does your own experience and knowledge of human behavior tell you that isn’t captured in the numbers? Is the opportunity in front of you a bad one because it doesn’t have the data to support it or is it actually the next big thing, but you won’t realize that until you’re reading about it in a future report?