Inventing Market Research, On the Fly

Market research is one of the key factors employed in business to succeed versus one’s competitors. Market research provides important information to identify and analyze customer needs, market size and competition. The goal is to create sustained competitive advantage.

The term “on the fly” means to do something without preparing and without thinking too much about how it should be done.

This is the story of how market research was invented at Apple…on the fly. I don’t believe this story has ever been told until now.

In the summer of 1980 I was hired for a three-month internship at Apple. I was in between my first and second year at the Stanford Graduate School of Business where I was working on my MBA (see Mac Story #4 “You’re Supposed to Work for this Man”).

This was the first summer that Apple hired Stanford MBA students for summer internships. There were three of us: David O’Connor, Tony Christopher and me. As long as I could spend my summer at Apple, I would have been happy to sweep floors, clean toilets, or anything else. It simply felt right.

A couple weeks before my internship started, I learned that I would be assigned to the Apple Market Research department. This sounded great because I would learn a lot about the company and the overall personal computer industry. Apple was the industry leader and I would be working for the best. I couldn't wait to see what they were already working on.

Upon arriving at work in June 1980, I was introduced to the department manager, Alan Oppenheimer. He was about 10 years older than me and was very engaging and likeable. We immediately hit it off. I was shown where my desk was located and someone handled the usual “new employee orientation” things. And I was introduced to our group assistant Lucy. That was it, just the three of us.

Then we got to work – or should have.

I asked Alan, “How long have you been at Apple?” I assumed at least 1-2 years.

Alan replied, “I joined two days ago.”

Mike: “Where were you working before that?” 

Alan: “General Mills in Minneapolis”.

Mike: “Were you working in Market Research at General Mills?”

Alan: “No, I never have. I know nothing about it.”

Mike: “Then why are you in this job?”

Alan: “I wanted to work at Apple, I lied about my background, and I interview well. They offered me the job as manager of market research and I took it.”

Mike: “Do you know anything about the personal computer industry?”

Alan: “No. Nothing at all.”

This created an unplanned pregnant pause in our “getting to know you” conversation. He then asked me: “Have you taken a Market Research class at the Stanford GSB?”

I answered, “No, but I have an idea.”

I told him I’d be back in about an hour. I raced out to the parking lot, jumped into my car and drove to the Stanford University Bookstore, a place I had been a million times before. Just as I thought, they had the GSB authorized Market Research textbook for sale. It was big and bulky, like all expensive textbooks. But if “look and feel” means anything, then this book was exactly what we needed. And it might have been one of the best purchases I ever made.

Alan Oppenheimer was a very bright guy (the photo below is the only one I could find online). And he was clever. He had earned a BA in Economics from Stanford in 1966 and then an MBA from the Kellogg School of Management at Northwestern University in 1968. Oh, and he was also very resourceful!

I drove back to Apple, found Alan, showed him what I had purchased and we did the most obvious thing: We sat down together, opened the big text book to the table of contents and saw that each chapter described a different type or technique of market research activity. We immediately decided to spend the summer of 1980 “doing one of each”.

We systematically read each chapter and then designed an appropriate market research project utilizing that particular methodology. We employed all the local high tech market research firms that we could find in order to do the actual work. 

What kinds of things did we study?

• Market size and market segmentation (home, education, business)
• Competitive offerings and the growth of the competition
• Strengths and weaknesses of the Apple II versus the competition
• Technology advancements and how they might impact product offerings
• The role of third party software
• Adoption rates of personal computers in small, medium and large businesses
• Market growth rates, domestically and internationally
• Brand awareness and advertising effectiveness
• The role of computer stores in the distribution channel

Alan and I worked well together. We often had multiple projects going on at the same time. We both enjoyed analysis and were good at keeping track of the details. At some point during the summer, Alan got approval to hire a fulltime employee. I think his first name was Howard.

In those days I could write simple computer programs, so I developed a program to do conjoint analysis, which is a fancy way of saying tradeoff analysis. Market researchers sometimes utilize conjoint analysis to statistically determine how people value different attributes (feature, function, benefits) that make up an individual product or service. For example (in 1980), when buying a personal computer, and budget is a consideration, would you rather have a 9 inch color monitor or a 14 inch black and white monitor? By assembling a dozen or more features or attributes, and then creating many questions that ask the consumer to make the trade off, one is able to quantify the priority and importance of features. The software program allowed us to load up a bunch of attributes and then it would generate all the questions for a questionnaire. Once the survey was completed by a large group of people, the program would statistically score the responses and we would have a conjoint analysis that prioritized consumer preferences. This info is this given to the product managers as they work with the engineers on the next releases of new or improved products.

Make no mistake, Apple was not a conservative market research driven company. It was a company driven by dreams and big ideas. The market research data was helpful, but never even the tie-breaker.

Though we might have started “on the fly”, by the end of the summer Alan and I most likely had the most comprehensive understanding of the personal computer industry marketplace of any two people in the world. This type of deep understanding inherently appeals to me. 

And I loved what I saw. 

This industry was ready to explode, and one did not have to be middle-aged in order to have an exciting job. It was the purest play in town. The products actually helped people become more productive and vastly improved communications. And it was never about money. 

It then became my goal to secure a fulltime job where I could make a real difference, hopefully with Apple, but certainly in the personal computer industry.

And that’s how market research got started at Apple.

(Note: the book title in the photo is representative of the book I purchased at the Stanford Bookstore. It's not the real deal.)