Consider the final line of Darwin’s On the Origin of Species:
“There is grandeur in this view of life, with its several powers, having been originally breathed into a few forms or into one; and that, whilst this planet has gone cycling on according to the fixed law of gravity, from so simple a beginning endless forms most beautiful and wonderful have been, and are being, evolved.”
Why is evolution beautiful?
In part, because it is inexhaustible. Infinite forms might arise from it. A disaster strikes, and a new species leaps to life; a food source is exhausted, and the beaks of finches reshape themselves; soot blankets the London countryside, and black peppered moths rapidly supplant their white-winged cousins.
In this sense, evolution is like a conversation. There’s a give and take to it, as organisms carve out their niches in the changing environment. Information about those changes is conveyed (via the processes of mutation and natural selection) by a swarm of decentralized agents. The language of evolution is that of action or inaction, of adaptation or stagnation — ultimately, of survival or death.
As it is with evolution, so it is with markets.
Free (and mostly free) markets are best thought of as a setting for dialogue: between people, between businesses, and between people and businesses. (For our purposes, the relevant difference between people and businesses is the amount of power they wield in the market. The voice of a single consumer is easily drowned out; the voice of a business is harder to ignore.)
Free markets arise organically. They too have limitless potential: The American Civil War begins, and demand for painkillers propels Pfizer to new heights; a company engineers a revolutionary smartphone, and dozens of imitators emerge; the rapid rise of generative AI paves the way for a caravan of slick tech products. Like evolution, markets have a language: that of supply and demand, of dissatisfaction and desire, of hope and trust, all of which can be expressed in a single value — price.
To succeed in a free market, you must be in on the conversation, and you must adapt based on what you hear. If you fail to listen once, your market will rebuke you. If you make a habit of it, you’ll be forgotten.
I. Price as a language
Of the Friedrichs born in central Europe in the 1800s, Friedrich Hayek was arguably the third most influential (behind Nietzsche and Engels), and he had arguably the third best mustache (again, behind Nietzsche and Engels). He also had a profound impact on our understanding of markets: what they are, how they come to be, and how they can proceed efficiently.
In his 1945 paper “The Use of Knowledge in Society,” Hayek rejects the idea that markets are best governed by a central planning committee that assigns prices to products, arguing that
- knowledge of a population’s needs and desires is the foundation of a functional economic system,
- this knowledge is dispersed among the members of a population, and
- a centralized committee cannot fully grasp the volumes of context-dependent information within a population, so
- the task is best left to a free market that spontaneously adjusts based on individual inputs.
For Hayek, prices are the language of a free market. They embody the nuanced, localized information that only individual consumers have access to. In his words:
“If we can agree that the economic problem of society is mainly one of rapid adaptation to changes in the particular circumstances of time and place, it would seem to follow that the ultimate decisions must be left to the people who are familiar with these circumstances, who know directly of the relevant changes and of the resources immediately available to meet them.”
Hayek calls this person — the person who is familiar with the particular circumstances of time and place — the “man on the spot.” Every time we order something on Amazon, pick an item from a Starbucks menu, call a Lyft, subscribe to a new streaming service, or cancel a monthly subscription, we are this person.
We don’t have all of the information about the circumstances that led to a given price, but we know enough to make the right choice for ourselves. We don’t know that an especially dry October in Nicaragua reduced the supply of specialty-grade coffee, but we do know how much we’re willing to pay before switching to a competing brand with a cheaper product. So we make a decision: to buy or not to buy.
As tens of thousands of consumers do the same, the market adapts. The tenor of the conversation changes. And without saying a word, without knowing even a fraction of why prices are what they are, the market’s constituents have made their voice heard.
That, in Hayek’s view, is the “marvel” of a free market.
II. Shaping the conversation
As a business leader, you occupy an influential position in the market.
Because you’re familiar with the immediate economic context that surrounds your business, you are also a “man on the spot.” However, unlike an individual consumer, you don’t give singular inputs to the economic system. Your business amplifies your decisions. It fields hundreds (or thousands) of inputs each day, and when it speaks, many ears tune in to what it has to say.
In other words, you have the opportunity to shape the conversation.
You’re in constant dialogue with your audience. Every time you give a discount, offer a promo, hike up your prices, or launch a marketing campaign, you’re querying your audience:
- How does our brand make you feel?
- Do you want what we’re offering?
- Are you willing to engage with us?
- Will you buy from us?
Every time they react (or fail to react), they give you their response. Why didn’t they engage? Maybe your messaging didn’t resonate with them. Why didn’t they buy? Maybe your price is too high. Maybe they decided it wasn’t worth the effort. Maybe a competitor beat you to the punch.
If you’ve stayed in business for any length of time, you’ve been adequately attuned to your customers’ decisions. You’ve identified an unmet need or desire in your market and created value to fill the void. This alone is a triumph.
But what happens when the conversation changes around you? What if an innovation shocks your industry? What if a competitor that does things differently explodes into your space?
That’s when those who are truly listening thrive. Great business leaders know that understanding what happened isn’t enough. You must understand why. Understanding why allows a business to adapt to the shifting environment, carve out a new niche, and rise to the challenge — instead of getting left behind.
III. Listening as an act of creation
Analytics platforms can report back to you on things like impressions, clicks, and conversions. Good analytics platforms can help people draw wisdom out of these metrics, providing explanations for what happened and anticipating what could happen next.
What neither an analytics platform nor changing market prices can do is take you inside your customers’ minds. Analytics platforms can extract insights that are invisible to the human eye out of multitudes of data, but they can’t materialize them out of thin air. Changing market prices help you understand where your target customers’ heads are at, but they can’t reveal what’s driving their decisions.
Enter qualitative research.
Qualitative research takes you straight to the source. It pulls you into the “mental sandbox” of your audience, where desires are not yet fully formed and needs are not yet fully articulated.
If you want to unpack your audience’s choice and rejection factors, conduct in-depth interviews or run a focus group. If you want to learn how your audience interprets and reacts to your messaging, talk them through it, phrase by phrase. If you want to know how your market share could be affected by a pricing change, include a qualitative component in your price point analysis.
In some cases (here is the magic of qualitative research), this information hasn’t even entered the market yet. As you interface with your audience, you’ll uncover their motives, values, dreams, fears, expectations, and perceptions — perceptions of themselves, of your competitors, and of your own brand. From this wellspring of rich insight flows the creativity that will inform every aspect of your business, from innovation to product development to core messaging.
Having refined your offering, you’ll introduce something new to your market. You’ll ensure that it meets their deepest needs, and you’ll package it in the language that moves them. When they respond, you’ll listen carefully. The conversation will evolve ever so slightly. And you’ll refine again.
Research isn’t just a “deep dive.” It’s the first step in a process of co-creation.
If your business is bold enough to lower its antenna, stop broadcasting for a moment, and seek out the voice of its audience, you might discover something delightful: You aren’t just listening to your market. In conversation with your audience, you’re creating it.
If you think listening deeply to your audience could help your business grow, let us know.