How do companies make decisions?

[Crunchy English]

This might be a stupid question, but how exactly DO major companies get their data for sales projections and marketing themes? Are their polls or focus groups or something?

Sony is pushing 3D now, but analysts (yes some of the ones who aren't Pachter too) say that the market isn't ready. What makes them so sure they pull this off?

Also on Sony's head are those god awful ads they ran at the beginning of the PS3's lifespan. Sure they have Kevin Butler now, but who thought the baby was a good idea?

Sure Sony and Microsoft are following Nintendo into motion controlled gaming because of all that money Nintendo already made, but how did Nintendo know casuals wanted that stuff?

Are they rolling dice? Are they asking someone? Are CEOs following gut instincts?

Personally, I'd like an opportunity to speak up. I know its easy to be a monday morning quarterback, but if they're looking data, I'd be happy to help them.

 

[the_pleasure_is_mine]

Money * Innovation / Loss = Decision

 

[wkrepelin]

Inferential statistics with the goal of maximizing profits.

 

[Raikov]

"Let's consult the chart!"

If you've seen the South Park episode in question you would know what I mean.

 

[Meggiepants]

All large companies probably have market researchers. The people who help the company figure out the trends.

The problem is, people are fickle. So what a group of researchers determines might be popular in the coming months/years might fail.

As for the 3D thing. I agree that it is too pricey for people to jump into. But Sony sells 3D televisions, and they own a motion picture studio. There have been a number of speculations that 3D was re-invigorated to try to help the ailing movie theater business model. And it makes good business sense to try to trick people into buying the same product again.

Let's say you bought Avatar on Bluray. Now there is the 3D version on DVD. But you don't have a 3D t.v. Now, if you really want to watch Avatar in 3D, you either have to go to the theater (kaching!) or buy a new 3D television and DVD (kaching, kaching!)

I'm not saying it's going to work. I don't think it will. But Sony isn't the only television company pumping the airwaves with those completely unrealistic commercials advertising the new 3D televisions, nor are they the only motion picture company cashing in on the 3D craze at the theaters.

If they manage to pull this off, they will be raking in even more dough. It's a gamble that they probably decided was worth the risk. And yes, I do think they did lots of research to decide this.

 

[Darquenaut]

Essentially most companies work on this method - this works for video games, movies, television, books and essentially any other entertainment medium.

Something new and innovative is thrown out there to the masses. Usually by "innovative" it is something that hasn't been fed to them for a while, or a revision of a previous idea. If the masses accept it and seem to be largely fascinated by it, the mass production of the idea is begun and pushed forward until the idea becomes rote, and companies once more throw out something new and "innovative."

Some previous examples in the game industry:
Early 90s - Street Fighter II and Mortal Kombat begin the fighting game craze.

Mid 90s - Super Mario 64 and the invention of the analog stick creates a slew of wannabe 3D platform games

Late 90s/ Early 00s - The popularity for WWII FPS like Medal of Honor and Call of Duty, coupled with new technology available, create a slew of other FPS titles and franchises - this would develop into combat in more present times and near-future "realities."

Mid 00s - Nintendo presents the Wii and presents the idea that people no longer have to press buttons in synch and patterns to play games, but can just wave their hands in front of a glowing screen. Microsoft and Sony follow in suit with Kinect and Move.

 

[Kpt._Rob]

Companies have marketing departments that do research telling a company what people might want that the company makes or might make, how to market it, etc... The actual decisions, however, are generally made by the board of directors. It's worth noting, however, that often the same person who's on the board of directors for one company is on the board of directors for multiple companies, often even in the same industry. This means that the same relatively small group of people are making the decisions for most industries. So, really the people who make decisions for companies are an elite group of people most of us have never even heard of before.

 

[Generic_Dave]

Generally they tend to make them badly. I worked for a large insurance company for about 5 years and in that time I went from thinking that all companies were evil machines bent on profit no matter what the greater cost. Now I realise that companies are incompetent machines bent on quarterly profit no matter what the greater cost.

Decisions are made, alot of the time decided by ego and bravado as much as any real insight into implementation thereof. These decisions are them implemented by middle-management who usually have little idea of the jobs those beneath them perform. So these people set goals and deadlines, usually with little regard for the amount of time it should take to do things properly. Below that you have the people actually doing the work, whose only real motivation is the threat of being fired from a menial job, not any love or want to improve the product being designed or sold. If any ideas can bubble up from the bottom, through the levels of management who don't understand the work, to the egotistical heads at the top it all starts again.

Don't overestimate the ability of those who work in large companies.