In today’s information-driven world, desk research, or secondary research, is essential for gathering valuable insights quickly and effectively. Conducting desk research involves the systematic collection, review, and synthesis of existing information from credible sources, allowing businesses and researchers to understand market trends, assess competition, or lay a foundation for more detailed primary research.
While this method is cost-effective and fast, scoping desk research correctly is critical to ensure the information gathered is relevant, accurate, and valuable. Let’s delve into the details of desk research, covering how to scope it effectively, align with objectives, and navigate common challenges.
What Is Desk Research and Why Is It Important?
Desk research involves gathering and analyzing information that is already available, whether through online databases, published reports, scholarly articles, or proprietary data from previous studies. Unlike primary research, which requires generating new data through surveys or interviews, desk research leverages pre-existing information, making it a cost-effective and efficient option when resources or time are limited.
Desk research is often the starting point for larger projects, helping define the framework for primary research or refining existing hypotheses based on market trends, consumer insights, or competitive analysis.
The scope of desk research is vast, covering diverse domains like market research, academic studies, government reports, and competitor analysis. For example, a company looking to enter a new market might start with desk research to understand industry trends, identify leading competitors, or gauge potential customer demand.
Similarly, a policymaker might use desk research to review the success of similar policies implemented elsewhere. Given its broad applicability, desk research plays a foundational role in various industries and domains.
Scoping Desk Research: Setting Clear Objectives
Effective desk research starts with clear objectives that align with the broader goals of the project. This scoping stage defines the direction and depth of the research. Without a defined scope, researchers risk gathering irrelevant information or missing critical data. Here’s a step-by-step guide to effectively scoping desk research:
1. Define the Research Purpose
Understanding why the research is being conducted is the first and most crucial step. Are you exploring a new market? Analyzing competitors? Gathering data to support a product launch? Answering these questions helps narrow down the sources and topics that will be useful. This also prevents researchers from getting sidetracked by unrelated data, ensuring that all efforts are aligned toward a specific end goal.
2. Set Research Boundaries
Once the purpose is defined, setting boundaries helps limit the scope of research. These boundaries can be based on geography, industry, time period, or type of data required. For example, a company researching e-commerce trends in North America may limit their sources to recent publications within the last three years that cover relevant aspects of digital marketing, consumer behavior, and technology trends. Boundaries prevent information overload and maintain focus.
3. Identify Key Information Needs
Scoping desk research also involves breaking down broad objectives into specific information needs. What exact information will drive decision-making or aid in hypothesis validation? For instance, if the goal is to understand consumer behavior in a certain industry, information needs might include demographic data, purchase frequency, and spending habits. Identifying these needs ensures that the research is comprehensive and relevant.
Sources for Desk Research: Choosing Credible Data
In desk research, the quality of the outcome depends heavily on the sources used. Credibility is key, as relying on unverified or biased data can lead to inaccurate conclusions. Common sources for desk research include:
1. Government and Industry Reports
Government publications and industry-specific reports are highly credible sources for understanding broader market trends, regulatory issues, and economic forecasts. Organizations like the Bureau of Labor Statistics, the World Bank, and the International Monetary Fund provide reliable data for various industries and regions. Industry associations also publish research on specific market trends, such as annual reports from the National Retail Federation.
2. Academic and Scholarly Journals
For research that requires detailed analysis, such as understanding consumer psychology or behavioral trends, scholarly articles and peer-reviewed journals are invaluable. Academic research, while more theoretical, offers insights into established frameworks and models that can be applied in practical settings. Platforms like JSTOR, Google Scholar, and university libraries are excellent resources for accessing academic research.
3. Commercial Databases
Many businesses turn to commercial databases for industry-specific data, consumer insights, and competitive analysis. Databases like Statista, IBISWorld, and Nielsen provide a wealth of statistics and reports across industries. While these resources often require a subscription, they are highly curated and can save researchers significant time in gathering comprehensive data.
4. News and Media Publications
Current events and industry news are important for understanding market trends and competitive movements in real time. Publications like The Wall Street Journal, The Financial Times, and industry-specific news websites are useful for staying updated on the latest developments. However, it is essential to cross-reference news with other sources to avoid relying solely on one viewpoint.
Developing a Methodology for Desk Research
Establishing a consistent methodology is crucial to ensure that desk research is thorough and unbiased. A structured approach helps maintain accuracy and consistency across various data sources. Here’s how to develop an effective methodology:
1. Systematic Data Collection
Collecting data systematically involves gathering information in a structured manner. Instead of jumping between different sources, it is often helpful to categorize sources by type or relevance. This method reduces redundancy and ensures a logical flow of information. Many researchers find it helpful to create a table or spreadsheet to track sources, key findings, and publication dates.
2. Data Validation and Cross-Referencing
Given the wide array of information available online, validating sources is critical. Cross-referencing data from multiple sources can confirm accuracy, especially if the information varies between sources. For instance, market share statistics may vary between reports, and cross-referencing allows the researcher to determine a consensus or highlight discrepancies.
3. Synthesizing Data and Drawing Conclusions
Once data is collected, it must be synthesized to create a coherent picture. The synthesis process involves grouping similar information and identifying patterns or trends that emerge. This step requires critical thinking and analysis, as raw data alone does not always provide clear answers. Synthesizing allows researchers to form a narrative or hypothesis based on the data.
Common Challenges in Desk Research
Desk research, while efficient, comes with its challenges. From data overload to potential bias, understanding these challenges is essential for effective research:
1. Data Overload and Irrelevance
One of the most common issues in desk research is data overload. With so much information available, it is easy to get overwhelmed or sidetracked by irrelevant sources. This highlights the importance of setting clear boundaries and focusing on information needs. Filtering tools and search operators can also help narrow down results.
2. Information Bias and Credibility Issues
Another significant challenge is ensuring the credibility of sources. Not all sources are unbiased, and some data may be skewed based on the agenda of the organization that published it. Reviewing multiple sources and considering the reputation of the publisher can help in discerning credible data from biased information.
3. Data Obsolescence
In fast-paced industries, data can become outdated quickly, especially in fields like technology or consumer behavior. It is essential to verify the publication dates of sources and prioritize more recent data to ensure relevance.
Best Practices for Conducting Desk Research
To maximize the effectiveness of desk research, certain best practices should be followed:
1. Organize Sources Logically – Categorize and organize data by type, such as market trends, consumer demographics, or competitor analysis. This allows for easier synthesis later in the process.
2. Remain Objective – Approach desk research with an open mind and avoid confirmation bias. Allow the data to shape the findings rather than looking for data that supports a predetermined viewpoint.
3. Utilize Technology – Many digital tools assist with desk research, from data aggregators to citation managers. Using technology to streamline the process can save time and enhance accuracy.
Conclusion: Making Desk Research Work for You
Desk research remains a powerful tool in any researcher’s toolkit, offering fast, cost-effective insights when scoped and executed correctly. By clearly defining objectives, selecting credible sources, and following a structured methodology, desk research can provide valuable information that drives decision-making and strategic planning.
As industries and information evolve rapidly, mastering desk research equips professionals with the knowledge needed to stay competitive and make informed choices. Remember that the success of desk research depends on a well-thought-out scope, credible sources, and a careful synthesis of the data collected.
By following the principles discussed, researchers can turn desk research into a reliable process that not only saves time and resources but also sets the foundation for more complex primary research, ensuring informed decisions and strategic advantages.
Here an example of a structured desk research proposal:
Title: “Private Equity Value Proposition: LBO Exit Strategies and Public Firms Acquisition During Bear Market Washout Considering ESG Investing”
This research aims to analyse the link between finance and strategy in Private Equity (PE) acquisitions of private companies, through a Leveraged Buyout (LBO), and in acquisitions/corporate restructuring of listed companies during a washout round and considering non-financial factors (ESG). A focus will be given to PE value proposition, through operations (including the organisational behaviours/development impact) and marketing to attract new investors.
The research project will seek to understand the following:
– What are the LBO exit/acquisition strategies and the benchmark returns (IRR) in specific market (e.g. bear market) and macroeconomics (e.g. raising interest rate, recession, inflation) conditions? What changed compared to a stable macroeconomic environment (a lot of attention on the “era of cheap debt” being declared over and a move back towards long-term interest rates): will projects be viable or will alternative sources of financing be considered?
– Have the PE fund manager’s expectations for returns changed following up on these macroeconomic conditions? Which PE strategy is going to be successful in having the strongest returns going forward? What are the PE threats coming from alternative investments/funds (smaller firms do have more access to crowd-sourced funding now. Direct fundraising via ICO’s & crypto ventures seem to have gone off the boil, was there an index or other metrics on that?)
– How does the bear market impact the PE strategies for acquiring public companies (Preqin data shows a spike in the last 2 years)? Is investing in public companies (instead of private companies) going to be more profitable, becoming the new PE model (the use of SPACs was also touted as being a significant disruptor that isn’t getting as many headlines. In terms of improving performance, have activist investor groups pooled positions to leverage influence?) Does PE improve the operating performance of backed firms?
-How PE creates value and extracts value from investors through its business model today? Are Environmental, Social, and Governance (ESG) issues new elements of risks and growth? What does ESG mean for the industry?
-What are the best PE strategies to attract new investors (e.g. marketing channels, brand awareness, data and resources/capabilities communications) and the impact of internal OB/OD best practices?
Why it’s important:
– Historically, PE showed resilience during economic downturns (it is seen to be easier to raise funds this way in a downturn as institutional investors probably have less risk appetite in a downturn. NYSE & LSE probably have some interesting listing statistics around the last couple of financial downturns). A new challenge came up in 2020 due to the pandemic global market crisis, and it’s continuing today with hostile macroeconomic conditions.
During the new downturn, evaluating the PE exit strategies, analyzing the impact of an LBO and non-financial factors (e.g. ESG/CSR), understanding the increase in listed companies’ acquisitions and how PE reacts to the economic environment through its resources/capabilities, are crucial to proving/disproving new behaviours and trends.
Also, analysing how PE follows up on operations, marketing, and OB to link strategy to finance, attracting new investors through an optimised value proposition, will define the entire investment funds industry picture.
This research will be relevant to:
– PE fund managers and PE executives that face the bear market, interested in having an overview of the landscape/market changes, and the implications in investment strategies and IRR expectations in similar situations that they might come across.
– Marketing/communications/sales/HR departments that need to create value and attract investors in an aggressive competition landscape, through organisational behaviour/development of new and proactive strategies.
– Anyone interested in companies’ valuations, LBO (eventually through a financial model to describe a real case).
According to the previous section, the research methodology will be based on collecting and analysing qualitative and quantitative historical data in order to describe “what happened” (descriptive analytics) and construct a hypothetical model that describes “what could happen” (predictive analytics), addressing the PE value proposition today.
Specific frameworks (to define) and financial modelling will be used to follow up on the overall analysis strategy: a critical interpretation/conclusion that validates findings against literature and prior research. Specific frameworks (to define) and financial modelling will be used to follow up on the overall analysis strategy: a critical interpretation/conclusion that validates findings against literature and prior research.
To validate the research questions, I will review secondary data, including books, articles, industry reports, literature, and PE institutional websites that highlight:
- PE role in the financial and funds landscape today and in the past LBO implications in capital structure and return of the investment Differences between the acquisition of private and public companies Exit strategies that are historically profitable
- PE online visibility (e.g. marketing channels) and brand awareness
- Latest acquisitions trend (quantitative data) available on reliable sources (e.g. Preqin, Bloomberg, Yahoo)
- ESG factors for investment opportunities/valuations
I will also consider primary data (e.g. interviewing investment associates and fund managers) in order to get:
- Channels and strategy to acquire investors (LP)
- Value proposition and communications strategy
- New targets to react/adapt to the macroeconomics and environmental landscape
Changes in the organisation (OB) in terms of OD that drive results and their impact internally to the firm and externally to address success.
