Nanos by the Numbers
For a man who measures conventional wisdom for a living, Nik Nanos, EMBA’10, Artsci’88, has been known to disregard it, often at critical points in his professional life. The founder and CEO of the Nanos Research Corporation, one of Canada’s leading public and market research companies, relishes telling the stories behind these choices, punctuating many with a hearty laugh, as if to say, “Who would have thought it?” Even so, it’s clear that none of these decisions were taken lightly, and that a measured analysis informed each one. It’s just what one would expect from the country’s most precise pollster, one who has set the record for the most accurate prediction of a federal election call in Canada’s history.
So how did he build his firm while still a Queen’s undergraduate student in Kingston into an internationally respected company that counts Bloomberg, the CBC, The Globe and Mail, and numerous Fortune 500 companies, government and non-profit organizations among its clients? The numbers tell at least part of the story.
4 Family Members
Nik and his brother John (Artsci’92) were born and raised in Trenton, Ont., by parents Dimitris and Patricia Nanos. Nik’s father had emigrated from Greece after WWII and become an entrepreneur, opening a billiard parlour and branching out into other ventures that crossed his path before his death at the young age of 47. Nik soon learned more about the family’s business holdings in the vacuum created by his father’s passing, and benefited from the experience of members of the extended family who shared this entrepreneurial drive. “Only the exceptions among our family and friends worked for someone else,” Nik explains. “Almost all had businesses and projects on the side, ranging from the restaurant and food businesses to residential and commercial real estate.”
Originally, he planned to buck the family trend and become a lawyer. The first step was to be a degree in politics at Queen’s, with law school to follow. But a provincial election in 1987 provided the impetus for a change in direction, one that went against his own conventional wisdom that a career in law was where his future lay.
22.76% of vote captured by Nik’s first client
Tom Annis, a Kingston businessman and friend of Nik’s father, was the local PC candidate in the Ontario election of 1987. He’d received a proposal from a Toronto polling firm to do a survey of the riding to assess his chances. “He invited me over for dinner and showed me the proposal,” Nik recalls. “He knew that I was studying this sort of thing at Queen’s, and asked if it was a good proposal, at a good price. I half-jokingly said, ‘Pay me the same fee and I’ll do a better job.’ To my surprise, he laughed and said, ‘You’re on!’”
The 1987 provincial election didn’t turn out as Tom had hoped (he placed third), but at least his pollster had prepared him for the results. Like many successful entrepreneurs, Tom was adept at recognizing potential and he saw this in Nik. He proposed putting together a group of partners to invest in a market-research company with Nik as one of the founding partners and its driving force.
“Of course, my mother cried when I told her I wasn’t going to be a lawyer,” Nik laughs. “Being a consultant was a bit too ephemeral an occupation for my family’s taste, practical business people that they were.”
The firm, SES Research, set up shop in downtown Kingston in 1987, with Nik doing double-duty as a fourth-year politics student and a part-time public opinion researcher. He also assisted Tom with his other business interests. “Tom was great at providing advice and guiding me through the start-up phase of the business. I truly benefited from his mentorship,” says Nik, also acknowledging fellow founding partner Peter Radley, LLB’65, for his expertise and guidance.
It didn’t take long for the partners to realize that making money as a political polling firm in Kingston wasn’t a sustainable business model.
$0* Value of the firm’s first commercial contract(*plus an IBM computer)
The partners decided to market the firm’s services to corporate customers, arranging for Nik to meet with Jim Barber, the owner of MicroAge Computers in Kingston. Nik pitched the benefits of doing a customer-satisfaction survey and was pleased with the owner’s enthusiastic response. Until the questions started. “He asked me how many corporate clients the firm had, and I said, ‘None,’” Nik recalls. “Then he asked about my experience in working at a market-research firm, and I said I didn’t have any. I finally confessed that I didn’t even have a computer to do the survey, but I made him an offer. I said I’d do the survey and he could pay me in computer equipment. If he wasn’t satisfied, I’d return the computer. But if he was, I’d get to keep the computer and he’d write me a reference letter.”
The owner, being a shrewd entrepreneur himself, accepted. Nik completed the project and more than satisfied his first corporate client. The computer, along with a reference letter, was his.
$675The fee for a project that opened doors to corporate Canada
Word soon got out about the new market-research company in the LaSalle Mews on Princess Street. Small businesses and local economic-development organizations came calling. Then came clients from farther afield, as the company became a regional hub for fieldwork being conducted in Kingston as part of larger opinion surveys. The firm grew to meet demand, enticing Nik’s younger brother, John, Artsci’92, to come on board in 1991.
Nik recalls his brother’s reaction to a call in late January 1995 from the local Business Depot (forerunner of Staples) manager, who was interested in doing a customer exit survey. “After I hung up the phone, I said to John, ‘Hey, there’s some good news and some bad news. The good news is — we’re picking up Business Depot as a client. The bad news? We’re doing a survey for $675.’ To which John replied, ‘Well, that’s the beginning of the end for us.’ He pointed out that it would run us $500 in real costs just to have people surveying customers as they left the store. It wouldn’t cover the cost of analysis or our overhead. But we did the survey anyway.”
Shortly after completing the Business Depot skinny-margin project, Nik got a call from the company’s head office. Would he be interested in doing similar studies for the chain’s 22 other stores? Of course, the answer was yes. As the retailer grew from 22 to 225 stores, so did the firm’s workload, encompassing everything market-research-related, from focus groups to market studies, and more. Business Depot/Staples was the firm’s signature client for nearly ten years. The steady billings enabled the firm to continue to grow, though always at a measured pace.
“So here’s the moral of the story,” says Nik. “You’re always presented with opportunities, but sometimes you have to take risks, in terms of where those opportunities might take you. I never forget that small project that most companies would have turned down, but that we took on because we thought there might be potential. Even today, clients will say ‘Nik, I have a project, but it’s too small for you.’ I usually tell them the Business Depot story, saying, ‘It’s not just the size of the engagement that matters, but how a project fits into our business strategy. Is there an up-side? Could it lead to other things?’ We’ve done other very modest projects, some that might seem counterintuitive, but they’ve led to bigger things.”
0.01% Accuracy range of 2006 federal election prediction
Bigger things were to come in the 1990s when Nik decided to buy out his Kingston partners, get married to Ottawa-native Paule Labbé and move the firm’s operations to Ottawa and Toronto. Nik, as CEO of Nanos Research, managed the Ottawa office, and his brother John became a partner and Senior Vice President, charged with heading up the firm’s Toronto office.
Front, Marc and Paul; middle, James and Greg; top, Nik and Paule The company continued to attract corporate clients, as well as media organizations that frequently commission opinion polling, especially at election time. Nik’s reputation as a pollster of uncanny accuracy was solidified during the 2006 federal election. By conducting nightly telephone tracking polls, the firm was able to closely monitor trends, practically in real-time. On the eve of the election, Nanos Research predicted the percentage of the national vote captured by the major parties within one tenth of a percentage point, a record for the most accurate election call in Canadian polling history. Its track record in other federal and provincial elections has been similarly impressive, according to the comprehensive charts on the company’s website that show Nanos’ predictions against the final results.
The reasons for this are quite simple, Nik says. It all boils down to sound research methodology, and a meticulous attention to detail to control for error, both consistently applied to a high standard.
Nanos was among the first firms to include cell phone numbers in its samples, to include the increasing number of people who don’t have landlines. The more representative the sample, the more accurate the results, he says.
While Nanos also uses online surveys, it does so by recruiting people using random telephone dialing, inviting them to go online and complete a survey. “This means we can report a margin of error,” Nik explains. “It’s much more expensive, but you can’t volunteer to do a Nanos survey, unlike websites that have ‘Get paid to share your opinion’ banner ads. In my opinion, if someone volunteers to do a survey without being asked, maybe there’s something different about that person than everyone else.”
Having a well-known brand — especially one not affiliated with any political party — also helps increase survey participation rates, he says. “When the call display says, ‘Nanos,’ or our staff explain they’re conducting a Nanos survey, people tend to recognize the name and know that we’re a bone fide research company that does quality work.” The reputation for political neutrality works not only in this respect, but also in attracting clients who appreciate doing business with a company above the political fray.
People also recognize the Nanos name because it’s been affiliated with some of the top media organizations in the world. The firm has done commissioned polls for CBC, CTV, and The Globe and Mail, among many others, and has been reported in the Wall Street Journal, The Economist and most major news outlets in Canada. It’s also the research firm of record for Bloomberg News’s weekly Canadian-consumer sentiment tracking, known as the Bloomberg Nanos Canadian Confidence Index. Nik has become a well-known media commentator, whose relaxed style helps demystify complex issues. He appears on CBC Newsworld’s ‘Power and Politics with Evan Solomon’ in the weekly ‘Nanos Number’ segment, highlighting a single number from an opinion poll and explaining its significance in the greater scheme of the topic at hand.
By sticking to these methodologies, Nik believes his company differentiates itself from competitors, especially those that rely on online self-selected surveys which do not use random sampling. “When survey results are inconsistent, when polling companies get it wrong, it’s often because they’re using online surveys that don’t allow for random sampling,” he says. “Yes, they’re accurate perhaps 15 times out of 20, as opposed to 19 times out of 20 for our surveys. People often say to me, ‘Well, that’s not bad.’ And I reply, ‘What if I told you that whenever you did four studies, one was wrong. Would you accept that?’ They always say no."
6 Members of the diverse Team W of the Queen’s Ottawa EMBA Class of 2010
By 2008, the company was flourishing, and Nik and his wife, Paule, were busy parenting their four active boys. In another counterintuitive move, Nik decided to enrol in Queen’s Executive MBA program, offered at QSB’s Ottawa facility. Paule, an Ottawa University MBA grad, was extremely supportive, though others in their circle questioned the decision, noting Nik was already a Research Associate Professor at the State University of New York. With a successful business and already a foot in academia, what could he learn? Nik disagreed, recognizing that there were hard skills that he needed to enhance and relishing the opportunity to learn from his peers. “When you’re the head of an organization, everyone looks to you to lead and it can be lonely. I was looking for an environment that was peer-oriented, where I would be with other people going through the same kind of learning processes."
One of the most lasting lessons Nik learned was imparted during a team-building exercise at the start of the program. “On the very first day that I met my teammates, I questioned whether a group that was so diverse would be able to function well. Then we started talking about who we were and what we did for a living; it quickly became very clear that I was with a very accomplished, great group of people. One of the first things I learned in the program was the importance of diversity and how it can elevate performance.” It led to a change in Nanos Research’s hiring practices. Before Nik’s MBA studies, the firm favoured grads with a social science, math or business degree. Now it has broadened its search to include people with diverse backgrounds, in biology, geography or the high-tech sector, among others. “As long as they can work together and bring different points of view to the table, diverse teams can be very high performing,” he says.
Other topics covered in the program had a direct effect on the company’s future direction. The market-research industry was shrinking at the time, due to technological disruptions (including the proliferation of do-it-yourself online offerings such as Survey Monkey). As a result, organizations were spending less on market research, and many in the industry decided to drop their prices.
"So we made a conscious decision to raise our prices and target the premium market,” Nik explains. It went hand-in-hand with a decision to adopt a strategy of controlled growth. By controlling the size of the company, Nik could ensure that he could be directly involved in research projects and accessible to clients. “I did not want to become the chief human resource officer for a large company,” he explains of his decision to remain a hands-on member of the team. It also meant that clients knew that if his name was on a project proposal, he would be part of the team providing advice and strategic counsel. “It would never be a bait-and-switch situation,” he says.
"Believe it or not, another part of our strategy is to consistently turn down work, even in this market, something that can be difficult for other research organizations to do. It speaks to the fundamental principal of supply and demand. And the irony is, when word gets out that we turn down clients, it creates greater demand and builds a stronger brand in the marketplace."
In April, Nik was elected as an alumni member of the Queen’s University Council. He welcomes input and suggestions from his fellow alumni at nnanos@me.com