We’re all familiar with the terms: Agile product development, Stage-gate processes, Big Data, Lean Engineering, Design Thinking, Fail Fast processes. These processes or concepts support the development of product innovation.
Even with so much processual know-how, research tells us that creating innovative products is a haphazard process with either a 40-70% failure rate depending on the study.
It’s not that the processes are wrong per se, but what makes them wrong is ignoring how product ideas are generated and asking customers the wrong questions.
An amusing metaphor for the strange staying power of these unsuccessful processes is H.C. Andersen’s story: The Emperor’s New Clothes. As the tale goes, a group of deceptive weavers tell the vain emperor he will receive new clothes and only people suitable in their positions will actually be able to see them. The emperor, his ministers and subjects pretend to see the new garments on an otherwise naked emperor. Everyone is pretending to see the clothes except when a child yells, “but he’s not wearing anything!”
What’s delightful about this story is how it describes the sign of the times in marketing and sometimes in product development. We are awash in buzzwords and processual hype. Everywhere you turn there’s a workshop, an article, a model, a process but very little results anchored in research and, most importantly, in results. It’s also worth exploring our generally accepted notion that product development failures have to be on a high level and are an acceptable facet of doing business. Do they need to be so high and should be we accepting this?
The answer to the above may lie in the nature of marketing. Marketing’s problem is that it is not a science, even if it has scientific elements in market research. It doesn’t have generally-accepted definitions or theories.
As a result, there are many individual interpretations of what marketing is, what product management is, how innovations are achieved and most importantly, how customer insights should be gathered for maximum innovative impact.
So where is the hang up? What can we do to bring more customer relevance and more structured product innovation in these processes? The answer lies in answering two problems connected with product innovation processes.
The Problem of the Marketing Strategy Hierarchy
How many times have you held your TV remote control and asked yourself why are all the buttons necessary? How many times did you avoid pulling out a manual and pouring over it to find your answer to your newly bought product?
What makes something like the overburdened TV remote control happen? I call this ignoring the “marketing strategy hierarchy”. The marketing strategy hierarchy is ignored when product managers rush into product development with ideas from the engineers, the designers, and maybe even the CEO without a thorough analysis of customers.
This marketing strategy hierarchy is implicitly understood, but often not explicitly stated as a roadmap. It starts with more macro concepts like the context and ends with more micro concepts like the 7 P strategies and looks something like this:
Marketing Roadmap
Source: Adapted from Mooradian, Matzler & Ring 2012
Product development is in a lower position whilst understanding customers is in the position above. In the marketing strategy hierarchy, we should always begin with understanding customers before anything further down the chain. When we don’t do this we get google glass where the wearers get beat up on US streets from passers-by who think they’re being video-taped. We get Harley Davidson cologne and Trump steaks.
The Problem of Customer Insights
The marketing strategy hierarchy problem tells us, we have to begin with customers. That much is clear. However, the second problem stems from misunderstanding how customer insights are generated for innovation. There’s a right way and a wrong way according to Harvard professor Clayton Christensen’s Jobs-to-be-Done theory.
If a firm is a little customer-oriented, they may say that they design their products based on customer insights. Sounds good, but not necessarily correct.
Incorrect customer insights are when we collect their pains, gains and tasks but we don’t ask them how important these points are or how satisfied they are with existing solutions in the market.
Imagine this scenario: You ask your customers if they like having attribute A. They say yes. You put attribute A in your product and it doesn’t sell any better. Why? The reason is most likely one of two things: either attribute A is not that important to the customer (but they still like it) or it’s already satisfied in the market place (we like it, but we don’t need it from you).
Wait, you say. What about conjoint analysis? Well, conjoint analysis is not everything it’s cut out to be either. Garbage in, garbage out. When a conjoint analysis questionnaire is created there has to be a list of product attributes connected to willingness to pay for that attribute. The problem here is in attribute selection. Do your engineers, designers or sales team tell you what to pick? If so, how do they know they’re picking the relevant attributes to assess?
Another no-go is to extrapolate product design solutions from customers. First, they aren’t qualified to understand what all the technological, engineering, design options are. Second, they can only speak of what they have experience with or can imagine and that can be limited in comparison to the experts in your company. Steve Jobs didn’t ask customers about their need for an Ipod or a Smartphone or design specs for the MacIntosh. Elon Musk didn’t ask customers if they needed luxury, high performance electric automobiles. Or in his PayPal days, he didn’t ask if we needed an alternative payment method.
So what is a customer-oriented company to do when they want to create innovation? Here’s a quick to-do list:
- Read Clayton Christensen’s The Innovator’s Solution for the theory.
- Read Anthoney Ulwick’s “What Customers Really Need” for the implementation of the theory.
- Start a focus group with your key customers to understand what their “Jobs Map” should look like and isolate jobs and subjobs.
- Ask your customers how they measure the completion of each job and sub-job (time, efficiency, emotional cues, expense, etc)
- Launch a quantitative research project with a large sample of your customers (for generalizability) asking them which jobs are important and with which jobs are they satisfied.
- Analyze outcomes:
- When a job is important but not satisfied – you are underselling. If you solve this issue you could have a product/process improvement and, maybe even an innovation.
- When a job is important and the customer is already satisfied, that is overselling. Don’t bother going in this direction.
- When a job is unimportant and satisfied by you or the competition, you are overselling. Don’t bother with investment in this direction.
About the Author
Nikolina Fuduric, PhD – I’m a systems-thinker, meaning I like to interconnect information from different disciplines to solve complex problems. This is probably because I grew up bi-culturally (USA & Croatia) and have lived in five countries. Diversity of disciplines, people, ideas and environments makes me feel most alive. That’s why the only career for me is a mosaic career ideally made up of thinking and doing. My thinking occurs at the University of Applied Sciences Northwestern Switzerland and my doing happens with my clients at Black Sheep Marketing GmbH. I’m also involved in women’s cooperatives in developing economies to help them develop products for international markets. Ten percent of my consulting earnings go to education & entrepreneurship efforts for empowering girls and women. When I’m relaxing, then I’m out in nature hiking, skiing, biking, and lounging between the two lakes where I make my home: Lake Lucerne and Lake Constance.