Monday, September 23, 2013

Indifferent innovation

I wrote my previous post on the willful blindness that settles in on many firms.  In that post, I was writing about the fact that if you are in any business with a tangible product, there's likely to be someone on the internet reviewing it on YouTube or writing a blog about the benefits and issues associated with your product.  Too often, product managers and product developers simply ignore what customers are saying in these reviews.  This is what I call willful blindness - that we ignore freely available and often valuable information from customers.

But most organizations have a love/hate relationship with their customers.  If only customers were smart enough to use the products in the way in which they were designed to be used, everything would be hunky-dory.  What we as innovators need to understand is that instead of ridiculing customers who use products in unorthodox ways or for unintended uses, we should be asking:  why?  Why are people using our product in these unintended ways?  What could they possibly gain from doing that?  And, what could we learn if we'd simply understand that, to misquote Kotler, people don't want drills, they want holes.

Your products and services are merely vehicles to help the customer achieve something or accomplish something.  Every product or service is simply a means to an end, almost never the end itself.  If we can swallow hard and accept that this is close to the truth, then how we help our customers achieve the goals they are setting and accomplish the outcomes they are trying to achieve, we will become a lot more important and valuable in their lives.  What Kotler missed is that when people create holes, they are actually going to fill those holes with something else.  Even the hole is just a means to an end.

Financial Services as an example

In some consulting work we led several years ago, it became clear that many people never receive much education about money management.  When I say money management I mean building a budget, tracking expenses, paying bills on time, and managing day to day cash flow.  I'm not referring to retirement allocations or credit swaps, but the basics of managing money, paying bills, living life day to day.  Our educational system does little to educate people about a vital component of their lives, and the banking and financial system offers little meaningful education as well.  Through our research we recommended to our client (a large bank) that they could enter the educational space, retain their customers who needed more education and win new customers.  The bank's response was that education wasn't their core business.  In that, they were right, but they didn't understand their customers' end goal.  The goal wasn't to save money or pay bills on time or have a checking account.  The goal was to have financial "peace of mind".  If that sounds familiar, it's because that's what Dave Ramsey, the radio talk show host, calls his financial planning program - Financial Peace.

The major banks and financial institutions don't understand that their services - checking, savings, mortgages, auto loans, home equity loans, etc - are simply vehicles to help their clients achieve something more.  Financial peace of mind.  The financial industry organization that ultimately understands this will win many converts.  Yet the banks don't believe education is their "sweet spot" nor their responsibility.  So, many charlatans fill the gap, and a few others like Clark Howard, Dave Ramsey and their compatriots try to fill the void. 

Stop asking about products and start asking about outcomes

What does this all mean?  Why do clients use products in ways we don't anticipate?  Why are their gaps in products and services? 

Because most firms don't understand what customers are trying to achieve.  Most firms focus on what their products do, as if that's what ultimately matters to the customer.  That's a mistake.  A checking account simply helps me pay for things in the absence of cash, but it doesn't provide greater peace of mind or financial stability.  What people want is less anxiety, better money management, improved  control of their finances.  While the bank's certainly aren't responsible for your income, they could help you plan your budgets and your "outgo" in ways that improve your financial acumen.  Sure, we're all interested in paying bills on time without cash.  Checking and automatic transfers accomplish that for us.  But that's a small bore outcome.  What we all really want is more information, more knowledge, more expertise and more assurance that we are doing things that help us achieve longer term goals and objectives.  Innovators must understand that products and services are simply instruments to help get closer to those objectives, or are stumbling blocks to those objectives.  We need to see the bigger picture.

And yes, the checking account guys will only want to focus on the features they can control.  This is why innovation is often so small bore.  Everyone has vested interests in their specific product or service and are constantly trying to improve it, while few people have the larger view of a customer's goal or experience in the aggregate in mind.  You'll need to spawn a completely new effort to understand the customers' ultimate goals, which may create new needs or insights for the checking team, as well as the branch team, and so on.

Do you love or hate your customers?

There's an old quote that says that the opposite of love isn't hate, it is indifference.  Most firms don't love their customers, they don't engage with them enough to know them that well.  And they don't hate their customers, although they may ridicule the way customers use their products, or the questions they ask in support calls.  The problem is that many firms are indifferent to their customers, especially indifferent to what their customers are trying to achieve.  We think in minute detail about how a customer uses our product, but fail to see the bigger picture about what the customer is actually trying to achieve.  Only when you understand the larger picture will you win your customers' respect and love, and truly understand how to create really new and interesting products and services.

As innovators, we need to understand what the customer's ultimate goals are - what they are trying to achieve.  To use the financial services example again, few customers really care about their checking account.  Checking is just table stakes.  It needs to work, and work flawlessly.  If you can create some minor improvements, great.  But think about how financial services fits into the totality of what a customer is trying to do, and what financial services firms could offer to help the client meet those goals, then identify the various new products, services, experiences and features that flow from that insight. 
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posted by Jeffrey Phillips at 7:17 AM


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