Wednesday, July 23, 2014

Innovation starts with a need

I'm in Chicago this week, interviewing customers of our client to understand their needs for products and services.  Nothing can open eyes and ears more easily than sitting mid level managers and executives in front of customers who are willing to express their frustrations, difficulties, gaps and workarounds to executives who believe their products are fairly robust.  I've never taken a client into an ethnographic encounter or a "voice of the customer" experience that didn't result in my client remarking on how much they learned.  Well, sure.  Get out of your office, out of the daily grind of meetings and actually interact with your customers, in an open and honest way.  You are bound to learn something!

But chastising my clients isn't my primary purpose today.  No, my primary purpose is to talk about the ignition switch for innovation.  Many people are confused as to what provides the initial "spark" for innovation, what creates energy and passion to conduct innovation work.  The answer is simple:  a need.  It can be a business need, to grow revenue or enter a new market segment or geographic space.  It can be a customer need, a gap in the marketplace that frustrates a customer.  But by and large, most good innovation is based on the identification, deep understanding and fulfillment of a need.  Whether it was Jobs recognizing the need to simplify and standardize music sharing, management and the device, or 3M recognizing its customers' needs and developing technologies that solve needs even before the customers recognized the gap, most good innovation starts with a need.

What is a need?

My daughters' birthday is coming up and no that's not a typo, I have twins.  When I asked one what she wanted for her birthday, she responded that she has everything she wants.  No, I replied, you may have everything you NEED, but no one can possibly have everything they WANT.  Wants are aspirational, need are much more tangible.  Too often we innovate to solve a "want" when what we should be identifying is what customers "need".

The folks who wrote Blue Ocean Strategy actually created a nice typology of needs.  It's interesting that while we use the word need it is, like a lot of other innovation language, very inexact.  In the Strategy Canvas the authors of BOS identified "undermet" and "overmet" needs.  These are needs that are partially but not perfectly filled by existing solutions (undermet) or needs that are met by products or services that exceed what the customer can consume or use (overmet).  Both are opportunities for innovators.  Even when a need seems to be met, there may be opportunities for new products and services that do a better job meeting the need exactly.

Then, of course there are "unmet" needs, in which a customer simply can't find a product or service that meets a defined need.  Care must be taken to understand this unmet need and how many people or businesses have the need.  One reason it may be unmet is that the need may only impact a small portion of a large market.  Or it may be exceptionally difficult to satisfy.  We as innovators should always be looking for important unmet needs that create conditions where the consumer is unsatisfied with his or her outcomes.

Finally, there's the holy grail of needs - the unarticulated need.  These are needs that consumers have that they may not even be aware of, or believe that no one can solve.  A good example is the Model T.  It's probably apocryphal, but Henry Ford is said to have stated that he didn't ask his customers what they needed because they couldn't image it.  "They would have asked for a faster horse" is the quote that is often attributed in this story.  If you can identify needs that people have that are important to solve and for which they don't believe a solution can exist or can't imagine a solution exists, you may be a big winner.  Of course the company that creates such a solution will find many competitors entering once the market has been developed, but personally I'd rather lead than follow.

How do you find needs?

Now that we've defined or at least identified a taxonomy of needs, the next question is:  how do I find them?  Let's consider two alternatives.  The first is that you carry on with your regular work, isolated in your corporate headquarters, reading second hand sales reports and purchased market research.  This approach to discovering needs is far too frequently the one that is used, since people don't have the time or energy, or experience, to sit in front of customers.  This approach to understanding customers is like digging for dinosaur bones in your backyard.  You may be digging, but the result will be less than satisfactory.

Now consider the other alternative - getting out of the office and meeting with customers, prospects, channel partners and so forth.  You will be amazed at what they tell you, both positive things about your company and negative things that cause them frustration, worry and anger.  There are literally dozens of ways to interact with customers, from web-based interactions you can conduct from the safety and security of your office, to purely ethnographic exploits which will place you in your consumers homes and offices. 

What will these consumers tell you?  Everything.  They'll share their joys and frustrations.  They'll tell you what they like and don't like about a product, a company or an industry.  They'll share intimate secrets.  They'll share their workarounds and shortcuts to getting done what they need to get done.  They'll expose how much they know, and in many cases how little they understand about your product and service.  You'll realize that marketing messages that you've reinforced for years, or product features that you've pounded on for months aren't registering.  You'll discover that people don't just have a wrong attitude about your company, but that they completely missed the important value propositions your product should create, at least in your mind.

And yes, I know you are uncomfortable and perhaps unfamiliar with interacting with clients or consumers in this way, but you need to do it.  Too often many corporations outsource all customer interaction, preferring to read market reports from analysts or market researchers.  What you get are facts that have been filtered, but what you miss are passion, anger, emotion, and other signals about the strength of the need.  Without that passion you have a PowerPoint presentation that looks a lot like every other recommendation.  You need that passion and emotion to carry your story, and you need to see that passion with your own eyes, not simply have it reported to you.

What do you do with needs?

Whether you frame this as "needs" or in the Christensen framework "jobs to be done" these insights become the basis for your innovation efforts.  Companies that understand important needs and respond to those needs effectively win customer loyalty, sell more products and become trusted because they listen to their customers.  These needs or jobs to be done are the things your customers are trying to overcome, hurdles to be removed, rough patches to be smoothed over.  Your job is to take those needs, understand them, rank them from the customer's perspective, and decide which you want to solve.  Then the innovation portion of the activity kicks in when you decide to solve them incrementally, with existing products and services, or to solve them by creating new and interesting solutions that customers don't anticipate.

There are basically three things you need to understand from this post.  First is that a good grasp of needs is what creates energy and enthusiasm for innovation, and helps ensure you are working on the right things.  Second is that you can't find important needs while sitting in your office.  You simply aren't that empathetic or smart.  You've got to get out and meet with customers.  Anyone who is in new product development or innovation who isn't regularly meeting with customers in different settings to discover needs should be fired.  Third, understanding needs is just the beginning.  That's when the real innovation work takes place.  You can't innovate successfully without the raw material of needs, but that raw material must be converted into valuable ideas, and then into new products and services that fulfill those needs.
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posted by Jeffrey Phillips at 7:32 AM


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