For profitable innovations, describe … then listen

One approach to building an innovation’s value proposition is to “get out of the building”, talk with prospective customers, and discover what they need.1 Another approach is to hold off talking to customers until you’re ready to launch the new product. “It’s not the customers’ job to know what they want. It takes a long time to pull out of customers what they really want”.2

I find merging both points of view works well for testing innovative ideas associated with business-to-business specialty products. It works because specialty products’ value chains, while complex, contain clearly identifiable decision-making buyers. These decision-makers when interviewed by a person skilled in elicitation go beyond a commonplace listing of features. They express latent needs and rich insights on what they really want the new product to do. They take on the Professor role as long as the interviewer stays in the Intelligent Pupil role.

“Get out of the building” and listen

Talking one-on-one with prospective customers and discovering what they need and will buy, takes time and skill. Often people who are responsible for developing an innovative concept … R&D, marketing, and business managers … don’t have the time.

Making time to elicit latent needs and insights is a problem for people who already have major global travel and management responsibilities. Now, besides these responsibilities, they must add lengthy preparation to get the most out of each interview.

Instead of primary research work, they rely on secondary sources. One such source, multi-client market research reports give estimates of the size of the market and commonplace lists of wanted features. However, multi-client reports offer little insight into what is so valuable in your concept that users would switch to your new product and abandon what they are using.

Dig deep, dig fast

Interviewers using elicitation can dig deep to get respondents to reveal what they know, feel, think, or believe. They discover valuable insights, latent needs, and new opportunities the innovative concept might satisfy.

Skilled interviewers detect hidden patterns in a conversation and draw out what the respondent is hesitant to say. They collect information that is not readily available and do so without raising suspicion that they are guiding the conversation.

I prefer the phone for elicitation interviews. You can dig globally, fast. You can cold-call interview most decision-makers in the value chain within a few hours of identifying them. And, despite hype about face-to-face interviews letting you reading a person like a book, it’s easier to detect and elicit hidden information by listening rather than looking.3

Follow the Rule of 40

Interviews with 40 decision-makers, randomly chosen from a list of 200 or more decision-makers in the concept’s value chain, will collect more than 95% of the features needed by prospective customers. (The Central Limit Theorem of statistics underpins this rule-of-thumb. It uses two tools of statistics, probability and proper sampling of potential decision-makers.4)

When I’ve taught the tool of elicitation for testing new product concepts, I’ve noticed novice users stop after 5-8 interviews. Often they stop because the unexpectedly rich information they’ve unearthed at in a few interviews makes them feel they done enough to test the concept. Often they have other job responsibilities that relentlessly limit the time they can spend interviewing. Often they don’t have the strong curiosity that helps marketing researchers move productively through the discipline of the Rule of 40.

Endnotes

  1. Steve Blank developed his ”Get out of the Building” Customer Discovery process to talk with prospective customers and discover what they need.

Continue reading For profitable innovations, describe … then listen

Before starting technical development, test marketplace acceptance

Two powerful tools for testing marketplace acceptance of a new product idea and guiding technical development: Voice of the Customer and Customer Value Proposition

Voice of the Customer was the prime front-end marketing research tool for testing assumptions in 453 firms1. It eclipsed both customer site visits and beta testing tools for use in the “messy” front end of new product development.

Once you gather and analyze valid information on customers’ stated and latent needs by the Voice of the Customer process, the next front end task is to use these insights to build a convincing value proposition to guide technical development. A colleague, who has translated innovative ideas into three successful startups, tells MBA students that learning how to create a three-sentence value proposition to guide development of an idea is priceless.

Building a idea’s Customer Value Proposition is central to the National Science Foundation Innovation Corps’ new program2 for translating technologies into products. Begun in 2011; the Corps has worked with 300 teams to speed up commercialization of the $125 billion of research underwritten by the US government.

Voice of the Customer

I first learned about the Voice of the Customer tool in 1989 at a PDMA conference in New York City. Abbie Griffin presented her early findings on using this tool for judging marketplace acceptance of a new product idea. She published her work on Voice of the Customer in 1993.3

My experience is that 40 elicitation interviews develop statistically meaningful insights about marketplace acceptance of technology and marketing assumptions. By the 40th interview, the 5-10 top-level unmet and latent customer needs for the idea are identified and a deep understanding of a B2B product idea’s commercial opportunities is gained.

Over the past twenty-six years, Voice of the Customer like other front-end research tools, has collected some weak interpretations. When I asked how many customer interviews his firm normally does to test assumptions, one practitioner with the title of Manager, Voice of the Customer said “ Oh we know what the customer wants. I look at some (multi-client) research reports and I represent the customer on our portfolio planning meetings.”

Perhaps the words of Thomas Edison should be heeded.

“Opportunity is missed by most people because it is dressed in overalls and looks like work”

Building a convincing three sentence value proposition4

  • Sentence 1: Market, needs product and benefits
    • The first phrase in the first sentence identifies the target of the idea. There is no value without an intended customer in mind.
    • The second phrase shows what the customer needs.
    • The third phrase identifies your idea.
    • The fourth phrase describes the benefit of your idea as it fills the needs of your intended customer. This is sometimes difficult and can be addressed by asking “why” your customer needs your idea.
  • Sentence 2: Competitive ability and advantage
    • The first phrase of the second sentence describes the advantage of your idea.
    • The second phrase explains what is different from the competition.
  • Sentence 3: Request
    • The third sentence makes clear what you want your intended audience to do.

A value proposition is an internal document, not for external distribution. It acts as a guide ensuring consistent messaging inside and outside the firm on the value delivered by the idea.

Product developers can use the value proposition to guide technical development of the idea. They may also use it creating marketing communications and sales proposals to early adopters. My experience is the Thomas Edison quote also applies to value proposition creation.

  1. (2013) Markham, S., Lee, H. Product Development and Management Association’s 2013 Comparative Performance Assessment Study Journal of Product Innovation Management 30(3) 408-409
  2. http://steveblank.com/2013/10/26/300-teams-in-two-years/
  3. (1993) Griffin, A., Hauser, J. The Voice of the Customer Marketing Science 12(1) 1-27
  4. http://newproductsuccess.org/2014/07/14/an-innovative-ideas-most-valuable-three-sentences/