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.

http://www.nsf.gov/news/special_reports/i-corps/, http://goo.gl/rjHmVa  and  http://steveblank.com/2013/10/26/300-teams-in-two-years/

Alex Osterwalder’s recent book Value Proposition Design: How to create products and services customer want John Wiley & Sons, Inc. Hoboken, NJ (2014) incorporates Blank’s Customer Discovery process to help build a concept’s value proposition.

  1. Steve Jobs did say “its not the customers’ job to know what they want”. He also said it takes a long time to pull out of customers what they really want.

“You can get into just as much trouble by going into the technology lab and asking your engineers, ‘OK, what can you do for me today?’ That rarely leads to a product that customers want or to one that you’re very proud of building when you get done. You have to merge these points of view, and you have to do it in an interactive way over a period of time—which doesn’t mean a week. It takes a long time to pull out of customers what they really want, and it takes a long time to pull out of technology what it can really give.” (Steve Jobs, 1989)

http://www.inc.com/magazine/19890401/5602.html

  1. Professor Richard Wiseman’s clever experiments demonstrate that it’s easier to detect hidden information by listening than by looking. Wiseman, R. (1995) The MegLab Truth Test, Nature, 373, 391
  2. For a discussion of the Central Limit Theorem of statistics see Chapter 8 of Naked Statistics: Stripping the Dread From The Data Charles Wheelan, W. W. Norton & Company New York, NY (2013)

Collecting deep knowledge from prospective customers, fast

When testing a concept, there are many ways to gather deep knowledge from decision-makers in the value chain. I use phone interviews, for their speed, global reach, and and frank feedback.

Since 1985 I’ve worked with development teams to help build compelling value propositions for product concepts. My clients are specialty product companies and private equity firms in North America and Europe.

Contact me at 203/323-4075 or george@georgecastellion.com so we can explore how gaining knowledge from a value chain’s decision-makers can pay off in revenue and profitability growth.

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George Castellion

Specializing in building unique market insights to cut in half the cumulative cost to develop a successful B2B product