Identify Competitive Features, Fast
Delayed discovery of customers’ unseen, but fully discoverable, latent needs can result in serious revenue losses. Quantifying the economic impact of cost of delay helps to move a modified product idea into the development flow when the revenue impact is large and desirable customers are waiting for launch.
“Cost of delay is the golden key that unlocks many doors”
Case History: Discovering the Right Competitive Feature
A client possessing exceptional R&D skills in lubrication technology struggled to meet two requirements unearthed by field sales talking with purchasing agent authorities in the heavy-duty machinery marketplace. The requirements were: a. Lifetime in use needed to be significantly increased, b. No more than a 2% increase in price would be tolerated. Marketing considered meeting these requirements essential for maintaining revenue on a mature and struggling product line.
After two years of technology work on the problem, meeting the second requirement remained out of reach. The client contracted me to gather and analyze insights about decision-making authorities in the marketplace’s value chain. For this work I made in-depth phone interviews to find key decision-makers in the worldwide marketplace and to discover which of the product idea’s features they were willing to pay for.
Two intriguing information patterns emerged
After completing forty interviews with the multiple layers of decision-making authorities in the value chain, two intriguing patterns about the features emerged. One pattern was associated with purchasing agents, the sole contacts for the client’s field sales people. Purchasing agents in this marketplace had a corporate mandate to buy an improved product only if the price increase was less than 2%.
A second pattern emerged as I interviewed the people who actually used the lubricant. These end users, be they dragline miners in Chile or heavy-duty construction equipment operators in South Dakota, initially said, “Yes, a longer lifetime would be good”.
But, as interviews progressed I asked “Why?” and many end users volunteered, “When my machine doesn’t work, I don’t get paid. So every day before I start, I inspect every moving joint in the machine where there could be damage because of friction. At the same time I always apply a fresh coat of lubricant. So, now that I think about it, improved lifetime isn’t really important to me.”
Discovering that the improved lifetime feature wasn’t important, I then asked the end users, “What could my client do that would be useful to you.” In a few early interviews, some of these end users said that a really desirable feature would be if the client could make the lubricant less messy to apply, they would switch to the new product.
Client’s response to actionable insights from the elicitation interviews
In a few weeks, the client’s technology people were able to produce a lubricant with a less messy-to-apply feature, by adding a proprietary material produced for another market. Adding the material addition added 0.1% to the cost. The client set up a separate sales force, with a renewed focus to launch the modified product in North America. Two years later a similar marketing strategy was used to introduce the new product to offshore markets. Rapid acceptance of the new product as a substitute for competitors’ products increased the client’s share of the market by 5% (an increase in $7m in yearly revenue). Nonetheless, the two-year delay in discovering the new competitive feature probably cost the client $14m in lost revenue
About the process used in the case history to find the latent need
In the front end of product innovation, take time for a quick verbal test of a minimum viable version of the product idea. Test it across key decision-makers in the marketplace. Interview actual prospective end users and not proxies, such as purchasing agents, to discover insights about what end users see as a needed feature. Analyze the interviews for emerging patterns of feature preference and marketplace dynamics.
(2009) Reinertsen, D. G. The Principles of Product Development Flow: Second Generation Lean Product Development Celeritas Publishing, Redondo Beach CA
(2014) James, J. Urgency Profiles http://blackswanfarming.com/urgency-profiles/ Accessed 02-04-2016