#347 from Innovative
Leader Volume 7, Number 6
Customer NeedsóFour Key Questions
Phillips, recently retired from Eastman Chemical, is proprietor of
Exponential Solutions in Jonesborough, Tennessee (phone
423-477-7098; email firstname.lastname@example.org).
innovation is one of the most important approaches to business
growth. Its basic
premise is that one starts with an understanding of the
customer/consumer problem (opportunity) and then develops a
commercially viable solution (opportunity).
In theory, this approach should prevent working on the
There are six
classifications of potential efforts (projects) involving
expenditure of resources in innovation.
responding to customer needs that are clearly understood by the
customer and if a solution were presented, the customer would
purchase. 2) Projects
responding to needs that are poorly understood by the customer;
but if an eye-opening solution were presented, the customer would
Projects that respond to needs of which the customer is
completely unaware; but if an eye-opening solution were presented,
the customer would purchase.
4) Projects that, even if technically successful, the
customer wonít purchase and, furthermore, the customer clearly
knows that now. 5)
Projects that even if technically successful, the customer
ultimately wonít purchase; but, at present, the customer has a
very poor understanding of his/her ultimate purchasing decision.
6) Projects that, even if technically successful, the
customer ultimately wonít purchase; but, at present, the
customer is completely unaware of any information or motivation
influencing the ultimate purchasing decision.
Itís clear that
commercially successful projects fall into the first three
also clear that as many as 30% of the projects in large companies
fall into the last three categories (see J.
Prod. Innov. Manag., 1992:9:3).
This fact, alone, provides sufficient motivation for
improving the processes involved in discovering customer needs.
The purpose of
this article is to explore the types of information that may be
obtained from customers that are necessary in making intelligent
There are four
key pieces of information that can be obtained from customers: 1) What is the problem? 2)
Who has the
How important is
the problemís solution to the customer?
4) How valuable is the problemís solution to the customer?
What is the problem?
Many people take
this question for granted. Yet
a poor answer is a major source of preventable failure in most
innovation processes. The
answer must be from the perspective of the customer, even though
the answer will be used by the potential supplier in its
decision-making process. To maximize utility of the answer, the
problem definition should contain a clear description to enable a
decision about whether or not the expertise (competencies) of the
supplier matches the problem.
several years ago, demonstrates the potential to be led astray. I was made aware of a potential customer who allegedly had a
technical problem with blood filters.
A colleague and I attempted to define the need but remained
very uncomfortable with the definition even
after a couple of rewritings!
In desperation we called the customer to better define the
problem. In a rather lengthy discussion he said that, in reality, the
technical performance of the blood filter was almost perfect (then
whatís the problem?) and that the main purpose of the unit was
to prevent air from reaching the patient's blood stream (was this
a new definition of the problem?).
We replied that
obviously he was having trouble with air getting through the
filter unit, to which he replied, "No, these units never fail
in this regard!" At
this point we were clearly dumbfounded but we kept stimulating the
person to define the problem.
Finally he defined his problem: "Our current filter
unit has x % of the market and we want to increase it to y % and
we thought a Ďgimmickí in the filter might enable us to do
final description of his problem is amazingly different from our
initial understanding, and had immense impact on our decision as
to whether or not we tried to help him solve his problem.
Remember Peter Drucker's famous quote "What the people
in the business think they know about the customer is more likely
to be wrong than right."
Who has the problem?
There are at
least three important owners of problems to which industrial
innovation responds: The paying (external) customer, the
manufacturing (internal) customer, and the business organization
or company (internal) customer. Obviously there needs to be a balance in responding to these
problem owners. However,
I strongly suspect that in many companies thereís a significant
imbalance toward internal problems.
One good way of determining whether or not a company is
customer driven is to look at the balance and make sure itís
consistent with being customer driven. The tendency is to classify more problems as external
customer driven than is really the case.
Thus a careful unbiased approach is helpful in answering
the who question. In the
final analysis, a significant part of any innovation program must
be directed at "making the customer smile green" for all
companies run on that external source of green (or whatever color
your currency is)!
important is the
problemís solution to the customer?
The answer to
this question is key to determining allocation of resources by any
potential supplier. The
dominant factor is the extent to which an innovation effort helps
solve the customer's most important problems. Obviously
sharing this type information requires high levels of trust and/or
secrecy agreements to protect the interest of the customer.
Without guidance provided by the answer to the importance
question, much industrial innovation is misdirected and
ineffective. If a customer is unwilling to share importance information there are three hints that can help: 1)
How many people does the customer have working on the problem? 2)
How much money is the customer spending to resolve the
How many other suppliers are working on the problem? Also, timing issues around potential solutions are an
important part of the importance
valuable is the
problemís solution to the customer?
this type is very useful in estimating selling prices and, when
coupled with the costs of potential solutions, can be used to
estimate the profitability of any potential solution.
Suppliers tend to make very cursory estimates about value,
if they make any estimates at all!
Reasonable estimates of value
to the customer can be
made about every problem he/she has.
However, itís difficult to instill and maintain the
discipline to make these estimates.
Furthermore, few problems are similar.
This means "cookbook" approaches are usually not
advantage can be achieved if shared understanding is reached
between the customer and the supplier concerning the answers to
these four questions. An
approach I have found useful is to send the information back to
the customer in written form for verification.
Shared understanding requires the practice of circular,
instead of linear, communication.
Over seven years worth of data, involving six needs
discovery projects and more than 20 customers, shows that the
customer changes the information sent back for verification over
50% of the time! As
hard as they try, suppliers usually donít get it right the first
time. This lack of shared understanding is a major cause of product
Could it be that
our educational systems are grossly biased toward teaching problem
solutionóthe problems are defined for you at the end of the
chapterórather than problem definition?
Unfortunately, needs discovery in industrial innovation
doesnít have a role that corresponds to the teacher who defines
the problems absolutely.