Market Targeting And Decision Making

While the pace and effectiveness of innovation are changing competitive challenges as we know them, the traditional approach to innovation is often not worth the effort. The following highlights the scary statistics associated with traditional innovation approaches.

First, though, consider this: 80% of new products fail on introduction to their market. And, about 60% of "new and improved" pre-existing products fail upon reintroduction.

Second, finding a new service or product is not that easy. Dell Computer built an idea-soliciting website in February of 2007 called Ideastorm. Of the 12,483 ideas posted on the site, only 366 were implemented, less than 3%. Do you know how much sweat it was to get to just one usable idea? How much impact do you think that one idea had? Or all 366? Starbucks, with its My Starbucks Idea, had even more disappointing results with a scattershot idea generation approach: 75,653 ideas yielded only 315 implementable ideas. That's less than half of 1%. What do you think the cost was for all the work involved in gathering, sorting, screening, evaluating, developing, testing, launching and nursing those 315 suggestions?
Sadly, even major corporations can have poor innovation systems.

Where to Look

Customers, floor workers and sales personnel can generate a lot of ideas for innovation. However, most of these ideas tinker with what already is; only rarely do they show the path to a major change in the marketplace. Because customers are rarely professionals who are current on the latest advances in industry and technology, their ideas are usually confined to something they've seen before, perhaps similar or related products in the same or another consumer sector.

In fact, developing customer ideas can be dangerous. They tend to generate bland, unremarkable, stereotyped, "me – too" solutions that are met with indifference upon launch; the waste of time, money and diligent effort can yield anything from discouragement to disaster.
However, internal and external suggestions from suppliers, buyers and curious employees can lead to some solid improvements to existing products and services. Such progress (incremental improvement) has been historically necessary to retain and grow market share. This incremental improvement is crucial only for maintaining and improving the current "performance engine" that is the lifeblood of the company.

Sadly incremental innovation (or improvement) is not enough to compete in today’s aggressively changing marketplace. Incremental innovation seldom disrupts the product development cycle and only rarely leads to dramatically increased market gains.

Character & Decision Making

The new realm of breakthrough innovation is built on a foundation of corporate character which includes humility, servant mentality, and a deep, intense caring for the customer.

The opposite of humility is hubris or ego. The know-it-all, expert approach seen in too many senior managers - - and others in authority - - is what blocks discovery and turns creativity dangerous. Far too much innovation is divined from the boardroom without ever getting out and truly understanding what the users are struggling with and desperately need. There is too much assuming that they know more than the buyers about what the buyers really want. In other words, they are guessing. Those guesses are usually based on feedback (solicited or not) from customers about feature upgrades; the guesses seldom get at the unresolved problems a user would pay a great deal to fix.

The net result too often is that such executives "try to create a need" by marketing some incrementally better feature that too few care about enough, at least to pay more (or any) money for. This is where many disasters happen. Humility assumes the opportunities for breakthrough are still unknown and hidden underneath the surface of casual observation. They are unknown to both the customer and the supplier. Getting to these gems requires a structured rigor to uncover what customers and suppliers have never thought about.

Secondly, a servant mindset builds on humility. It is needed to ensure the diligent effort and long, patient, hard work to approach and thoroughly, skillfully develop a deep understanding through interviewing many, many customers. Mainstream buyers need to be carefully examined. Fringe purchasers need to be identified and understood. Non-buying prospects will yield amazing insight. Potential customers - - who get their jobs done with products from other direct and indirect industry suppliers - - they give the most understanding and wisdom of all.

Further, this process of understanding the customer (driven by the interviewing process) and thinking differently about what the customer is really trying to do, cannot be delegated to underlings and especially not to salespeople who have the completely wrong agenda for this task. Steve Jobs is an excellent example of a CEO who saw this as his primary role. Interviewing seems like a low-level, laborious function but it is of the highest level of importance. It is central to a better understanding of the customer. It's where true growth can be found. Much skill is required for the discovery. And… much caring.

Marketing and Innovation

When the motivation for growth is greed, power and fame, the perspective will always be warped. Those so disposed are never able to see quite right. By contrast, those that know their "why", their vision to create a better world - - and their grassroots mission to make it so - - they are the ones who can provide leadership for the whole industry. They are the ones who become the most trusted advisor. They are the ones who can capture the hearts and minds of the people they serve.

Marketing and innovation, it turns out, are closely interrelated. Understanding the market means having an intimate knowledge of the people who collectively struggle to get their work (and pleasures) done in simpler and easier ways. Innovation is not as much about giving them what they want as it is giving them what they don’t know they want. Innovation is about finding the simple button: a way of simplifying what they are trying to “do”. The outcome should be an improvement in making the “doing” easy. Easy is the difference between taking an escalator and rolling a boulder uphill.

Identifying Needs That Drive Satisfaction

The targeting process begins with a selection of new markets and customers based on one's unique and distinctive skill set, and most importantly, the identification and prioritization of opportunities. These opportunities are based on breakthrough understanding of what customers are trying to do. It ends with the delivery of new and significant "outcomes" in the form of a satisfying, need-based product or service.

One place where innovation tends to get stuck is in accurately "defining user needs", their struggles and drudgery, what they really want even if they don't consciously know it. Usually, customers are not qualified to know what solutions are best - - that's the job of the innovator. In fact, customers have a very hard time articulating what tools, products or services they want; but, with the guidance of the innovator, they can become very good at specifying what they are trying to do and what "outcomes" would make them happy.

Breakthrough

In the context of innovation, needs are best described as the "requirements", the job they are trying to get done or done better. The key to success in innovation is knowing precisely and in a standardized way what buyers and users are trying to do. Proper interviewing and mapping techniques with accompanying structured, stereotyped feedback can make all the difference in the world. It can turn a 70 to 90% failure rate for new product introductions to a plus 80% success rate for all types of innovations. (When was the last time Apple brought out a product that wasn’t wildly successful?) The reason this can be done is because (1) individual needs can be isolated and classified (as "jobs-to-the-done") and distinctly rated from unimportant to very important, and (2) the degree those same needs are being fulfilled can also be ranked from satisfactory to very unsatisfactory. This means innovators can accurately identify very important customer needs that are going unmet. In other words, we go from flailing around in the dark to intimately understanding where we can help right now and possibly in a very big way.

The innovative "breakthrough" comes because resources can be focused on a desperately crying need or set of needs. This way we focus on meeting a big need and avoid focusing on small needs. Demand is certain and the only critical variable is the skill set of the innovator. Most reasonably successful companies are highly skilled organizations. If the company's old performance engine worked well, then the new performance engine based on innovation should work even better.

A New Way To Identify Unmet Needs

People "hire" a service or product to get a job done. By doing a detailed analysis of "getting the job done", it is possible to discover many opportunities for innovation. There is a comprehensive discipline for understanding the unmet needs of customers. The process involves following a structured approach for the creation of a “Job Map”.

It is useful to ask context questions that will get the users talking: "What makes this job challenging, inconvenient or frustrating? Time-consuming? What are the pitfalls? What causes the job to go off track? What aspects of this job are wasteful?" In other words, they become focused when asked about what they know best and what the "job" is which they use a product or service to do.

In creating a job map, the purpose is NOT to find out "how" the user is executing a job; rather the aim is to discover "what" a user might be attempting to get done at each point in executing a job AND what has to happen at each of those junctures in order to successfully complete the job process. The goal of uncovering real user needs is pursued by considering the jobs they're trying to get done and the outcomes they're hoping to achieve. A dissatisfaction with any outcome is where each innovative opportunity lies.

Lead with Needs

Having a system to capture customers' deepest and most pressing needs is critical to innovation. Usually, all critical needs can be identified with clarity and certainty. The needs can be prioritized for importance and opportunity. Key unmet needs in the marketplace become the focal point for aligning know-how, resources, people and strategy. The company's current performance engine (way of making money) can be invigorated; new performance engines with brand-new solutions can be built to ensure a positive future.
With this clarity, core markets can be grown, opportunities can be capitalized upon in adjacent markets, new markets can be discovered, and existing markets can be disrupted. Success is never certain; but, the path towards it can be mastered in a way that creates substantial improvements in a company’s innovative advantage.

Confidence comes from having customer-defined metrics that serve as the baseline for investigation of any marketplace; that market can be more easily understood in terms of jobs-to-be-done (people buy drills to create holes – the job to be done). The job, not the product or service solution, is the most elementary unit for analysis and the basis for further exploration.

The Job Map breaks down complexity and cloudiness into identifiable opportunities. Those opportunities can be prioritized with hard numbers instead of wishy-washy guessing and hoping. Practicing these well-practiced company disciplines ensures the needs of the customer becomes central to the innovator's thinking, while personal opinion, intuition and past experience becomes secondary and subservient.

Clarity

Most importantly, the mystery and most of the uncertainty disappears from the innovative process. The rigorous controlled approach based on customer-defined metrics enables the generation of valid breakthrough ideas at the right time and place. Formulating growth strategy becomes simple and effective; value creation becomes straightforward.

Without a solid understanding of the true needs in the marketplace, innovation is a gamble. The scattershot approach is a hesitant one that allows no focus, no concentration of resources and people, no "damn the torpedoes, full speed ahead!" It seems to be the pursuit of serendipity. No wonder for all the techniques, skill-sets and brilliance, so many innovation projects only have only a 10-20% chance of succeeding.

The Next Step

Would you like to boost your innovation success rate to four out of five, or even higher over time? The core elements to a breakthrough innovation discipline can be applied with an above 80% innovation success rate.
Success improves and the risk of failure is reduced as you become more certain about the critical unmet needs in your marketplace. The value of these disciplines is only realized as they are embedded into the day-to-day practices and mind-set of an organization. The result is an innovative capability that is hard for anyone to match. Do you want a bigger market share? Fatter margins? Much happier customers…. Well contact us to better understand how to apply this methodology?

For an introduction to the methodology,
Go: User Analysis Go: Home

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