When was the last time you rented a video from Blockbuster or saw someone riding a Kawasaki Jet Ski? These are examples of previous industry leaders that have gone the way of the Dodo bird due to a lack of innovation. While most business leaders recognize the importance of innovation, many organizations are not very good at it. In fact, according to a McKinsey report, 84% of executives agreed that innovation is important to their growth strategy, but only 6% were satisfied with innovation performance. Why is this the case? While there are many factors that contribute to a company’s ability to successfully innovate (see the eight essentials of innovation by McKinsey), I believe one of the key reasons is not being intentional about gathering the proper customer insights that can drive innovation opportunities.

What is Innovation?

There are varying definitions and degrees of innovation (e.g., sustaining vs. disruptive). However, for the purposes of this article, I contend that innovation is simply a new way to solve a problem or satisfy a need/desire.

Why Companies Fail to Innovate

Developing innovative ideas is obviously an important initial step but many organizations go about this the wrong way. The following are common approaches that are often ineffective:

  • Relying on your VOC data. While the information from your “Voice of the Customer” program can be invaluable to helping improve your product, rarely does it produce innovative ideas. More often, it is a way to uncover product/service problems or competitive deficiencies.
  • Brainstorming for ideas. This entails putting together a bunch of creative thinkers from various disciplines to “spit-ball” ideas. While many ideas will likely be generated, the problem with this approach is that it is typically not grounded in a keen understanding of customer needs, desires and frustrations. As a result, the chances of finding a successful idea from the bunch is very remote.
  • Asking customers what they want. In over 35 years of doing research, I’ve been asked multiple times to simply have target customers tell us what they want. This is a bad idea for a couple of reasons. For one, people generally have busy lives and don’t “live and breathe” your product category like you do. The “ideas” offered are typically things they have experienced elsewhere (like on a competitor product) but are not truly innovative. Another reason is that the question lacks constraints. For example, if you ask someone to describe the ideal outboard motor, they might say they want something that is highly reliable and powerful yet lightweight, gets good fuel economy and is inexpensive. I can see the engineer’s eyes rolling now.

Misconceptions About Innovation Research

It is about identifying the key challenges or frustrations customers face when trying to satisfy a particular need or desire.

Having an intimate knowledge of customer needs, wants and desires – often through research – is at the heart of uncovering innovation opportunities. However, some claim that research is inappropriate for innovation. The reasoning is that “customers often don’t know what they want” or there is a “bias towards the familiar” (or against the unfamiliar). There is a lot of truth to this. But to assert that research is not appropriate is a complete misunderstanding of the role of research in uncovering innovation ideas. It is not about determining whether customers say they will buy your new product idea (that is like asking someone to marry you on the first date). And it is not about customers describing for you some brilliant new product or service idea for you to implement. Instead, it is more about identifying the key challenges or frustrations customers face when trying to satisfy a particular need or desire.

A Better Approach: Outcome Driven Innovation (ODI)

Outcome Driven Innovation, also known as the “Jobs to Be Done” approach, starts with the end in mind as the name suggests. The premise is that people buy products and services to accomplish something. So, the goal of ODI research is to clearly understand what target customers are trying to accomplish (the “job”), identify how they gauge success in performing the job (“desired outcomes”), and determining where current products or services are falling short in satisfying the need.  Below is a brief description of the main elements of an ODI research study.

  • Understand of the Main “Job” (example, recreate with family on the water). The intent is to understand the target customer’s motivation in doing a “job” and the context in which they do it. This is gathered via qualitative research (preferably one-on-one interviews) and involves asking basic questions such as: Why do you go boating with your family? How often do you do it? When do you go? Where do you typically do it? What things do you do on the water?
  • Identify Desired Outcomes. Once the main job is understood, the interview shifts to uncovering the success criteria customers use when performing the job. To help elicit the criteria, it is helpful to break the main “job” into steps. For example, launch the boat, cruise around the lake, stop to swim and/or picnic, reload the boat, store it. Then, for each step, ask how they accomplish it, what challenges or frustrations they experience with that step, and describe what success looks like. From this, desired outcome statements are developed. It is important that the statements not be in the form of a specific solution or technology (e.g., push a button to automatically launch boat) but rather describe the metrics used to define success (e.g., minimize the time to launch the boat).
  • Determine satisfaction and importance. After the desired outcomes are elicited, the next step is to determine the relative satisfaction and importance ascribed to each. Ideally, this is obtained via a separate quantitative (online) survey. However, if enough target customers are included in the prior qualitative phase (to understand the main job and identify desired outcomes), patterns start to emerge and the general importance and level of satisfaction with the various outcomes can often be surmised.

The final step in the ODI process is conducted after the research is completed and involves a brain-storming session with individuals from various company departments and perhaps even strategic partners. The goal is come up with better solutions to some of the “desired outcomes” identified that were both highly important and had a low level of satisfaction. The most promising ideas are subsequently developed/refined and potentially tested before deciding whether or not to move forward with them.

Unlike the generic “brain-storming” approach noted earlier, this session is highly focused on important but unmet customer needs and so the chances of producing a lucrative innovation idea is greatly enhanced.

Case Studies

A few years ago, I conducted an ODI study for a major marine manufacturer and a couple of key items (Desired Outcomes) were identified that were in need of improvement. From the brain-storming session that followed, a seatback storage solution was suggested and later introduced to increase the amount of storage available and reduce clutter on board the boat. This feature soon spread throughout the product line and is a highly popular feature today.

Another innovation inspired from this same study was a channel-lock system to simplify the process of attaching the boat cover. Instead of stretching and pulling the canvas to align snaps, a new system was developed whereby tabs were inserted along the boat frame. This made it much quicker and easier to attach the cover and removed a key hassle with the boating experience.

Now let’s revisit the Blockbuster Video example referenced at the beginning of this article. Had they done ODI, they likely would have realized that the main “job” was enjoying movies from the comfort of home but that the “desired outcome” of having a convenient way to pick up a movie was not being well served. If they acknowledged this, they might have been quicker to respond to the threat from Redbox and Netflix that made it much easier to get a movie. (As in interesting side note, after a few years in operation, Netflix offered to sell their company to Blockbuster for $50 Million. Blockbuster passed thinking it was too expensive. Today, Netflix is worth nearly $100 Billion. Ooops!).

Conclusion

The process of uncovering innovation ideas is not dependent on some sudden flash of inspiration from a creative genius. Instead, it is often the product of an intentional, focused approach to identify a better way to satisfy important customer needs and desires. And the process is not limited to just products. The same approach can be used to improve services, processes and the overall customer experience.

References

Ulwick, Anthony W. “What Customers Want”, McGraw-Hill, 2005.