BOS: How to turn your customers’ pain points into opportunities

Here is a blog post from Blue Ocean Shift:

How to turn your customers’ pain points into opportunities

Do you see what your customers see? Are you aware of the pain points your industry imposes on them?

Pain points are aspects of a business, product, or service that buyers, knowingly or unknowingly, are forced to put up with or find so inconvenient that they turn to alternatives.

But what if you could identify these pain points and get a clear picture of how they limit the appeal and size of your industry?

Pain points: blocks to utility and hidden opportunities

Utility captures the satisfaction that buyers get out of a business, product or service. Blocks to utility have the opposite effect. These are the difficulties or pain points an industry imposes on buyers.

Pain points, which are often hidden, also represent opportunities to grow your business. However, most industries become blind to them, just as buyers often become numb to them, in the belief that these pain points are simply the way things are.

So how can you identify these pain points? And how do you know which ones are worth solving? To help you get a snapshot of how your industry is blocking utility for buyers, authors Chan Kim and Renee Mauborgne developed the buyer utility map – the second in a series of market-creating tools that make up the blue ocean shift process.

Identify the pain points your customers and noncustomers face

The buyer utility map will give you and your team insights into how your industry – even if it’s a fiercely competitive one – limits its demand by creating pain points for current and potential buyers. The map will help you see where blue oceans of uncontested market space exist and how to create them.

The map outlines the full range of experiences buyers have (from purchase to disposal) and helps you identify all the ways an industry delivers utility to buyers. More importantly, it shows where the industry blocks utility and reveals hidden opportunities to break away from the competition and expand the size of the market.

Experience what customers experience

The buyer utility map.png

The buyer utility map © Kim & Mauborgne.

A customer’s experience can be broken down into six distinct stages, what we call the ‘buyer experience cycle’. These experiences run more or less in sequence from purchase to delivery, use, supplements (buying an add-on for example), maintenance and disposal. Interestingly, many industries focus on one or two stages of the buyer experience cycle and overlook all the opportunities offered by the remaining stages.

Each stage of the buyer experience cycle encompasses a variety of specific experiences. For example, in a store, the purchase stage may include searching for the product you want, lining up at the cash desk, and so on. The six stages present a generic template of the buyer experience cycle, but you might want to customize them to fit your industry.

Running down the vertical axis are the six utility levers, some of which you might pull to offer buyers greater utility.

  1. The first is productivity, that is, anything to do with efficiency – less time, effort, and/or money – in fulfilling buyers’ needs.
  2. Then we have simplicity, which is anything that eliminates or minimizes complexity or hassle.
  3. Convenience is about when and where you want something, like 24/7, 365 days a year.
  4. Risk reduction might include financial, physical and reputational risk.
  5. Fun and image are things like the look, feel and attitude the offering conveys.
  6. And last, environmental friendliness is about how green your product or service is, and what this might mean for buyers.

Combined with the six stages of the buyer cycle, the map produces 36 potential utility spaces. Where does your industry or target industry concentrate its efforts among these 36 possible spaces?

Few industries or organizations realize how many utility spaces they could explore or, on the flip side, the narrowness of their current focus.

You can discover blue ocean opportunities by widening your focus and exploring the map more fully. This is true for even the most commoditized and highly competitive industries.

From pain points to opportunities: ActiFry and the French-fry industry

A great example is the French multinational, Groupe SEB, whose electric French-fry makers were struggling to stand apart in a market that was shrinking 10% a year. Seeing the need to break out of this intense competition, Christian Grob, head of electric cooking, set out to challenge the industry’s most basic assumptions.

Using the buyer utility map, Grob and his team discovered two facts that the industry accepted without question. The first was that, to make French fries, you had to fry them. The second was that frying required a lot of oil.

These assumptions led the industry to overlook a host of problems. All that cooking oil was expensive, and dangerous when hot. Cleaning it up and disposing of it was difficult. Using so much oil was also unhealthy and fattening.

The buyer utility map Grob.png

Grob and his team challenged the accepted wisdom and redefined the problem. Rather than try to come up with the best-in-class fryer, they concentrated on how to make delicious, healthy fries without frying them in lots of oil.

The result was ActiFry, a new type of French-fry maker that used only one tablespoon of oil to make two pounds of fries, with roughly 40% fewer calories and 80% less fat. Not only that, but the appliance is easy to clean and has no safety or oil disposal issues.

The winning combination of low calories and delicious fries inspired Oprah Winfrey to tweet about how much she loves her ActiFry. Not only did demand outstrip supply across Europe, but after Oprah’s comments, Groupe SEB’s stock price jumped 5% based on this one product. To this day, more than ten years later, ActiFry remains the global market leader.

What Groupe SEB discovered was that, despite the intensity of the competition, the industry essentially focussed on only one of the 36 potential utility spaces – productivity in use, i.e., creating a reasonably priced electric French-fry maker that worked reliably.

By looking at other utility spaces, Groupe SEB discovered important pain points for buyers that had long slipped under the radar, pushed noncustomers away from the industry.

Now it’s your turn. Start filling in your own buyer utility map to turn the pain points of your industry into opportunities for growth. To go further, follow the step-by-step guide to plotting your buyer utility map in Blue Ocean Shift.

Advertisements

IOP: Forget products, innovate your business model

Building supply dealers, Do you have a business model? If so, is it current or are you using an old model? Below is a blog from the Innovate on Purpose:

Forget products, innovate your business model

What happens when the largest, most cataclysmic change forces known to business collide with embedded, rigid business structures and models?  Which side wins, the irresistible force or the immovable object?  In my post today, I’m going to answer this age-old philosophical question.  Innovation and change destroy complacent, unchanging business structures and models.  Every time.  Every where.  In every market.

It sounds a bit over the top to argue that everything we know is changing, and many models and structures will soon crumble from the onslaught of new emerging demands, capabilities and technologies, but in short that’s what’s going to happen, and is already happening.  Product life cycles are collapsing – I was recently in a conference where a camera manufacturer estimated the average shelf life for a new camera was between 3 and 6 months, or less than half the product development cycle time!  For years we’ve talked about the increasing pace of change, and much like the proverbial frog in the pot we’re still sitting in the water as it’s reaching the boiling point.  The telephone didn’t reach a billion users until decades after its introduction – probably almost a century afterwards.  Facebook, Google and other internet applications reach a billion users in the matter of a few years, and newer, social media driven applications will do so even faster.  Unfortunately for them they’ll also burn out and disappear even faster as well.

Do old business models make sense in this new, rapidly evolving environment? Can a business define and “lock in” its business model and hope to merely sustain its business model, thinking it will weather the storm and wait until “things return to normal”?  It’s almost trite to say “the new normal is change”.  That almost goes without saying.  The race goes to the nimble, the agile and the swift, not to the large and slow.  There is no return to normal, in fact what’s normal is more change and a faster pace.  Can slow, rigid business models that were successful in the past, in a much more staid environment offer any solace to a business, or position those businesses for success in the future?  I’m going to argue the answer is:  probably not.

At worst you need a business model that evolves at the rate of change in the environment.  You simply cannot afford to fall behind and become locked into an older business model (hello Blockbuster), no matter how dominant you think the existing models are.  Netflix obliterated Blockbuster but continued to evolve its model into streaming and now content creation.  Why?  Because standing pat on a business model once people understand the value proposition is crazy.  There are simply too many avenues to attack a business model once the value proposition is understood.  Let’s look at a couple of ways to attack an existing business model.

Chipping Away

There’s what I like to call the “chipping away” model, which is what retail banks in the US are experiencing.  No newcomers want to face all the regulatory burden that the retail banks face in total.  Instead they offer single solutions or products that are equal to or better than what the banks offer, in areas that are more profitable.  These startups are “chipping away” at the bank’s value proposition and are much more nimble and flexible.  They can get into and out of features or products in an exceptionally short timeframe, and can attract good customers quickly.  Mint, Betterment and other firms are not subverting the entire business model as much as chipping away at the most valuable parts, while banks are locked into older models more suitable for the 1970s and 80s.

Bypass

Then there’s the bypass model, which is what Netflix did to Blockbuster.  Same value proposition in terms of content, just a different channel.  Blockbuster had every valuable retail corner locked up, and Netflix decided (based on the availability and capability of the web (and the US mail!)) to completely dislocate Blockbuster and its presence model.  Netflix, Uber and Airbnb did what road builders do – they looked at the crowded mess of existing highways and simply “bypassed” the congestion, which freed up consumers and previously stagnant assets.

Consolidation

There’s also the consolidation model, which is what I like to think Apple did to the music player, music management and music distribution industries.  Remember Tower Record?  Or how about your Rio MP-3 player?  Apple consolidated a number of valuable pieces and components into a much larger but simpler business model, and drove a number of companies and channels right out of business.  Or, to continue the Apple theme, consider how many devices the iPhone has replaced:  cell phone, digital camera, GPS, music player, calculator, watch, even a slide rule if you have the right app.  Creating platforms that consolidate capabilities that other business models kept apart is exceptionally valuable.

The list goes on and on.  Zara, H&M and others are disrupting the fashion industry through a focus on speed.  Tesla is trying to disrupt automotive sales and distribution, attempting to sell directly to consumers rather than through dealers.  Older structures, business models and channels don’t necessarily have to carry forward into the future.  While they may be “carved in stone” these examples and others prove that stone can crumble, or smart companies can innovate their way around, under or through them.

What should we take away from this diatribe?

Product innovation is interesting, and every company should have active, on-going innovation to spawn new products and services.  However, product innovation is easy to do, easy to copy and will require constant updating.  So, we can argue that product innovation needs to become as commonplace and consistent as day to day operations.

It’s business model change that is becoming the important focus.  If product life cycles have decreased, so too have business model life cycles.  When whole industries and channels can collapse in a matter of months (Tower Records, Blockbuster as examples) then every industry must examine and understand the sensitivity and viability of their business models.  No business model is inviolate; none will simply resist all of the change that’s underway.  This means that corporations should be evolving their business models at a minimum.  Business model innovation is becoming far more important than product innovation, and yet far too many companies don’t understand or do product innovation well.  How much more difficult it will be to innovate business models when the skills don’t exist to innovate products.  Large corporations with rigid, complacent business models may end up like the dinosaurs, watching the small rodents run around and thinking how small and helpless they are.

 

Three Traps: Complacency, Cannibalization, Competency

The Three-Box Solution: A Strategy for Leading Innovation by Vijay Govindarajan is a great book to help leader innovate with simple and proven methods for allocating an organization’s energy, time, and resources across the three boxes:

Box 1: The present—Strengthen the core

Box 2: The past— Let go of the practices that fuel the core business but fail the new one

Box 3: The future—Invent a new business model.

Below is an excerpt on the three behavior traps. How do you manage them to the lead your organization to innovate?

Three TrapsThree Box Solution.jpg

While there were many within IBM who clearly understood the implications of both nonlinear shifts, their insights had difficulty penetrating the entrenched logic of the past. The dominant logic of the past exerts its hold on business cultures and practices in three distinctive but tightly interlocking ways. I think of their dynamic effects as traps that snare the unprepared. All three have common origins in mind-sets that focus excessively on past values, behavior, and beliefs.

The Complacency Trap

Current success conditions a business to suppose that securing the future requires nothing more than repeating what it did to succeed in the past. This is the complacency trap. Complacency shrouds the future in a fog of misplaced confidence, hiding from view a clear understanding of the extent to which the world is changing around you.

IBM’s extraordinary success driving revenues in its Box 1 mainframe business masked difficulties to come. Rather than face up to looming threats to the mainframe business, IBM applied temporary patches. One such patch ‘was to change the revenue model from leasing mainframes to selling them outright. S This produced a pleasing surge in near-term revenues that postponed IBM’s day of reckoning.

The loyalty of successful organizations to the past is often so potent that they become quite ingenious at ignoring the onset of fatigue in the Box 1 business. Instead of building the future day by day, IBM prolonged it’s past with what amounted to an accounting change. The resulting years-long period of bolstered revenues made it easy for the company to think that everything was just fine-four words that fairly summarize complacency.

Another way to understand how IBM fell into the complacency trap is that the company’s continuing Box 1 profitability delayed development of a sense of urgency that might have motivated a more prescient Box 2 judgment: that it was important to invest aggressively in the new enterprise model of client/server computing.

This is the dark side of success. No matter the industry or company, each great innovation spawns a steady accumulation of Box I-based structures, processes, and attitudes of the kind that blinded IBM to its predicament. IBM mainframes were not simply smart machines; they were smart machines that over the years had created at customer work sites whole new layers of enterprise management that had never existed before.

Mainframe computers were island fortresses, secured and operated by a newly empowered IT function and inaccessible, except through IT proxies, to the rest of the enterprise. If a technology can embody a governing philosophy, the mainframe’s philosophy was exactly opposite that of the open, accessible internet that was yet to appear. Even before the internet emerged as a business tool, there were pitched battles within almost every company about making valuable mainframe data accessible to and usable by employees with networked PCs. This increasingly loud demand clashed with the mind-set of IBM’s IT customers, who saw their mission as protecting the security and integrity of corporate data: allowing liberal access would lead to data corruption and to proliferating unreliable versions of the “truth.”

In fact, customers can play an important role in deepening a complacency trap. IBM had collaborated with its customers in creating what became an entrenched system of governance for computerized organizations. That system’s structures and attitudes were a self-reinforcing feedback loop amplified by IBM’s large-enterprise customers.

Ultimately, a more modern version of the mainframe emerged and made peace with the rest of the IT infrastructure. Today’s version powers big data analytics and other applications in many large enterprises. But in the IBM of the 1990s, mainframes cast a long shadow over the emergent model of more open, democratized network computing.

The Cannibalization Trap

The cannibalization trap persuades leaders that new business models based on nonlinear ideas will jeopardize the firm’s present prosperity. So, like antibodies attacking an invading virus, they protect the Box 1 business by resisting ideas that don’t conform to models of the past.

At its heart, the fear of cannibalization reflects a wish to keep the world from changing. It is perhaps easy to understand that wish, but it’s much harder to excuse it. The glib answer to those who suffer from this fear is to remind them that change is inevitable and the world will change either with them or without them. When a business allows worries about cannibalization to interfere with its strategy, it has overinvested in its past and is doomed to undermine its future.

Cannibalization is typically understood-and feared-as a near-term threat. As foresighted as IBM was in developing its personal computer in the early 1980s, forces marshaled within the company to protect the legacy business. Those who feared the PC believed it had the potential to threaten the mainframe computing model, perhaps by feeding the growing appetite to liberate enterprise data or by diverting attention and investment away from the company’s dominant business.

People who fear new technology are usually more right than wrong about its potential to supersede legacy products. The truth is, every Box 1 business has reason to fear, sometimes even hate, whatever shiny new thing is being launched. When Steve Jobs gave a big push to the Macintosh launch toward the end of his first stint at Apple, the group in charge of the incumbent Apple II felt threatened and undercut. It was as if cofounder Jobs had sponsored an insurrection.”

In reality, however, cannibalization should be understood as a long- term benefit. The new Apple Macintosh embodied features that soon enough would make its predecessors obsolete. If Apple hadn’t moved quickly, a competitor-maybe even IBM-would have filled the vacuum. Given its history, IBM’s embrace of microcomputing was unexpected. But it quickly set the standard for PCs and legitimized them as tools for both home and business users. While IBM’s marketing of the PC initially tilted toward home users, the real revenue bonanza came from businesses. Suddenly, at least part of IBM had reason to root for client/ server computing. No matter what anyone in the mainframe business thought about it, the client/server model had the shine of inevitability.

So, while companies must take the fear of cannibalization seriously as a problem to manage, it can’t become a reason not to act with foresight when new nonlinear strategies or business models present an opportunity.

The Competency Trap

The competency trap arises when positive results the current core business encourage the organization to invest mainly in Box 1 competencies and provide little incentive for investing in new and future-oriented competencies. In established companies built around a spectacular success, such as IBM’s industry-defining mainframe computers, it is natural to want to create a workforce whose skills dominantly reflect the legacy success. But a competency trap is a double- edged sword. IBM’s investments in Box 1 competencies helped its mainframe business. But Box 1 logic asks, why invest in skills not vital to the company’s current profitability? That is why Box 2 is necessary.

IBM eventually recognized that the dominant computing model it had exploited to achieve such great success was changing. Yet, despite having made significant investments in a robust R&D function, it was having chronic difficulty incubating new ventures. It struggled to find what IBM insiders called “The Next Big Thing.” The organization appeared to have succumbed to a “four monkeys” value system.

Believing that there were indeed systemic problems, then-CEO Louis Gerstner commissioned an internal inquiry to identify root causes. The inquiry, led by Bruce Harreld, IBM’s head of corporate strategy, confirmed Gerstner’s fears. Looking at a number of recent examples of flawed new-business incubation, Harreld’s team concluded that the company’s dominant Box 1 systems, structures, processes, and culture had:

  • Created a powerful bias for near-term results.
  • Encouraged a focus on existing customers and offerings to the extent that new technologies and nonlinear trends were either underestimated or escaped detection entirely.
  • Burdened new businesses with unreasonably high performance goals-especially damaging to ventures that targeted newer, riskier, but often more promising markets.
  • Motivated an unimaginative approach to market analysis that impaired the company’s ability to understand the sorts of “embryonic markets” most likely to spawn nonlinear Box 3 ideas.
  • Interfered with development of the skills necessary to adaptively transition a new business through its emergent and growth stages until it finally became an established enterprise.
  • Caused assorted failures of execution, many owing to the inflexibility of Box l=driven organizational structures, which leaders of new ventures “were expected to rise above … Voicing concerns over [such challenges], even when they were major barriers to new business initiatives, was seen as a sign of weakness.”

What the report didn’t say is important to note. IBM’s problem was not caused by a lack of research competency. On the contrary, its workforce possessed at least some expertise in a wide array of disciplines and technologies. Among its research projects were some that were quite promising and others that were highly speculative, unproven, and obscure. But for all the reasons listed, even ideas that managed to get traction were being ineptly developed and executed. What IBM needed was a well-designed process for enabling, supporting, and rewarding its maverick monkeys and likewise for managing new ventures onward through their developmental stages.

Such a process typically should incorporate a range of structural, cultural, and leadership remedies. At IBM-first under Gerstner and later Sam Palmisano-these distinctive remedies came together under the emerging business opportunities (EBO) framework, which created new structures, changes to the buttoned-down IBM culture, and more versatile and adaptive leadership behavior.

S+B: What It Takes to Stay Ahead of the Competition

Are you maintaining a high level of performance? Are you aware of new and innovative products on the market? Below is a blog from the STRATEGY+BUSINESS Blog by Matt Palmquist.

What It Takes to Stay Ahead of the Competition

Bottom Line: For companies, sustaining a consistently high level of performance requires unique capabilities that may differ sharply from the strategies they used to succeed in the first place.

Leading firms set themselves apart by achieving a high level of performance and meeting or exceeding consumers’ expectations relative to the competition. It’s usually an arduous, years-long process. But sustaining that level of performance is a completely different challenge — one that few companies can overcome in the modern business landscape.

There’s plenty of substantive advice available on how to attain high-quality performance in the first place. Researchers have variously touted the ability of firms to create barriers to entry for competitors, for example, or to draw (pdf) on unique capabilities to differentiate themselves. But rivals learn quickly, once-novel strategies can eventually be duplicated, mistakes can be made, and complacency can set in. What it takes to sustain top-quality performance, therefore, is also deserving of study — but it has received comparatively little attention from researchers. Indeed, most analysts have implicitly assumed that the capabilities required to attain high-quality performance are the same as those needed to sustain it.

A new study aims to shed light on the issue by analyzing which capabilities enable companies to sustain a consistent and high level of performance. It should be noted that for the study, the quality level and consistency of performance are two distinct concepts. Whereas a firm with a high quality level outshines its competitors in the short term, consistency involves maintaining that high level with minimal variance for a five-year period.

The authors analyzed data on 147 business units within large companies in the manufacturing sector that were based in either the U.S. or Taiwan. The reason to zero in on U.S. firms is obvious: They tend to set the tone for the global economy. The researchers chose to study Taiwanese firms as well in order to consider the differences between Eastern and Western cultures in their management approaches and assess any impact on performance. (In the final analysis, no significant differences between them appeared.) Taiwan also has a well-established reputation for advanced manufacturing.

To assemble a sample, the authors reached out to executives whose companies had won awards or earned acknowledgment from associations dedicated to recognizing high-performing businesses. The authors conducted surveys with quality or operations managers at the firms, who could speak to the specific strategies employed, and with general managers, who could field questions about the firm’s overall performance and the nuances of its business environment. For a subset of companies, the authors also obtained financial-performance data from the business unit’s accountant as well as internal audits that gauged the quality of its products and services.

After controlling for firm size, competitive intensity (pdf) of a given industry, and level of uncertainty faced — in the form of rapid technological developments or changing market conditions — the authors found that four particular capabilities emerged as integral to sustaining high-quality performance:

Improvement. This capability was defined as a firm’s ability to make incremental product or service upgrades, or to reduce production costs.

Innovation. Defined as how strong a company was at developing new products and entering new markets.

Sensing of weak signals. Defined as how well a company can focus on potential banana peels in order to improve overall performance, including analyzing mistakes, actively searching out production anomalies, and being aware of potential problems in the surrounding business environment.

Responsiveness. Defined as a business’s ability to solve problems that crop up unexpectedly and to use specialized expertise to counter those complications.

But these capabilities influenced different aspects of sustaining high performance, the authors found. For example, innovation capabilities primarily help firms maintain a certain level of quality, whereas the capacity for improvement affects mostly the consistency component. That’s probably because innovations are typically unique events that meet customers’ immediate needs and establish a certain level of quality, whereas incremental improvements are geared toward ensuring the long-term reliability of products and services, which translates into consistency.

Meanwhile, a firm’s capability for responsiveness had no significant effect on consistency, but had a decided positive impact on its level of quality — presumably because responding to quality-related problems quickly and efficiently is also a way of exceeding customers’ expectations in a one-off way.

Sensing of weak signals had a strong positive effect on consistency, but a moderately negative impact on the level of quality. This suggests a potential trade-off, the authors note, because maintaining both a high quality level and consistency is essential to sustaining performance. The authors speculate that a focus on sensing weak signals mandates that firms spend a lot of time collecting data and analyzing the occasional blip, which could cause them to get mired in minutiae and distract them from the more important tasks associated with sustaining a high level of performance. Although the benefits may pay off over time, a concentration on preventing failures rather than seeking out successes could also lead firms to take a short-term view and be overly conservative, too concerned with simply surviving, and to thus shy away from taking chances.

Intriguingly, the capabilities that increase consistency (improvement and sensing of weaknesses) are unaffected by the level of competitive intensity or uncertainty surrounding a firm, whereas those that affect the level of performance (innovation and responsiveness) depend heavily on the external context, the authors found. Presumably, the value of innovation and responsiveness is higher in the face of unanticipated external shocks, whereas improvement and sensitivity to failure are capabilities that are more internally oriented. As a result, firms may need to invest in certain capabilities more than others, depending on their business environment.

Source:An Empirical Investigation in Sustaining High-Quality Performance,” by Hung-Chung Su (University of Michigan–Dearborn) and Kevin Linderman (University of Minnesota), Decision Sciences, Oct. 2016, vol. 47, no. 5

 

HBR: Know the Job Your Product Was Hired for (with Help from Customer Selfies)

Are you focusing on the wrong thing? Are you creating customer stories from what your customers are designing and building? Below is a blog from the Harvard Business Review by Clayton M. Christensen and Bob Moesta.

Know the Job Your Product Was Hired for (with Help from Customer Selfies)


In what world is a Snickers bar competing with a kale salad?

When a healthy fast food chain recently asked customers to share selfies of them posing with healthy, on-the-go snacks, it received some unexpected pictures – including ones of customers holding Snickers bars. “We focus on organics and cool new macronutrients, and our consumers are into quinoa and kale and bean sprouts,” Alex Blair, who owns four franchises of Freshii, a Toronto-based chain of healthy fast-food outlets, told the New York Times. “But some of these photos were so far from that wavelength, it’s really helping us kind of realign with the mass market.”

True customer insights – the kind that can drive breakthrough innovations — come from these kinds of surprising individual stories. Classic market research would tell us that most of us aspire to make healthier eating choices – but the subtleties of when and why we actually do (or don’t) tell a far more important story to marketers. A Snickers bar might be a perfectly acceptable (even preferable) alternative to a kale salad when you’re running through the airport trying to catch your plane. Or you’re about to jump into a game of pickup basketball and your stomach is growling. Those kinds of use cases can even frustrate sophisticated data-mining techniques.

Over the past two decades, we’ve watched great companies fail time and again with innovation – and waste billions on go-nowhere R&D efforts — because they’re focusing on the wrong things. Rather than looking at specific customer use-cases, they chase the false sense of security offered sophisticated algorithms or market surveys, or they focus on technical improvements rather than customer needs.

Yet customers make the choices they make to bring a product or service into their lives not because they’re dying to purchase something, but because they have what we call a “Job to Be Done” that arises in their lives. They’re struggling to make progress with something – in particular circumstances.

Jobs to Be Done are, like customer stories, complex, and nuanced. To create products and services that customers want to pull into their lives, you have to identify not only the functional, but also the social and emotional dimensions of the progress your customers are trying to make. This means both drilling deep and looking wide; even the most experienced innovators can miss rich opportunities that are buried in the context of understanding a job if their focus is too narrow.

Great customer insights reveal the unexpected. Though it’s a nascent practice, the use of customer selfies is an attempt to get at the real “job” customers are hiring products to do. The idea is that selfies provide clues that bridge the gap between what customers say and what they actually do. Customers might unknowingly reveal something authentic and true about themselves through the simplicity of the choices they make in a selfie – and even provide insight into how they perceive the product and its potential competitors.

Of course, a selfie is far from a candid ethnographic moment. It’s a specific picture, with a specific composition, that the subject has chosen not only to take, but to share. By its very nature, it depicts how that person wants to be seen by others. But that, too, can provide valuable clues for piecing together a full picture of a customer’s Job to be Done. Both business strategies and academic theories are built – and made stronger – by our ability to recognize things that we cannot yet explain.

Many of these surprising or even anomalous use-cases can serve as a useful wake-up call — to an overlooked opportunity or a flawed assumption. When a consumer shows us an image of how they might hire kale in one circumstance and Snickers in another, it challenges us to think differently about how our products help customers make the progress they seek – not just what we expect them to seek — in their lives.

 

You’re Doing Customer Experience Innovation Wrong

Do you believe customer experience innovation initiatives will drive differentiation and long-term value? Below is a blog post from the Harvard Business Review by Kerry Bodine.

New Research: You’re Doing Customer Experience Innovation Wrong 

“Innovation” has become a buzzword in the customer experience field.

In a recent Forrester survey of 100 customer experience professionals, nearly half of respondents said that their executive team’s strategy for customer experience is market differentiation. And an ambitious 13% said that they’ll settle for nothing less than having the best customer experience across every industry — in other words, these companies want to be the next Apple, Disney, or Zappos.

They also believe that innovation will help them achieve these lofty goals — and they’re investing accordingly. Sixty-nine percent of these respondents report that their companies have dedicated personnel for customer experience innovation. Sixty-four percent have allocated time to innovation activities. And 55% have dedicated innovation budgets.

Are their investments paying off? A whopping 73% of interviewees say they plan to launch innovative customer experiences in the upcoming year — and two-thirds believe that they already have.

customer innovation

These numbers sound promising — but they just don’t add up.

If this much innovation work is really happening, then why don’t we see customer experiences that are actually innovative gushing forth from nearly every organization? Why haven’t we seen more and more companies earning excellent scores in Forrester’s Customer Experience Index ? In 2013, only 8% of the companies in this annual benchmarking survey received a top grade from their customers — and that’s a pathetically low number in comparison to the amount of professed innovation in the industry.

Here’s the problem: Everyone talks about customer experience innovation, but no one knows quite what it is or how to attain it. In fact, when we ask customer experience professionals how they’re driving their innovation efforts, we find several misguided approaches that actually thwart differentiation and waste massive amounts of time and money in the process.

Many companies simply try to keep up with the Joneses. Fifty-eight percent of our respondents said that their firms drive customer experience innovations by watching what their direct competitors are doing. A full 72% look to copy companies in other industries. For example, Citibank wanted to copy the Apple store so badly that it actually hired the same architects responsible for the Apple store concept to design its bank of the future. Not surprisingly, it wound up with a bank that looks like an Apple store. Imitation may be the highest form of flattery — but it’s not innovation. In fact, it’s the very definition of parity.

Other companies pray that technology can save them. Sixty-two percent of our panelists report that technology advancements drive their firms’ innovation activities. But technology for technology’s sake can end in disaster. Consider the multinational auto insurance company that invested in a new mobile app and expensive back-end integration to connect customers in an emergency with a call center agent. While it looked good on paper, the plan failed to account for the fact that drivers didn’t download the app in anticipation of getting into a car crash — and had more pressing things on their minds than browsing an app store once an accident occurred. Result? Another so-called innovation that failed to produce business results.

In order to change approaches like these, companies must first have a clear understanding of what it is they’re aiming for. Forrester defines customer experience innovation as: The creation of new customer experiences that drive differentiation and long-term value.

Customer experience innovation requires a structured approach that goes beyond traditional find-and-fix methods and helps firms identify and create experiences that really matter. To put their innovation efforts on the right track, customer experience professionals must do three things.

Reframe innovation opportunities. Companies need to start their innovation initiatives with an outside-in approach that frames their business challenges within the context of customers’ unmet needs. To identify new opportunities, for example, Philips Healthcare mapped out a typical day in the life of a radiologist, a key purchase influencer, regardless of whether those activities involved Philips. This approach enabled the team to identify a key pain point in radiologists’ daily work — an inability to compare one patient’s scan with those of others — that Philips already had the data for and capability to solve but hadn’t considered productizing.

Ground innovations in the business model. To sustain new types of interactions and ward off copycats, companies need to connect innovations to the mechanics of their underlying business model. Mobile operator giffgaff’s customers discover, evaluate, buy, and get support online and in social forums — the direct result of a cost structure that includes only a handful of employees. And Zipcar’s car-sharing business model drove a need for keycard (and then mobile phone) vehicle entry — new types of interactions that traditional rental companies never envisioned. Customer experience professionals should explicitly map out the mechanics of possible new business models — like resources, activities, and revenue structure — using a tool like the business model canvas . This visualization can help teams see how core business activities can fuel new types of customer interactions — and support them in the long run.

Infuse innovations with the brand. Ikea Systems’ cartoon furniture assembly instructions, Mini Cooper’s retro-inspired dashboard, and the cheerful chirp of a Zappos customer service rep — the qualities of these customer experiences create strong associations with their brands. And the more a new customer interaction looks, feels, smells, sounds, and tastes like a specific brand, the harder it will be for competitors to copy. That’s why design and innovation consultancy Continuum created mood boards when developing a new restaurant concept for Bertucci’s called 2ovens. A collage of carefully chosen photos depicted the desired 2ovens vibe; helped align internal Bertucci’s stakeholders; guided the design of touchpoints as diverse as the dining space, menu, and website; and even shaped the company’s hiring policies.

Customer experience innovation happens at the intersection of consumer needs, business model, and brand. Companies that neglect one or more pieces of this innovation puzzle will be forever relegated to customer experience mediocrity, on par with throngs of other companies desperate to fix their experience issues and retain customers. But by following the steps above, firms can increase the likelihood that their customer experience innovation initiatives will drive differentiation and long-term value.