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Customers or Competence?

March 4th, 2015

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10-03-customers

By Paul Sloane

It’s a question that goes to the heart of your strategy. Should you base your new product or service development on your technical expertise, the things that your business is good at, or on the needs of your customers, even if those needs are in areas where you have little or no strength?

How should you go about new product development? Where is the place to invest your precious and limited resources? Ideally you should build new products or services that play to your competencies and meet clear customer needs, but sometimes that combination is not an option.

Start by making a list of all the things that you are really good at. This might include technical expertise, market experience, areas of operational excellence and so on. In parallel you should study your customers in the entire process of how they acquire or use your products and those of your competitors.

Look for areas that don’t work as well as they should. Any difficulties or inconveniences that they experience are clues to potential innovations. Look for an overlap – something that customers need and which you can provide really well. This is potentially a worthwhile new product, though there are a myriad different reasons why your efforts may end in failure – and most new product launches do end in failure.

But what if you have say a great technical idea for which there is no apparent customer need? And what if there is a probable customer need in an area in which you have little experience or competence? Which should you back? Both are risky ventures with even lower chances of success than regular innovation efforts. But that does not mean they should be written off. Let’s consider two notable examples.

When Apple launched the iPad in 2010 there was no ostensible customer need for the product.  People had smartphones, which they liked, and they had laptop or notebook computers which they liked. Why, many pundits asked, would anyone want a third device to carry around? There was no clear killer application that would run only on an iPad and so there seemed no compelling reason for people to buy one.

Steve Jobs famously disdained focus groups and customer research. He thought that he knew better than customers what their future needs would be – and this time he was right. The iPad was a colossal success and spawned a whole new category of products – the mobile tablet computer. This is an example of a new product which was based on technical expertise, novelty and beautiful design which created a market which did not previously exist.

Now let’s consider the Amazon Kindle, launched in 2007. Jeff Bezos at Amazon could see that there was a potential customer need for an inexpensive reader for electronic books. But, unlike Apple, Amazon had no experience or competence in electronic product design or manufacture. Amazon’s strengths lay in excellent web services, software and logistics. For the company to launch its own hardware product would be a major step into unknown territory. Yet that is what they did – with tremendous success.

What lesson can aspiring innovators learn? The golden rule is that you should base new product initiatives on a combination of your technical expertise and evident customer needs. But innovators are rule breakers so you can try a new product based on just one of these criteria. This approach is fraught with danger – but occasionally it produces a winner as massive as the iPad or the Kindle.

Paul SloanePaul Sloane is a speaker and a facilitator who helps companies overcome the problems they have making innovation happen. Through Destination Innovation, he improves creativity and lateral thinking for leaders with our leadership and innovation workshops. This results in a more agile culture, more ideas and successful innovation.

 

Image via shutterstock.com

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