Outcome based Innovation

Getting to what customers really want

Literal voice of the customer does not translate into meaningful inputs. Customer-driven movement has failed to produce the desired results because asking the customer what he wants solicits wrong inputs.

Companies gather requirements however they do this without ever really understanding what types of inputs they need to obtain from customers. Neither does the customer. Customers offer their requirements in a language that is convenient to them but unfortunately not convenient for the creation of breakthrough products.

To figure out what customers want and to successfully innovate, companies must think about customer requirements very differently. Companies must be able to know well in advance criteria customers are going to use to judge a products value. These criteria must be predictive of success and not lagging indicators.

Outcome-driven innovation

1. Customers buy products and services to help them get jobs done. New and existing markets both people and companies have “jobs” with functional dimensions to them that arise regularly and need to get done. When customers become aware of such a job they look for a product or a service that will help them get the job done. In outcome-paradigm the focus is not the customer; its on the job. The job is the unit of analysis. When companies focus on helping customers get a job done faster, more conveniently and less expensively than before they are likely to create products and services that the customer wants. Only once a company chooses to focus on the job, not the customer, are they capable of reliably creating customer value.

2. Customers use a set of metrics (performance measures) to judge how well a job is getting done and how a product performs. Customers use metrics (just like business measure output quality of business processes) to measure success in getting the job done. These are in their minds and seldomly articulated making it difficult for companies to understand them. These are the known as the customers desired outcomes – the fundamental measures of performance inherent to the execution of a specific job. Only when all metrics for a given job are well satisfied are customers able to execute job perfectly. These metrics are ironically overlooked in the customer-driven world because they are not revealed by listening to the “voice of the customer”.

3. Customer metrics make possible the systematic and predictable creation of breakthrough products and services. Good companies figure out the 50 to 150 outcomes for a given job that are important and unsatisfied and then systematically devise a few ideas that will better satisfy those underserved outcomes.

Only after knowing what jobs customers are trying to get done and what outcomes they are trying to achieve are companies able to systematically and predictably identify opportunities and create product/services that deliver significant new value.

Having the right input is critical to success, but knowing when not to apply them is too. Once outcomes for a job are identified they must be prioritised and targeted. When a company knows which outcomes are most underserved and has chosen them as growth targets the company is able to:

a. Optimise their messaging strategy and exploit the advantages their current products have in satisfying the targeted underserved outcomes

b. Prioritise their projects in their development pipeline so they can quickly bring those products and services that do the best job addressing other opportunities

c. Systematically devise ideas that address the remaining unexploited opportunities, creating valuable if not breakthrough products

Variability into Innovation

Managers must be first willing to accept innovation is indeed a science – systematic process for creating products or services that delivers new value to customers. Technically speaking, innovation is the process of creating product or service solution that delivers significant new customer value.

Process begins by selection of the customer and market, which includes the identification and prioritisation of opportunities, and ends with creation of an innovative product concept that delivers the new and significant value.

In practical terms, innovation is simply the process of figuring out “what customers want”. Companies must figure not only what solutions and product features customers want, but as a prerequisite to devising a valued solution, a company must first be able to figure out just what outcomes customers want the product to satisfy ie. companies need to figure out what jobs customers want to get done and how they measure success in getting a job done before they can determine what the solutions customers want.

There are a number of factors contributing to innovation failures. However the wrong inputs make it difficult to obtain good results. Companies must know for whom they want to create value and how to process and apply these inputs to create the value.

Factors that are root cause of many failed initiatives include:
– ill-conceived growth strategies
– faulty data collection
– missed opportunities
– poor market segmentation
– wrong growth targets
– unfocused maketing, messaging and branding
– poorly prioritised development initiatives
– scattershot idea generation

In the next post of this series, I will share with you 8 simple steps to innovation. Stay Tuned!