What Customers Want

1. Redefine innovation: Focus on customer jobs and outcomes, not solutions

Customers buy products and services to help them get jobs done.

Jobs-to-be-done framework. Innovation should focus on understanding the fundamental jobs customers are trying to accomplish and the outcomes they use to measure success. This shifts the focus from product features to customer needs. By identifying jobs and outcomes, companies can create solutions that deliver real value.

Outcome-driven innovation. Instead of asking customers what products they want, companies should uncover the metrics customers use to define success when getting a job done. These desired outcomes are stable over time and provide a clear target for innovation efforts. By focusing on improving customers' ability to achieve their desired outcomes, companies can create breakthrough products and services.

• Examples of jobs: Cut wood (circular saw), manage music (iPod), limit financial risk (insurance)
• Examples of outcomes: Minimize the likelihood of the cut going off track, increase the percentage of plants that emerge at the same time, minimize the time it takes to look up a needed phone number

2. Capture the right customer inputs: Jobs, outcomes, and constraints

The literal voice of the customer sidetracks the innovation process because customers are not qualified to know what solutions are best—that is the job of the organization.

Three key inputs. To innovate effectively, companies need to capture three types of customer inputs:

1. Jobs customers are trying to get done
2. Outcomes customers use to measure success
3. Constraints that prevent customers from adopting or using a product

Avoid common pitfalls. Traditional "voice of the customer" approaches often capture the wrong inputs, such as product solutions, specifications, or vague needs statements. These lead companies astray. Instead, focus on capturing desired outcomes in a specific format: direction of improvement + unit of measure + what is desired.

• Example job: Clean teeth
• Example outcome: Minimize the time it takes to remove food from hard-to-reach places
• Example constraint: Shaky hands making it difficult to use a blood glucose meter

3. Identify opportunities by prioritizing underserved outcomes

An opportunity for improvement exists when an important outcome is underserved—that is, when it has a high opportunity score.

Opportunity algorithm. To identify the best opportunities for innovation, use the formula: Opportunity = Importance + (Importance - Satisfaction). This reveals which outcomes are both important to customers and not well satisfied by current solutions.

Prioritize opportunities. Use quantitative research to rate the importance and current satisfaction level for each outcome. Then apply the opportunity algorithm to prioritize:

• Scores >15: Extreme opportunities
• Scores 12-15: Low-hanging fruit
• Scores 10-12: Worth consideration
• Scores <10: Unattractive

By focusing on the highest-scoring opportunities, companies can direct innovation efforts where they will create the most value for customers.

4. Segment markets based on underserved outcomes, not demographics

The only way to find a group of customers with a set of underserved outcomes is to use that variable as a means for segmentation.

Outcome-based segmentation. Traditional market segmentation based on demographics or psychographics often fails to reveal true innovation opportunities. Instead, segment markets based on groups of customers with similar sets of underserved outcomes. This uncovers "segments of opportunity" that are ripe for innovation.

Benefits of outcome-based segmentation:

• Identifies unique opportunities in mature markets
• Discovers demanding segments willing to pay more
• Reveals overserved segments for potential disruption
• Determines best market entry points
• Uncovers high-growth potential segments

By segmenting based on outcomes, companies can develop targeted solutions that address specific customer needs, rather than trying to create one-size-fits-all products.

5. Target opportunities strategically for growth and innovation

An effective targeting strategy adds function and performance (but not necessarily cost) in areas that are underserved and reduces cost and function in areas that are overserved.

Strategic targeting. After identifying opportunities and segments, companies must decide which to pursue. Effective targeting strategies include:

1. Addressing broad market opportunities first
2. Targeting related opportunities that form a theme
3. Pursuing unrelated opportunities that represent growth avenues
4. Creating new ancillary products for big single opportunities
5. Reducing costs in overserved areas

Balancing value and cost. The goal is to optimize products by adding value where customers need it most while eliminating unnecessary costs. This creates a unique and valued competitive position.

• Example: Coloplast targeted underserved outcomes related to "preventing complications" in wound care, leading to double-digit growth
• Example: Bosch targeted multiple unrelated opportunities in circular saws, creating a breakthrough product

6. Position products by connecting features to underserved outcomes

The messaging strategy that is most effective clearly states a product's advantage in areas of the market that are highly underserved.

Outcome-based messaging. To effectively communicate product value, connect specific product features to the underserved outcomes they address. This precision helps customers understand the true benefits of the product.

Balancing function and emotion. Consider the product's functional complexity and emotional appeal when developing messaging:

• Low function, low emotion: Focus on service or cost (e.g., raw materials)
• Low function, high emotion: Emphasize emotional appeal (e.g., cosmetics)
• High function, high emotion: Balance both (e.g., cars, clothing)
• High function, low emotion: Focus on functional benefits (e.g., medical devices)

Outcome-based branding. Create brands that connect products to the jobs customers are trying to accomplish. This makes customers think of the product whenever they need to get that job done.

• Example: Milwaukee's "Sawzall" brand for reciprocating saws

7. Prioritize development projects based on addressing key opportunities

Products that deliver less than 3 percent more value than those currently available often fail.

Evaluate pipeline projects. Assess how well each project in the development pipeline addresses targeted underserved outcomes. This allows companies to:

1. Identify which projects will create the most customer value
2. Accelerate high-potential projects
3. Modify or kill low-value projects
4. Reduce wasted development resources

Customer scorecard. Use a scorecard listing all customer outcomes to objectively evaluate how much value each project delivers. Successful new products typically deliver 5-10% more value than current offerings, while breakthrough products deliver 20%+ more value.

• Example: Cordis Corporation prioritized stent development after recognizing it addressed a key underserved outcome, leading to a billion-dollar business

8. Generate breakthrough concepts through focused brainstorming

Companies do not need to generate hundreds of ideas; they need to generate just a handful of ideas that specifically and satisfactorily address their customers' underserved outcomes.

Focused brainstorming. Traditional brainstorming often produces many irrelevant ideas. Instead, use focused brainstorming:

1. Stay focused on targeted underserved outcomes
2. Aim for breakthrough improvement (80%+ satisfaction)
3. Apply constraints to enhance creativity
4. Eliminate bad ideas quickly
5. Optimize best ideas for cost, effort, risk, and sustainability

Targeted ideation. By focusing creativity on specific underserved outcomes, companies can generate fewer but higher-quality ideas that are more likely to create customer value.

• Example: Bosch circular saw team constrained to add features without increasing cost, leading to innovative airflow redirection solution

9. Evaluate ideas objectively using the customer scorecard

In an outcome-driven environment, company team members, not customers, objectively judge proposed new products by determining the degree to which the proposed offering satisfies all the possible customer outcomes and quantifying the total value the offering delivers.

Customer scorecard evaluation. Evaluate new product concepts objectively by assessing how well they satisfy all customer outcomes, not just a few. This provides a quantitative measure of potential value creation.

Benefits of scorecard evaluation:

• Predicts product success before development
• Compares concepts objectively
• Identifies weaknesses in concepts for improvement
• Eliminates subjective opinions and politics from decision-making

By using the customer scorecard, companies can confidently select winning concepts and avoid investing in ideas unlikely to succeed in the market.

10. Transform innovation into a predictable, systematic process

To achieve this level of certainty, a company must not only determine whether or not a product idea will deliver customer value, the company must also know how much more value it will deliver than the products and services it is competing with.

Systematic innovation process. By following the outcome-driven approach, companies can transform innovation from an unpredictable art to a systematic, manageable process:

1. Define innovation strategy
2. Capture customer inputs (jobs, outcomes, constraints)
3. Identify opportunities
4. Segment markets
5. Target opportunities
6. Position current products
7. Prioritize development projects
8. Generate breakthrough concepts
9. Evaluate ideas objectively
10. Implement winning solutions

Measurable results. This approach allows companies to quantify the potential value of new concepts, predict success rates, and make data-driven decisions throughout the innovation process. It reduces risk, accelerates time-to-market, and increases the likelihood of creating breakthrough products and services.

• Example: Pratt & Whitney used this process to develop a solution that increased customer satisfaction by 35%, regained lost market share, and captured additional growth

Last updated: November 18, 2024