Giving customers a fair hearing

SPRING 2008

V O L . 4 9 N O. 3

Anthony W. Ulwick and Lance A. Bettencourt

Giving Customers a Fair Hearing

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REPRINT NUMBER 49314

MARKETING

Giving Customers a Fair Hearing
With a clear definition of what acustomer need is, companies are able to get the inputs that are required to succeed at innovation.
Anthony W. Ulwick and Lance A. Bettencourt

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s there agreement in your company that innovation is the key to growth? Is there agreement that understanding customer needs is the key to success in innovation? Is there agreement on what a customer need is? We have asked this series of questions topeople in hundreds of companies, and in doing so have made a surprising discovery. Even though there is broad agreement that innovation is the key to growth and that understanding customer needs is the key to innovation, not even 5% of the companies said there was agreement within their company as to what a customer need is. This suggests a very disconcerting question: How can a companyconfidently uncover customer needs, determine which are unmet and systematically create products that address them if it cannot agree on what a customer need is to begin with? The answer is it can’t — and this is a root cause of failure in the innovation process. Most companies already understand that there are four basic approaches to product and service innovation: growing core markets, capitalizing onadjacent market opportunities, discovering new markets and disrupting existing markets. But when it comes to understanding customer needs, voice-of-the-customer programs are undermined in two ways. First, there is no consistent standard that defines just what a “need” is — what its purpose, structure, content and format should be. Although companies talk to customers, the inputs they gather differin purpose, structure, content and format, introducing variability that can derail the innovation process. Second, companies do not understand that to succeed at all these innovation strategies, two very different types of customer inputs are needed — in other words, they do not realize just how a “need” must be defined given the type of innovation initiative being pursued. Only when companieslearn what needs are will they be able to consistently uncover hidden opportunities for growth through innovation. Our purpose here is to introduce a set of timeless standards that define the purpose, structure, content and format of a customer need statement and thereby to transform the art of requirements gathering, and hence innovation, into a rules-based discipline. These standards, and thetheory that supports them, are the result of our analysis of over 10,000 customer need statements collected for products and services covering nearly every industry. These standards apply to the four basic innovation strategies and other innovation strategies that a company might pursue and can benefit any company that wishes to bring predictability to the process of innovation.

Anthony W. Ulwick isthe founder and CEO of Strategyn Inc., an innovation management consultancy based in Aspen, Colorado. He is the author of What Customers Want (McGraw-Hill, 2005) and “Turn Customer Input into Innovation” (Harvard Business Review, January 2002). Lance A. Bettencourt is a senior consultant with Strategyn and a former member of the marketing faculty at Indiana University. Comment on this article orcontact the authors through smrfeedback@mit.edu.

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MIT SLOAN MANAGEMENT REVIEW

SPRING 2008

SLOANREVIEW.MIT.EDU

The Characteristics of a Requirement Statement
Companies need to remember that it’s not enough to just solicit opinions; getting the right information is crucial. Customer requirements are used by companies to inform and guide many marketing and development decisions —...