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The Ultimate Guide to Turning Professional Services into Scalable Products

Great Product Innovation Starts with an Urgent & Expensive Problem

 
“What’s the biggest new product development mistake you see companies make?” a client recently a
sked me.

I immediately said, “Creating something that does not solve an urgent and expensive customer problem.”

It’s true. Sometimes it happens when we fall in love with a new technology, jump to developing a product that leverages the technology and then end up creating a “solution in search of a problem.”

Other times, we might develop a new product to copy a competitor without pausing to ask if the competitor is successfully meeting an urgent and expensive customer problem.

Or, maybe, our product team thinks they have identified an urgent and expensive customer problem. But it’s really only a frequently  cited problem. Or it is a symptom, not the root cause, of the problem.

In all of these cases, we waste money developing and launching new products that customers won't buy. 

Here are a few tips for avoiding this mistake. 

1. Appreciate the difference between frequently cited problems and expensive and urgent problems.

Clayton Christensen’s advice to design products that solve customers’ “ jobs-to-be-done” is frequently cited among product innovation professionals. He suggests looking for “…poorly performed ‘jobs’ in customers’ lives-and then design[ing] products, experiences, and processes around those jobs.” 

However, we think finding a “job-to-be-done” is not enough.  We encourage our clients to find an  urgent and expensive job-to-be-done to solve. We need to understand the difference between a minor annoyance or a real pain point. The difference between something that will "improve people's moods but not their lives.” [1]

For example, we recently conducted Voice of the Customer interviews for a client. Many of the customers we spoke with cited feeling lonely while on out-of-town work assignments as a problem they faced. However, as we dug deeper, we realized that this problem was not as painful as other problems, such as job assignment uncertainty or better temporary housing options. We recommended focusing innovation efforts on solving those problems first and think about addressing loneliness later.

Cindy Alvarez, author of  Lean Customer Development, has some great tips for asking the right questions in customer interviews that can help us understand how urgent and expensive a customer problem is.  Here is some of her advice that I love: 
  • Whatever amount people say they will pay for a product that solves their problem is wrong, so don’t ask. Instead, ask what they pay for something they already use that provides a similar amount of value or use with the same frequency. 
  • The answer to any question that starts with “do you want” or “are you concerned about” will always be “yes” so, instead ask people to rank potential solutions or ask what they would sacrifice to solve a problem.
  • The two driving forces of purchase and usage behavior are apathy and the desire to avoid looking/feeling stupid. To put people at ease, don’t ask, "do you have X problem?"  Instead, ask, "how does X problem affect you?" Or refer to hypothetical people who share X problem and ask how it may be affecting them. 

Keep in mind that urgent and expensive problems are frustrating enough that people do more than complain about them. They are prepared to do something about the issue, such as paying for a service or switching providers. 

2.    Don’t confuse the current solution with the problem. 

Consider this oft-cited example from Harvard Business School marketing professor Theodore Levitt: A potential customer needs a hole in their wall to hang a painting. The current solution to that problem is a drill.  We might be tempted to create a better drill.  But, if we take a step back to reconsider the problem, which is: “I need a hole in my wall,” we could design an entirely new way to create better holes in walls. As Levitt said, put it, "People don't want to buy a quarter-inch drill. They want a quarter-inch hole!"

Mobility, getting from point A to point B, is similar. When cars were invented, people stopped buying horses and buggies. It no longer mattered how fast the horse or how good the buggy, people wanted cars instead. The customer problem was mobility, not slow horses. Car companies are facing a similar market distribution felt by the horse and buggy companies. The urgent and expensive problem that cars solve is getting from point A to point B. Enter Uber and Lyft, who innovatively solve that problem.

One way to do this is to understand the root cause of the problem.  To uncover the root cause, we like the five whys method. It was developed by Japanese inventor and industrialist, Sakichi Toyoda, to provide a better understanding of any problem and uncover its solution. It’s a simple process that involves asking the question “why” enough times that you get past symptoms of a problem to the root cause.

The point is not to stay anchored to a particular solution or ‘surface-level’ problem. When we identify the underlying customer problem, it opens the door for game-changing innovation.

3.    Design real-life tests for your hypotheses, don't just ask questions.

Once we’ve found a problem that seems worth solving, we need to be sure. That means developing a hypothesis and testing it. A testable hypothesis should state the problem and what we expect our solution will do. For example:
  • I believe [target market] will [do this action / use this solution] for [this reason].
  • Because we believe [this is a problem], if we do [this solution], we expect [result] to happen. 

To test the hypotheses thoroughly, we need to go beyond just asking customers and run live tests.  This is important because:
  1. People’s imaginations are limited. Henry Ford is known to have said: “If I had asked people what they wanted, they would have said 'faster horses."  But as I mentioned, faster horses weren't the answer.
  2. People are also pretty terrible about estimating what they’d do in hypothetical situations. When interviewed, for example, people may say they would be willing to buy something, but will they really? That's why we need to test hypotheses in the market, not just use customer research. 

There are a range of techniques for market testing that are fast and thorough, such as selling a product before it exists (think: Kickstarter), or building and launching your MVP (a.k.a. send a product with as few features as possible to market). Each of these approaches allows us to see whether customers will buy your product and test different feature sets of the product that entice them to or deter them from buying.

At Vecteris, we specialize in helping B2B companies successfully design and manage innovations. Our  Innovations Insights service ensures your new products address urgent and expensive customer problems. Using techniques adapted from the Design Sprint process, our service includes:
  • Generating hypotheses
  • Assessing the competitive landscape
  • Identifying urgent and expensive customer problems by segment
  • Ideation workshop(s)
  • Testing concepts, pricing, and packaging 

Please contact me to walk you through our different  Innovation Insights offerings!

[1] https://www.forbes.com/sites/theyec/2018/05/18/how-to-successfully-identify-problems-worth-solving/#35a12c7a1cb4