I don’t think I am alone in this, but 2019 feels like a lifetime ago. It was August of that year that we first introduced our Product Innovation Quotient, a tool to help organizations assess their product innovation capabilities. Since then, our thinking has evolved—and so has the assessment.
Today, we have a more robust assessment that is still simple to complete and understand—and digital. We’ve renamed it the Product Innovation Maturity Diagnostic. You can take the assessment on our website. We’ll send you the results via email once your scores are calculated by our team.
A Model for Product Innovation
Modern product innovation and management is an organization-wide competency – not a single person’s job.
With this in mind, we created an organization-wide model - what we call the Productize Pathway - for how to develop and bring products to market successfully. It encompasses activities from data analysis, market research, finance, product development, sales and marketing.
We've created the Vecteris Product Innovation Maturity Diagnostic to measure your competencies across the six phases of the Productize Pathway:
Few teams are strong across all phases of the Productize Pathway. Knowing ahead of time where you may need help (either in resources or in training) will help save you time and money allowing you to reach success faster.
We designed the Product Innovation Maturity Diagnostic to walk you through each stage, outline best practices and help you determine which areas you should focus on improving first.
I was explaining to a client the other day that the biggest mistake I see companies make when developing new products is developing a product that does not solve an urgent and expensive customer problem. Turns out he’d heard me say that before. Many times.
This time, though, he asked: “But, Eisha, what exactly is an urgent and expensive customer problem?”
I paused. I speak or write those words so frequently that I forgot other people aren’t as steeped in them as I am. It was an “aha” moment for me.
An urgent problem is a problem a customer needs to solve within this calendar year.
An expensive problem is a problem that a customer is willing to allocate resources (human and financial) towards solving.
Urgent = Customer needs to solve within this calendar year
Expensive = Customer would allocate resources towards solving the problem
Is It Urgent? Is it Expensive?
Here are a couple of scenarios to help illustrate the urgent and expensive customer problem concept. Ask yourself, is this scenario an example of an urgent problem? Is it an expensive problem?
Scenario 1: I need reporting data this week for a Board meeting. I need to get a data visualization tool or I could pull it manually and give it to them in Excel.
Answer: Urgent, not expensive. Excel is a perfectly good free alternative. It might be slow, but it works. Now, this could become expensive if every customer needed this multiple times a week but in this situation, this problem is not expensive.
Scenario 2: My CRM provider is really expensive and I’d like to switch, but our executive team is dragging their feet on making a decision.
Answer: Expensive, not urgent. This could become urgent if we needed to cut expenses to keep covering the cost, but for now, we have time.
Scenario 3: My company was just hit with a lawsuit and my in-house attorney just quit. I need outside counsel.
Answer: Both! Legal help is costly, but we need it now because we can’t ignore a lawsuit.
Hopefully, those scenarios were pretty straightforward. But, the real world isn’t always that black and white. There are several traps we can fall into when it comes to identifying urgent and expensive customer problems.
Beware of the Customer Problem Traps
If I’ve said “urgent and expensive customer problem” a million times, I’ve probably advised “talking directly to your customers” two million times. We are constantly encouraging our clients to go directly to their customers and prospects before spending significant development dollars. While collecting voice of the customer is incredibly important, there are a few traps to avoid when trying to uncover urgent and expensive customer problems.
1.Frequently cited problem: Sometimes a product team thinks they have identified an urgent and expensive customer problem, but it’s really only a frequently cited problem.
For example, my team recently completed a new product development project for a client whose business was placing professionals in out-of-town assignments. We started the project with a series of Voice of the Customer interviews. Many of the professionals we interviewed talked about the loneliness they felt while on out-of-town work assignments. In digging deeper we realized that the problem of loneliness was not as painful as other problems, such as job assignment uncertainty or access to better temporary housing options. Loneliness was a frequently cited problem, but not an urgent and expensive problem. We recommended to our client that they focus innovation efforts on solving the problems of job assignment uncertainty and better temporary housing options and think about addressing loneliness later.
2. Too Small to Be Profitable: Sometimes an organization identifies an urgent and expensive problem, but for a market segment that is too small, too price-sensitive, and/or not a good fit with their core services.
For example, one copywriting services company decided to use their existing internal writing training program for new employees and develop it into a new product that clients could buy to train their staff. Unfortunately, after spending more than $100,000 developing the new external-facing program they found that the only companies interested in the training were the small handful of very large companies who had teams of in-house copywriters to train. The Total Addressable Market (TAM) for this product was too small.
3. Problem of One but not Many: Other times, we mistake one customer’s request for the need of many customers.
For example, the customer of a training and development company asked for virtual delivery of the nine class training series to help reduce travel costs (this was pre-COVID-19). Without validating whether other clients had the same need, the company spent well into six figures building an online platform that only one company wanted.
Not starting with an urgent and expensive customer problem isn’t the only mistake we see in product innovation. Read our white paper on the Top 7 Product Innovation Mistakes to Avoid in 2021.
Many of our clients have been asking us for advice on how to stay competitive in this rapidly changing world. Customer behavior is changing rapidly and, if they are financially healthy, your competitors are likely innovating to adapt to these changes. Other competitors may be struggling and could become acquisition targets for you to bring on new assets or new customers or both. How do we stay on top of all this?
Enter: Lean competitive analysis
Just like lean startup or lean product methods, lean competitive analysis is designed to help you quickly monitor and analyze competitor actions. It is not the type of competitive analysis you would do if you were refreshing a three-year strategic plan, nor is it what we see a lot of companies doing right now, which is no competitor analysis.
I’m still surprised how many companies run down the innovation path without a quick hygiene check on the competitive landscape. A CEO gets excited about a new idea or your sales team comes to you promising that people will buy. Boom! You are off and running, only to watch the product flounder in the market after months of long days and heartache.
What is ‘typical’ competitive analysis?
Typical competitive analysis is about developing a rich understanding of who is doing what in your market space. It answers questions such as:
In lean competitor analysis, we narrow this question list based on your end goal. What are you trying to learn? Or in Vecteris terms, where are you on the Innovation Pathway?
Where are you on the Innovation Pathway?
Are you in the discover and scope stage before building a new product? If so, focus on competitors serving your target market. This means traditional competitors as well as brand new ones who are serving the same customers and addressing the same problems but with completely different solutions. A lot of ‘digital-only’ companies may emerge on your competitor scan.
Ask are they efficiently solving your customers' most unique and expensive problems? Where is the "white space" — real customer problems that aren't being addressed by your competitors?
For example, recently, a client in the healthcare industry engaged our support for the first phase of the Innovation Pathway (Discover & Scope). Their executive team was considering a large investment in a new product and wanted us to do a deep dive on new digital-only entrants, not their typical competitors. They needed to understand how well these new entrants were solving the same customer problem and how much was start-up hype. Our competitive analysis gave the board the confidence to take the next step to build a Minimum Viable Product.
In the Launch phase, we focus competitor analysis on pricing, positioning, packaging, and promotion (our version of the 4Ps). For another client in this phase of the Innovation Pathway we used competitive analysis to create a sales enablement toolkit including a pitch deck that clearly differentiated them from competitors and a sales “cheat sheet” on how to differentiate their offering versus specific competitors. These tools gave the sales team greater confidence in the product.
How to do lean competitive analysis well
The first step is to identify all the players. You may know some of the traditional competitor names. Resources like CB Insights, Owler, and Capterra (for tech products) can help you identify others. Advisors, investors, and a few customer interviews are also great sources for competitive information. Start with an exhaustive list of everyone in the space, but then do a quick competitive scan to cut the list down to just a handful of the companies that seem to compete with you the most.
Next, take a deep dive into the shortlist. Secondary sources are suitable for a first dive into the tangible and intangible assets, capabilities, níche, and current market positions. You can check advertising, sales brochures, news coverage (mainstream and business press), annual reports, trade associations, or one of the many business databases with paid walls (such as Hoovers). Social media and company websites also reveal a lot about brand identity and marketing strategies. You can go so far as to sign up for competitors’ newsletters or subscribe to their blog.
Once the data is collected, you have to analyze it and compare it to your own. There are many ways this can be done. You could conduct a SWOT Analysis to evaluate their strengths, weaknesses, opportunities, and threats. Whatever your approach, be sure to run your own business or idea through the same method you used to assess your competitors (i.e., take an objective look at your structure, sales, and marketing efforts, etc., using the same metrics).
We recommend that you continue to monitor your competitors through the rest of your journey through the Innovation Pathway. Refresh the analysis quarterly. Consider tracking metrics that speak to:
What strategies have you used for lean competitive analysis? What worked well to get you the information you needed? If you have questions about how to structure your next competitive analysis, don't hesitate to reach out.
“What’s the biggest new product development mistake you see companies make?” a client recently asked 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.”
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:
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:
To test the hypotheses thoroughly, we need to go beyond just asking customers and run live tests. This is important because:
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:
Please contact me to walk you through our different Innovation Insights offerings!
Understanding our customers—or more specifically their urgent and expensive problems—is the key to developing a successful product. I’ve seen too many companies waste time developing a new product that no customer wants or needs. This often happens when a CEO develops a product because they have fallen in love with an idea or a technology or are trying to out-do a competitor and they don’t want to take the time to talk to any customers about what real-life problems they are solving.
To understand those real-life problems, we need to talk to our customers directly. Feedback from a sales force is not a replacement for our own customer conversations.
Interviews can be time-consuming and a bit of a headache, if we’re being completely honest. But there is no other approach that can yield rich data with the deepest insights. And if you do them well, you don’t need to do that many.
I’ve talked to a lot of customers over the years. Here are 5 useful tips I’ve learned for doing this well – with a minimal amount of pain for you and the customer.
1. Be Clear on What You Need to Learn
We need to be sure the conversation stays on task. We can easily let open-ended questions spiral out of control or run off in a million tangents.
Then build your interview guide around those hypotheses. Your goal will be to prove or disprove each hypothesis. Review after each interview to see what you have learned and what you have left to learn. This keeps conversations headed in the right direction, to get the answers we need, without being overly prescriptive about where the conversation goes.
2. Start with the Basics
Remember, the #1 goal is to understand your customers’ most urgent and expensive problems. Use two or three broad and open-ended questions in the beginning of every customer conversation about their experience. Not only does this warm-up the conversation, it gives you the opportunity to explore the big picture. You are looking to learn:
Really explore the most pressing problems customers are facing from their point of view. Broad and open-ended questions open the door for the customer to express themselves without biasing the results (a real risk to be aware of).
3. Talk to a Representative Sample
We don’t have time to talk to everyone. So, this is where our customer personas come in. Well-developed customer personas will help us make sure we talk to the right mix of sample customers to capture a diverse mix of voices.
Keep in mind the product you plan to create – is it intended to bring in new clients? Make sure you have prospects in the mix. Could the product be received differently by very mature vs less mature customers? Will there be differences between the end-user and actual buyers?
This may sound like a daunting number of interviews, but it is really about quality over quantity. If you plan ahead to have a good mix of participants, you should be able to get the data you need from 10-12 interviews.
4. Iterate, Iterate, Iterate
This should be your mantra in all thing’s product. Pull up your notes after every interview to highlight what you have learned. Return to those questions we discussed earlier. What is the most expensive, urgent problem people are facing? Can we solve that problem? Are we creating enough value for customers to jump on board? Have you proven or disproven your hypotheses? Do you need to re-work your assumptions?
Now, ask yourself, what do you need to change in the next conversation to continue learning? Should you tweak an opening question? Should you make changes to your product vision? Can you add more specificity to your sample packaging or pricing? Don’t go more than 2-3 interviews without adjusting your interview guide.
5. Be Customer-centric
Finally, it’s imperative that we remember that we are dealing with people. People with packed schedules, to-do lists a mile long, and, basically, a million other things they could be doing instead of answering our questions. Keep the entire process focused on the customer. Work around their schedules. Thank them for giving up their time and sharing their insights.
You’ll also need to make them comfortable sharing – even when they have something to say that we might not want to hear. Be prepared for your customer to crush your vision entirely.
“Disarm “politeness” training: people are trained not to call your baby ugly. You need to make them feel safe to do this. My approach was to explain that I needed their honesty, so I didn’t build something nobody wanted to use, which seemed to resonate with folks.” –Giff Constable Chief Product Officer at Meetup
Last but not least, we need to listen more than we talk. It’s human nature to fill the gaps that make us feel awkward. We can use prompting cues like “tell me more” or “interesting, can we expand on that?” The goal is to get the customer talking again.
As we have already noted, people are busy and sometimes hard to schedule but don’t let that stop you. With hundreds of interviews under my belt, I can honestly say that 99% of people really enjoy being part of the product development process and appreciate that we value their opinions and care about their problems.
Don’t forget our team at Vecteris has decades of experience working with companies as they quickly bring products to market. Our team is highly skilled at conducting the research companies' need and providing actionable recommendations to move quickly on product ideas. Don't hesitate to reach out to see how we can help.