Let’s take a deeper look at Commercialization, focusing on finding the insight into customer needs that are opportunities to develop new or improved products and services.
Listening to Customers
Common wisdom in business planning holds that the Voice of the Customer is the key to finding new opportunities to grow. But is that really the case with companies that are striving to develop new ideas and differentiate themselves from competitors?
Henry Ford famously said “If I’d asked people what they wanted, they’d have said faster horses”. Among other words of wisdom he also said that “Business owners go down with their businesses because they simply can’t change. One sees them all about, business owners who don’t know that yesterday is past and woke up with last year’s ideas.”
What you do need to listen to customers about include:
- Real benefits of a product or a service that they think are meaningful, not just the features of a particular product or service you’re trying to sell
- What’s in it for them to buy your product or service?
- Why they should care?
- Why they should believe that you can deliver?
Developing Innovative New Ideas
Doug Hall from Eureka Ranch has studied thousands of innovative new products, he says that companies that develop a Future Focus on their products and services are 10 times more predictive of success than companies that simply follow Voice of the Customer (VOC) approach to developing new ideas.
Why is this the case?
It’s primarily because companies following VOC typically only incrementally improve their products or services, while the Future Focus companies are following much more aggressive and radical innovation strategies. Yes, the ideas for new products and services coming from a Future Focus are decidedly riskier but they have a much higher pay off when they succeed. Consider the following statistics from Georgia Tech on typical approaches that businesses use to grow profitable sales:
% Profit Margin (Return on Sales) from Growth Strategies:
- Low Cost = 8%
- Quick Delivery = 15%
- Voice of Customer = 16%
- High Quality = 17%
- Innovation = 33%
Next Steps You Can Take Today:
One of the best things to do today is to form a small team comprised of sales and marketing, engineering, production, customer service and financial staff in your company. Get a flip chart or white board and simply list all of the products and services that you deliver today, assign a rough % Profit Margin to each one and identify the top two customers to whom you sell these products or services. This should look something like the following table:
|Product / Service
||% Profit Margin
|Low Temp Snack Food Oven||%15||Frito Lay, Snyder’s|
|Catalytic Converter Curing Oven||25%||Johnson Mathey, Honda|
|Energy ManagementServices||35%||Frito Lay, Snyder’s|
The next step is to take a hard look at your most profitable products or services and ask the following questions:
- How unique are we with this product or service? Because, if you’re not cheap, you better be unique
- What is the Overt Benefit promise you currently make to the customer? In other words, What’s in it for them to buy your product or service?
- Why does the customer care about your product? This is the Reason to Believe.
- How is your product or service Dramatically Different from your competitors? Again, if you’re not unique, you better be cheap
Use the information you generated with the team to brainstorm ways to radically improve your products or services. What do your employees that are closest to customers say about new benefits that your products or services could provide that would make your offering meaningfully unique? This is the starting point to finding new ideas to develop and sell, or commercialize. At the end of the day, as Peter Drucker said, “the only reason we exist is to provide the best products and services possible to our customers”.