Product Innovation: Uncovering Customer Needs That Matter

Guest episode with Nathan Baird, author of Innovator's Playbook

Today’s episode is special. We got a guest with us to talk about product innovation. Nathan Baird wrote the book, “Innovator’s Playbook.” And is keen on helping teams focus on what drives value instead of wasting time with things nobody needs.

This episode is free :)

You can expect an overview of hands-on techniques for product innovation!

Let’s rock it!

Special episode with Nathan Baird

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Before we jump into Product Innovation with Nathan, I want to thank all of you who joined my Product Strategy Course launched last week. It’s great to have people all over the world striving to learn how to set sound strategies. Join us to rock the world!

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From here, you’re reading Nathan :)

Design Thinking is a human-centred, creative, and experimentation-driven approach to innovation that teams use to create, design and test new products, services, experiences and better ways of working.

Whilst most Design Thinking principles have been practiced in the consumer goods industry for decades, its widespread adoption in other industries has only occurred in recent years. This explains why although its use is now fairly mainstream, the practice is still quite immature. This is especially the case for some of the harder and more specialist stages of Design Thinking, which require expert facilitation and training and years of practicing, honing, and refining to master these skills.

“Having run hundreds of innovation projects and spent tens of thousands of hours leading and training Design Thinking, in my view the most important, yet toughest phase of the innovation journey is the insight generation stage.”

It’s the most critical because without an important and unmet customer need and insight identified, teams are just wasting their time inventing products and services nobody wants. They might be having a lot of fun, but they aren’t being very commercial about how they allocate their organization’s resources.

A study cited by Robert G. Cooper in his book ‘Winning at New Products’ identifies that the number one factor behind innovation failure is “a lack of thoroughness in identifying real needs in the marketplace,” with teams often “making assumptions in order to justify the project.” 

It is possibly the hardest phase because you’ve got to take all that you’ve learned and know about the customer – what you’ve seen, heard, read, and experienced from them in the discovery iteration – and turn that into customer insights that inspire opportunity and unlock innovation. Observations and data alone don’t cut it here. Insight requires curiosity, synthesising, connecting, and sense making to get to the underlying ‘why’ behind customer’s behaviours and needs.

So how can teams get better at generating true deep customer insights?

Start with empathy

To start with, teams need to actually get out of the office and conduct empathy research with real people (customers and potential customers). Jumping straight to insight generation, or worse still ideas, without customer research, is just a shortcut to disaster. This results in your insights and the whole innovation program being based on misconceptions, assumptions, and opinions.

Brainstorming customer needs, even if you’re using a customer empathy map, does not equal empathy and understanding. In Silicon Valley entrepreneur Steve Blank’s book The Startup Owner’s Manual, he says, ‘Real-life insights don’t live in your office; they exist out in the world of your customers and potential customers. You have to get out of the building.’

Empathy is the ability to understand and share the feelings of another. This is best done by immersing yourselves in your customers' world to identify who they are, what is important to them, and what pains and delights them. Three useful methods for doing this are:

1. multiple sources,

2. extreme customers and

3. deprivation and disruption.

Multiple sources of research help you build empathy for your customers by:

·      ‘being the customer’ where you experience the situation the customer experiences,

·      ‘being with the customer’ where you observe the customer in situ and interview them after and

·      ‘learning about the customer’ by talking to the people around them including subject matter experts.

Another great method is to talk to extreme customers. The experience is often heightened for extreme customers, so by including them in your research, you uncover insights that you wouldn’t have gotten by talking to just ‘mainstream’ customers — yet the insights still apply to the masses. For example, extreme customers for a gaming company might be the 19-year-old hacker who lives in their parent’s basement at one extreme and the grandfather who doesn’t even own a smartphone at the other.

The third method is deprivation and disruption. When we are helping a client innovate in a mature category, such as transportation, cereal, or alcohol, it can be hard for customers to articulate any substantial unmet needs, frustrations, or desires. To overcome this barrier, we apply what we call deprivation and disruption research techniques.

Deprivation involves depriving the customer of a regular activity, product or brand and getting them to keep a diary of how it made them act, think, and feel. Similar to the thinking behind researching extreme customers, this technique helps heighten the needs and pain points for the customer.

Disruption works well when you are innovating a physical or virtual space or the product you’re working on is central to a physical or virtual space. For example, if you were looking for insights to redesign a workplace, you could get employees to go and work in a different space for a week and keep a diary of all the things they missed (and didn’t miss) from their regular workspace, and what they liked and didn’t like about the new workspace.

The key thing to remember for all these techniques is that it is about finding inspiration for innovation, not market validation. Market sizing and validation come later in the innovation journey.

Only once we’ve understood who our customers (and potential customers) are, what is important to them, and what pains and delights them can we move onto the insight generation, or distillation, step.

Cracking the insight

My method for turning customer research into customer insight is through debriefing, synthesizing and prioritizing, crafting, and sense checking. 

Debriefing is about sharing and unpacking the findings from your customer research across the team. This is best done in a workshop setting using sticky notes and marker pens and banking out interesting observations and anecdotes onto butcher’s paper. I like to use an Empathy Map (with 4 quadrants - Say, Do, Think, Feel) for this. 

Next is synthesize and prioritize, where you and your team hone in on the really rich and interesting observations. It’s a very qualitative and gut-feel process, so there are no hard and fast rules, just tips and techniques to help make the magic happen. Try looking for needs (needs can be functional, emotional, or social), desires, wants, workarounds, undesired outcomes, obstacles, risks, tensions, pains, and simply things that stand out. Through practice and experience, you’ll get better at identifying the most promising opportunities. Following this exercise, you’ll still have a fairly large pool of sticky notes, which will need to be prioritized further.

I prioritise these by assessing ‘How important is the need (extreme is the pain) for the customer’ and ‘How satisfied are customers with their ability to fulfil the need (solve the pain) - given the solutions they use today’. This is a similar prioritization framework to JTBD. I then craft these prioritized important and unmet needs as customer insight statements.

Now, we craft these sticky notes into customer insight statements or narratives. This is a very iterative and creative process. The customer insight statements consist of three key elements:

1.    A rich and specific description of the customer and the situation or context.

2.    Articulation of the need or problem the customer is trying to satisfy or solve.

3.    Distillation of the insight, that synthesis of their needs and why these are so important to the customer or why they are so hard to solve.

For example, the customer insight statement behind the creation of Magnum ice cream might have been something like:

An indulgent foodie needs guaranteed satisfaction because if the delivered pleasure falls short of the expectation, it doesn’t justify the guilt.

As Clayton Christensen says, in his book Competing Against Luck, ‘you’re trying to capture the story of the customers in their moments of struggle or desire for progress.’

Finally, we sense check our insight statements. You’ll know when you have a good insight because it feels intuitively true, and you can’t help but start to think of solutions for it. Good insight statements are interesting and inspire action.

Cracking compelling insights is half the battle of innovation and the number one driver of innovation success.

Nathan Baird is the founder of customer-driven innovation and growth firm Methodry and the author of Innovator’s Playbook: How to create great products, services, and experiences that your customers will love! He is one of the world’s most experienced Design Thinking practitioners, a former Partner of Design Thinking for KPMG, and helps teams build their innovation mastery and works alongside them on their key challenges. Visit www.methodry.com.

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Have a lovely day,

David