What customers want – outcome-driven innovation

January 14, 2010

I just completed reading the book “What Customers Want – Using Outcome-Driven Innovation to Create Breakthrough Products and Services” by Anthony Ulwich, CEO of Strategyn, Inc.

This is a great read for those faced with the innovator’s dilemma of building products or services that satisfy customer needs or requirements.

Anthony points out that although customer-driven thinking is well entrenched in corporate America, companies still find that 50 to 90 percent of their product and service initiatives are failures, collectively costing them more than $100 billion each year. He suggests that a new approach is necessary and that the answer lies in the fundamentals of business process improvement.

In Anthony’s years of analyzing the customer-driven approach to innovation, he discovered one factor that stands out above all the others in derailing the customer-driven approach and in introducing process variability. It’s the inputs that come from the customer. When companies gather customer requirements they do not know what types of inputs they need to obtain from the customer. Neither does the customer.

To figure out what customers want, companies must think about customer requirements in a different way.

Anthony has created a more effective approach that he calls the outcome-driven method. Three tenets define this approach:

  • Customers buy products and services to help them get jobs done.
  • Customers use a set of metrics (performance measures) to judge how well a job is getting done and how a product performs.
  • These customers’ metrics make possible the systematic and predictable creation of breakthrough products and services.

A simple example of getting the job done is people buy running shoes to work out; they buy snow blowing machines to remove snow (especially in Boston!), etc.  You get the picture. They then use a set of metrics to judge the desired outcomes. When corn farmers grow corn, for example, they may judge products for their ability to minimize the number of seeds that fail to germinate, increase the percentage of plants that emerge at the same time, or minimize the yield loss owing to excess heat during pollination.

Only after knowing what jobs customers are trying to get done and what outcomes they are trying to achieve are companies able to identify opportunities and create products and services that deliver significant value. Only then can they figure out What Customers Want.

I really enjoyed Anthony’s approach to outcome-driven innovation and recommend this book to any Expansion Stage Company that is trying to answer the question, “What do customers want?” and Creating Competitive Advantage.

Key Account Director

Marc Barry is an experienced sales leader in the Enterprise Technology Industry including Software, Cloud and Consulting. Currently, he is the Key Account Director at <a href="http://www.oracle.com">Oracle</a>. He was previously a Venture Partner at OpenView.