It is a long held belief within many firms that customers do not know what they want. Yet, in spite of this, organizations continue to dig for insight into what their customers value - hoping it will lead to the creation of the next breakthrough product or service. It is recognized that if a company could obtain unique customer knowledge it would possess an unprecedented ability to accelerate the creation and delivery of customer value. Furthermore, it would attain a powerful and dominating competitive position - one that is both unique and valued. Given the immense benefit that would result from such wisdom, it is no wonder firms often exhaust a disproportionate share of their time and resources attempting to gain unique customer insight. Engineering, R&D, marketing, sales, research, management and other functions often spend countless hours talking with customers, watching the way they use products, discussing their needs, interpreting their comments and integrating that information into the company's planning and development processes. But to what avail?
It's true - most organizations are dedicated to listening to their customers. They gather customer requirements and closely adhere to what their customers have requested when creating the next new product or service. Unfortunately, companies often find that such efforts yield disappointing results. Despite the investments that companies are making in seeking out customer knowledge, new product failure rates remain high and success is best described as random and unpredictable. Companies complain that their customers do not give them the information they need to create breakthrough product concepts. They are also uncomfortable with the fact that customers may reject ideas that could ultimately become the next great success - the microwave and the fax machine are two historical examples. In addition, companies continue to find that products requested by customers are not what they really wanted after all. These frustrating experiences often undermine the genuine efforts companies are putting forth as they attempt to master the process of innovation.
As a result of these complications, many companies conclude that, "customers do not know what they want" - a phrase spoken frequently, and with much conviction, by executives around the world. Given the results that are typically seen, this is a rational conclusion shared by many firms that listen to their customers. After all, customers do not offer the best solutions. In fact, they frequently change their minds and listening to them rarely leads to the creation of breakthrough products and services. Recognizing that technology is moving at such a rapid pace, many firms have concluded customers cannot keep up - the complexities are too great and the choices are ever changing. The facts seem irrefutable - customers simply do not know what they want. Or do they?
Though experience tells us that customers do not know what they want, logic dictates that at some level, at least, they must. When customers select one product or service over another, they obviously use some set of criteria to judge the value of the products under consideration. The product that satisfies the most important criteria is often the one that is selected. So we can see, in spite of all of our statistical evidence to the contrary, customers do, in fact, know what they want. Why then, are so many organizations unable to collect this information and use it to their benefit when developing new products and services? Simply put, they are unaware of the underlying issues associated with obtaining unique customer knowledge. Let’s examine this situation in more detail.
The commonly accepted conclusion that "customers do not know what they want" is merely a symptom of the real problem - a problem that most firms struggle to address. In many organizations, gathering customer requirements is a process filled with ambiguity. Confusion abounds as companies try to understand the differences between customer wants and needs – simple words that cannot accurately describe the embedded complexities of the situation. The problem is pervasive, but the solution remains elusive because firms fail to let go of a long-held belief. To this day, organizations commonly believe that by simply talking to their customers, they will undoubtedly know what these customers value. This faulty conclusion is the nemesis from which complications arise. Simply talking to customers does not guarantee that a firm will gain insight into what they value. The truth is - companies often fail to capture helpful customer information because they do not know what information they are looking for or how to capture it. They are asking questions that enable them to capture customer ideas and solutions rather than understanding real customer desired outcomes - and ironically, are using the information in ways that ultimately inhibit the creation of breakthrough product and service concepts.
Research conducted by The Total Quality Group, a Florida-based consulting firm, suggests that at least 72% of all firms obtain and use customer information in ways that inhibit their ability to create breakthrough concepts; Ironic, but true. Firms are developing products believing they understand what their customers value when in fact the information they are collecting may be causing them more harm then good. Paradoxically, the more a firm talks to its customers, the more likely it will struggle in its efforts to understand their needs. Many firms reject this notion outright, discounting it as a possibility. They ask, "how could we spend all this time and effort taking to customers, and not know what they value?" The fact of the matter is firms rarely discriminate as to what types of information they are collecting from customers, simply thinking that any information is helpful. In reality, obtaining the right information remains an ongoing obstacle to mastering the process of innovation. How is this possible?
When attempting to uncover customer requirements, most firms ask their customers for requirements on a specific product or existing solution. For example, they ask for requirements on a disk drive, a pacemaker, a two-way radio, a security system or whatever device the firm is producing. In response to such a question, customers will suggest features, ideas or solutions they believe will create value for themselves and others. Companies accept these statements as the customer's requirements, hoping they hold the answer to future success, but they rarely do. Why? Most customers are not engineers, scientists or technologists and are unaware of future possibilities. They are limited to what they know or have seen in competitive products. As a result, the information they provide typically does not result in a breakthrough product concept and, in fact, inhibits firms from looking for solutions that will deliver greater levels of value. By limiting themselves to delivering what their customers are requesting, companies stop short of looking for breakthroughs, and are doing so unknowingly and with good intentions.
The problem here isn't that customers need to be better educated about technology in order to offer better requirements. The problem here is that companies are asking customers to play the role of product designers and engineers - a role for which they are not typically trained. They are asking customers for solutions - information they are not qualified to provide. Simply stated, customers rarely know the best product concepts or solutions - nor should they. This is not their responsibility - it is the firm's. Companies that expect product ideas to come from customers are abdicating their role as developers and technologists, often to the detriment of the firm. This is a risky proposition.
The irony of the situation is that customers are sitting there all the while with the information that is needed to help qualified company employees create breakthrough product concepts - but this is rarely the information for which they are asked. They are typically asked for solutions - information that should come from qualified employees and technologists. They need to be asked for their desired outcomes - information that will lead to real customer insight.
From the customer's perspective, products and services are used to help them better execute some underlying process. A product is simply a point-in-time solution designed to help execute a process. Customers have a clear knowledge of the underlying processes they are executing and the elements of that process that are important to them. Capturing the customer's requirements on the underlying process - not the product designed to help execute that process - is the key to creating a breakthrough concept. This is the heart of the issue. Capturing requirements on the underlying process will deliver the information needed to create a breakthrough product or service concept. Collecting requirements on the product itself will not.
Keep in mind, when a company is developing a product or service, it is effectively attempting to find the best solution to satisfy many important desired outcomes. The solutions should generally come from the firm; the desired outcomes should come from customers. Capturing solutions from customers and confusing them with desired outcomes is the root cause of failure in most requirements gathering processes today.
Understanding what customers value is a prerequisite for success. Yet, gaining real customer insight remains a daunting task for most firms. Many organizations continue to capture requirements on the product itself, and as a result end up with lists of conflicting and competing features, ideas and solutions - causing the typical frustrations of requirements gathering. Companies using this approach will continue to think that customers do not know what they want and that requirements change quickly over time. When capturing requirements on the underlying process however, a firm is able to collect customer information in the form of desired outcomes - not solutions. This is the information that is needed to successfully manage product and technology innovation. Companies using this approach will recognize that customers do know what they want and that solutions, not desired outcomes, change quickly over time.
With this new insight, the perils of capturing customer requirements can be conquered. Firms have the potential of systematically structuring their efforts to manage product and technology innovation. Knowing what information is needed to create customer value is an essential step in a company's effort to master the critical process of innovation. Thinking that customers do not know what they want is reflective of the approach that is being used. Of course customers know what they want - and firms that know how to capture and use this information will become the pioneers of the future, as this knowledge provides the foundation from which customer value is created.