catching the innovation wave
TRANSCRIPT
Catching the Innovation Wave…through the new science of B2B customer insight
Dan AdamsAdvanced Industrial Marketing
[email protected] www.newproductblueprinting.com
.
© AIM, Inc.
Current operations
Diminishing returns
Unlimited potential
Future sales
Quality Wave Productivity Wave
Profitable SustainableOrganic Growth
1970 1980 1990 2000 2010 2020© AIM, Inc.
The New Science ofB2B Customer Insight
100 books per weekInnovation Wave
Questions we will address…
1. What will change in this Wave?
2. Do B2B suppliers have an advantage?
3. What is the science of B2B customer insight?
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Dan’s first rule of battles:
“Never be in a battle you don’t know you’re in.”
SellDevelopIdea Validate
Front End 25% Success Rate
Source: Cooper, Winning at New Products-3rd Ed, p. 11. © AIM, Inc.
Some Independent Research…
Manufacturing(with Six Sigma Success)
New Product Development
3 Defects per
1,000,000Attempts
3 Defects per
4Attempts
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What must change?
Customers
1. Does your company have bright R&D people?
2. Do your competitors have bright R&D people?
3. So how will your company win?
YourCompany
Competitor A
Competitor B
Competitor D
Competitor C
What if your R&D worked only on problems that
truly cared about
and competitors kept guessing what to work on?
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Problem 1. What’s the right question?
Problem 2. What’s the right answer?
What unmet needs will this market reward us to satisfy?
How can we satisfy these needs?
1. Which Problem consumes most of your innovation investment?1
2. Which Problem area leads to most new product failures?2
3. Which Problem area could be turned into a science?
Two parts to…
Market Needs
Supplier Solutions
© AIM, Inc.1 Improving New Product Development Performance and Practices, American Productivity & Quality Center, 20032 The Conference Board, Adapted by Robert S. Cooper, Winning at New Products, from D. S. Hopkins & E. L. Bailey, “New Product Pressures” 1971
Whose Idea?
SellDevelopIdea Validate
Yours … or Your Customer’s?
Most suppliers fail to engage customers…
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SellDevelopValidateIdea
Assumed market need
See if anyone buys product
SupplierSolution
MarketNeed
When do most companies understand market needs?
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Questions we will address…
1. What will change in this Wave?
2. Do B2B suppliers have an advantage?
3. What is the science of B2B customer insight?
© AIM, Inc.
can usually offer more insight than
B2B Customers B2C Customers
Education
Training
Time on the Job
1. Knowledge
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Financial Impact
2. Interest
Personal Recognition
HERO
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can usually offer more insight than
B2B Customers B2C Customers
3. Objectivity
Group Decisions
Procedures
Accountability
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can usually offer more insight than
B2B Customers B2C Customers
4. Foresight
Financial Objectives
Predictable Benefits
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can usually offer more insight than
B2B Customers B2C Customers
5. Concentration
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Millions of Buyers
Fewer Buyers
can usually offer more insight than
B2B Customers B2C Customers
Concentration
So What?
Knowledge
Interest
Objectivity
Foresight
B2B Customers are able to help supplier design better products.
Customers are willing to help supplier design better products.
Customer decision-making is rational, stable & understandable.
Customers can be directly engaged …and primed to buy later.
Customers can discuss their needs before seeing a prototype.
© AIM, Inc.
B2B Customers B2C Customers
Questions we will address…
1. What will change in this Wave?
2. Do B2B suppliers have an advantage?
3. What is the science of B2B customer insight?
© AIM, Inc.
Let’s introduce 1 term and 2 principles…
What is a Customer “Outcome”?
Increased abrasion resistance
Faster operating speed
Reduced maintenance costs
Quicker change-over timeImproved grease resistance
Greater weight capacity
Reduced inspection frequency
Higher fill levelsReduced roller wear
Less slippage with wet ore
1. Customer value is only created when an important, unmet outcome is improved.2. Suppliers’ only path to profitable, sustainable growth is customer value creation.
… a desired customer end-result
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2 Principles:
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B2B Suppliers can understand outcomes at 9 levels…
1 Uncover all outcomes
2 Understand importance
3 Define & set direction
4 Prioritize outcomes
5 Learn how to measure
6 Identify satisfaction levels
7 Measure next best alternative
8 Quantify value created
9 Quantify value captured
Conduct qualitative Discovery interviews and project your notes. 1 Uncover all outcomes
Diverge Converge
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Ask “what else?”
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B2B Suppliers can understand outcomes at 9 levels…
1 Uncover all outcomes
2 Understand importance
3 Define & set direction
4 Prioritize outcomes
5 Learn how to measure
6 Identify satisfaction levels
7 Measure next best alternative
8 Quantify value created
9 Quantify value captured
During Discovery interviews, probe deeply to understand why they want this.
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1. Supplier learns more
2. Customer opens up more
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B2B Suppliers can understand outcomes at 9 levels…
1 Uncover all outcomes
2 Understand importance
3 Define & set direction
4 Prioritize outcomes
5 Learn how to measure
6 Identify satisfaction levels
7 Measure next best alternative
8 Quantify value created
9 Quantify value captured
For customer’s Top Picks, create “outcome statements” to clarify outcome.
“Outcome Statements” were pioneered by Tony Ulwick of Strategyn© AIM, Inc.
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B2B Suppliers can understand outcomes at 9 levels…
1 Uncover all outcomes
2 Understand importance
3 Define & set direction
4 Prioritize outcomes
5 Learn how to measure
6 Identify satisfaction levels
7 Measure next best alternative
8 Quantify value created
9 Quantify value captured
During quantitative Preference interviews, ask how Important and Satisfied…
Diverge Converge
MSG = IMP x (10 – SAT)Ex: Avg. IMP=9; SAT=6MSG = 9 x (10-6) = 36%
© AIM, Inc.
23
B2B Suppliers can understand outcomes at 9 levels…
1 Uncover all outcomes
2 Understand importance
3 Define & set direction
4 Prioritize outcomes
5 Learn how to measure
6 Identify satisfaction levels
7 Measure next best alternative
8 Quantify value created
9 Quantify value captured
During Preference interviews, ask how customers would measure each outcome.
1. How would you measure abrasion resistance? Measure loss of belt thickness over time
when conveying DSO-grade iron ore Use a ball mill for lab simulations, try with
iron ore and small squares of belting …
With B2B customers, this is often a very rich conversation
© AIM, Inc.
24
B2B Suppliers can understand outcomes at 9 levels…
1 Uncover all outcomes
2 Understand importance
3 Define & set direction
4 Prioritize outcomes
5 Learn how to measure
6 Identify satisfaction levels
7 Measure next best alternative
8 Quantify value created
9 Quantify value captured
Then ask for “barely acceptable” and “totally satisfied” points.
1. What would be barely acceptable? 1 millimeter of belt thickness loss per
week
2. What would make you totally satisfied? No loss of belt thickness at all
This gives you all the information you need to replicate the customer
experience in your operation.
© AIM, Inc.
25
B2B Suppliers can understand outcomes at 9 levels…
1 Uncover all outcomes
2 Understand importance
3 Define & set direction
4 Prioritize outcomes
5 Learn how to measure
6 Identify satisfaction levels
7 Measure next best alternative
8 Quantify value created
9 Quantify value captured
You will be able to predict customer reaction to all these products…
Abrasion Resistance
Maintenance Costs Belt Velocity
Grease Resist.
Belt Change Time
Weight Capacity
Your New Design
Your Old Product
Competitors© AIM, Inc.
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B2B Suppliers can understand outcomes at 9 levels…
1 Uncover all outcomes
2 Understand importance
3 Define & set direction
4 Prioritize outcomes
5 Learn how to measure
6 Identify satisfaction levels
7 Measure next best alternative
8 Quantify value created
9 Quantify value captured
Use customer interviews and tours to gather economic data…
Value Calculator – Acme Belt A100
Then use this economic data to create a value calculator… to quantify the
value customers will receive.
© AIM, Inc.
27
B2B Suppliers can understand outcomes at 9 levels…
1 Uncover all outcomes
2 Understand importance
3 Define & set direction
4 Prioritize outcomes
5 Learn how to measure
6 Identify satisfaction levels
7 Measure next best alternative
8 Quantify value created
9 Quantify value captured
Give value calculator to customers so they can document benefits themselves.
Value Calculator – Acme Belt A100
Value calculators raise customers perception of value (the ceiling)… and help the supplier set optimum pricing.
© AIM, Inc.
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B2B Suppliers can understand outcomes at 9 levels…
1 Uncover all outcomes
2 Understand importance
3 Define & set direction
4 Prioritize outcomes
5 Learn how to measure
6 Identify satisfaction levels
7 Measure next best alternative
8 Quantify value created
9 Quantify value captured
Seem like too much bother?
1. These 4 levels alone yield great value
Control Chart
2. In the 1980’s, it seemed hard to move from quality inspectors to statistics.
3 points…
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MarketResearch Discovery
InterviewsPreferenceInterviews
Side-by-SideTesting
TechnicalBrainstorming
ProductObjectives
BusinessCase
1 Uncover all outcomes
2 Understand importance
3 Define & set direction
4 Prioritize outcomes
5 Learn how to measure
6 Identify satisfaction levels7 Measure next best alternative8 Quantify value created
9 Quantify value captured
1 2 3
4 5 6
7
Probing, Top Picks
Outcome statements
1-10 IMP, SAT ratings
Recommended test method
Barely acceptable, totally satisfied
Side-by-side testing, Outside-In Score
“What else?”
Calculate customer value
Raise perceived value, set price
ValueCalculator
8 9
3. New Product Blueprinting covers all 9
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B2C
Why will B2B suppliers enjoy more “science”?
PotentialInsight
It’s difficult to predict how consumers will respond to non-economic benefits, e.g. amusement.
Supplier ability to predict
customer buying behavior
B2B100% Certainty
100% Guessing
PotentialInsight
Knowledgeable, interested, economically-driven buyers can help suppliers design new products with confidence.
TypicalInsight
B2C suppliers are consumers themselves… and tend to spend liberally on research.
TypicalInsight
Most B2B suppliers don’t use their own products & conduct limited VOC
Today, this large B2B Insight Gap can provide competitive advantage.
Small B2C Insight Gap
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The Customer Insight Gap