Friday, April 28, 2017

Learning the New Rules: How and When to Use Customers in Product Development

By April Bertram

Business Development Director
GOJO Industries

I am always amazed at the number of organizations that are still not incorporating the customer development method early into their product and business model generation process. 

Many have the philosophy that you can’t ask your customers what they want in a product, because they don’t know. We’ve all heard Henry Ford’s quote, “If I’d asked customers for what they wanted, they would have said a faster horse.” I’ve learned from strong market intimacy and a hands-on approach, that involving customers early with methods beyond asking them what they want, generates the most successful innovations in the least amount of time. Here are some guidelines for these customer discussions:
  1. You must start with building hypotheses for a vision or strategy. These are the critical underlying factors that must be true in order to launch a successful innovation. This should include the target market(s), key decision maker (buyer), how the product will get to market, partnerships required, technical platform, etc…to name a few.
  2. Create a minimum viable value proposition that can be tested with customers. I often rely on a sell sheet to test my hypothesis. It’s imperative to test the hypotheses that are the most critical or present what we call the biggest “death threats” of the strategy. These are the components of the strategy that if not validated, will guarantee market failure. An example might be, the key decision maker (KDM) finds value in the product and is willing to pay an annual subscription fee and invest in the hardware required for the system. While you might find the KDM finds value in the service, the true test is “are they willing to pay for it? ”Test the death threats first.
  3. Get out in the market and not only ask questions, but observe how customers do their jobs. This is critical. One of our target markets is building cleaning services. I have spent time following them on their cleaning routes just watching how they do their jobs, then asking questions later. It’s amazing how much you learn by watching. You can build very unique insights with this approach.
  4. Involve all players across the value chain in these learning activities, not just your end customer. It’s the learnings you gather from each of these key players synthesized together that creates the ah-ha moment in innovation. Your distributor may have a unique perspective on how the product can be brought to market or who would actually pay for the product. Expect lots of pivots at this stage. Learnings from one will translate to another. Before you even begin building a product, you should be able to refine your hypotheses on your target market segment, the key decision-maker (who will pay), what they might be willing to pay and how you will reach them. 
  5. Once you have validated key hypotheses with your strategy, build a minimum viable product and find customers to test it on. The sooner you get something out to them, the faster you will iterate. Never assume that there won’t be any changes. You should have lots of learnings and iterations to the product in the beginning. Although, once you have validated your strategy, that should not change much. This part of the development process is building and refining the product that supports your validated strategy. These should initially be quick cycles of learning, in hours, or days, not weeks or months. 
Once you have identified a solid minimum viable product, or MVP, you can then build something for piloting that has a longer, more involved test plan.

The biggest challenges to this approach are typically culture related. Product developers and R&D teams are not used to getting out into the markets. They have no idea how to reach the right customers and they aren’t comfortable sharing an early prototype or minimum viable product. A major failure point in the process of involving customers is not having a solid learning plan in place with specific objectives that you want to validate or invalidate on the test/interaction. To avoid these common pain points when involving customers in development, try implementing the following practices:
  1. Establish connections between your customer facing teams such as sales and customer service. Ask them to proactively start including team members on calls so they can begin observing and learning how to interact with customers and when to ask questions. To be even more effective, incorporate these customer interactions into performance plans. You can also facilitate learnings by building customer panels that are responsive in providing feedback. My personal preference is to get out into the market and develop strong connections with customers.
  2. Create prototyping sessions to get teams used to building the “right” minimum viable product using very basic tools, paper, glue, tooth picks, etc. The purpose of this prototype is only to get directional feedback on key components of the product. It doesn’t have to be and shouldn’t be perfect. You must preach this often. Once they start to see the value and efficiency of the MVP, they will be more comfortable with this approach in future projects. 
  3. Develop an actionable learning plan. Define up front what questions you are specifically trying to answer. Make sure the test will answer those questions. If not, redesign it until it does. You want clear direction after each cycle of learning. Know what you will do if the answers come back to your questions differently than expected. Try to guess possible scenarios and what you would do with the product direction in each of those situations.
Sometimes the concepts that you are presenting are so forward thinking, that it’s hard for customers to grasp. That’s okay. Show them the vision and how they might fit into that new business model. Ask them if they want to partner and learn with you. This is the best form of customer development because they are an integrated part of the strategy development and later the product development. 

The future of innovation and product development will be through the collaborations with those outside your organization. You need to establish these processes now so you will be effective at implementing them when it matters most. 

April Bertram is the Business Development Director of SmartLink Solutions at GOJO Industries. April joined GOJO in 2002 to lead healthcare product development efforts. Since then, she has reinvented the GOJO innovation process, from the front end of innovation, to market and product development, and strategic portfolio management. Most recently, April was tasked with creating new IoT business models in healthcare and other core vertical GOJO markets.

Prior to her role at GOJO Industries, April was a small business owner and served in Product and Market Development for market leading brands, Hygenic Corporation (TherabandTM and Biofreeze®), GE Lighting and CompuServe Network Services/UUNet.