This is part 2 of a 3 part series for industrial enterprise business leaders on bringing your customers into the product development process. In part 1 we defined the concept and outlined the basics of the methodology. For this post we will discuss common objections that we have heard from internal stakeholders at our clients to the concept. In part 3 we will outline how to overcome organizational constraints.
Together, we began this series with a simple statement: There have never been more dangerous words uttered in the product development process than “We know what our customers want.”
We observed that rarely do we truly understand our customers needs and unfortunately, neither do they. We find ourselves investing heavily in marketing and sales to cover up for poorly conceived business cases. The ultimate result is that an unacceptable percentage of all new products fail.
At Bright Wolf, we believe a major part of the solution is to invite customers into the product development process itself. Rather than simply conduct market surveys, or ask sales people what they hear from the field, welcome customers directly into the core of product development activities. By working iteratively together, you build a product that drives real value for them, and real revenue for you.
While this might sound like a simple concept, and one that most people would agree with on its surface, in practice we have found a surprising amount of pushback when trying to implement it inside an organization.
As a result, we felt it was prudent to take a moment and address some of the concerns and objections you are likely to face in your own organization. The following are actual responses we’ve heard from industrial equipment manufacturers when discussing giving their customers greater involvement into the product development process.
We already know what our customers want
The assumptions behind this statement were already addressed in part 1 of this series, but let’s dive a bit deeper into some of the logical fallacies that drive the attitude.
The first is the belief that we have a full grasp of all the forces acting on our customer. The truth is that the world is changing far more rapidly than ever. No matter how well we know our customers, we only understand a fraction of the overall criteria influencing their decision making. It is not at all uncommon that an outdated assumption or unforeseen shift in the market can doom a product to failure before it has started development.
The second is the belief that we have properly understood the customer. Customers are busy dealing with their current business problems. They often aren’t spending the cognitive resources to clearly articulate their needs, and they may not be aware of all the potential solutions available to them with new technology.
What they can’t articulate in a vacuum, they often can explain when presented with a potential solution. As a result, we should present them potential solutions as early as possible to receive feedback and iterate. Otherwise, we risk presenting them with the solution we thought they wanted, only to find our concept stopped short by a simple constraint that wasn’t obvious until it was placed into context.
We can’t show them a product they can’t buy
There are two fallacies that seem to underpin this attitude. The first is related to the idea that we already know what the customer wants. In other words, “we’re going to get it right immediately and the customers are going to be so excited, that when we tell them they can’t have it yet they will be angry and our reputation will suffer”.
As we already noted above, 95% of new products fail. The chances of us not only getting it right the first time, but of coming up with a product that is so innovative and useful that customers are beating down our door are small enough as to be almost non-existent. It is certainly worth the risk to avoid investing in a project that we determine doesn’t have a high chance of success once we’ve shown it to customers.
What if it did happen? That would certainly be a problem worth having. It would be one of the easier investment decisions your company ever had to make and seal the momentum of the initiative. We can’t think of a better trade off.
The second is the idea that we can’t show the customer behind the curtain of the product development process. That if they see the sausage being made it will affect their respect for the company, or worse their respect for us personally.
In our experience this has always served to be unfounded. Customers feel honored and excited to be brought into our trust and confidence. Far from lessening their opinion, it raises it, as they appreciate being heard and shown that their input matters.
We can’t risk our current sales
We have found that this attitude is typically driven by the sales component of the organization. It could be more accurately re-phrased as “if you mess this up, we might lose a customer.”
The belief is that being involved in the product development process may cause a customer to hold on an order while they wait for the new product to come to fruition. Or that being involved in the process might somehow lead to organizational embarrassment that loses the customer.
Once again, we observe both these fears to be unfounded. As noted above, involvement increases allegiance to the brand.
Additionally, this attitude fails to account for the additional revenue opportunity that comes from getting the new product right. We may seek to protect a million dollar sale, at the expense of ten million dollars of new revenue from successful new product launch.
We will discuss how to deal with the barrier between sales and product development in part 3 of this series “Overcoming Organizational Constraints.”
Our competitors already have this
The experience of reading a competitor’s glowing press release about their new product release can be a jarring one. The feeling of being behind can force us to make rash decisions.
Often this drives us to play catch up as quickly as possible. Simply trying to replicate the functionality as quickly as possible without consideration for the utility of that functionality. Often we fail to ask ourselves the simple questions, “Is this driving value for customers?”, “Are they buying it?”, “Does it function the way they say?”
In a worst case scenario we could spend millions replicating a competitors’ product that doesn’t function the way they claim, and that customers don’t want.
Urgency is good, but allowing it to reduce diligence is not the right answer. Even if a customer is gaining traction with a new product, the right answer is to figure out a way to differentiate and drive additional value, not to simply attempt to replicate what they are doing. The best way to do this is by bringing your customers in to allow them to help you differentiate and stand out from your competitors.
Our stage gate funding process was set up to solve this problem
Our experience with projects that have come to us at the end of a stage gate funding process is that they have typically been nothing more than a hypothesis that has been twisted into the right shape to pass the stage gate process.
One particularly egregious case is a project that was brought to us having just recently received funding through the stage gate process of a large equipment manufacturer in the beverage industry. The project proposal rested on the ability to provide 10% cost savings to the end customer once they adopted the project.
When we asked how they arrived at the 10% number they stated “that’s the number it took to get us funding, now we have to see if it’s real.”
In other words, since the answer to what it takes to get a project approved through the stage gate process was known, the incentive became for the project champions to work backwards into the correct answer to get the project approved, regardless of whether it was grounded in data.
In addition to the objections listed above, there are deeply ingrained organizational constraints that make this process challenging. For the next post, we’ll discuss how to overcome and manage these issues.