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What Customers Want: Using Outcome-driven Innovation to Create Breakthrough Products and Services (Hardcover)
by Anthony Ulwick
| Category:
Innovation, Growth strategy, Marketing, Business |
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¥ 248.00
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| MSL Pointer Review:
Ulwick's customer driven framework is a ground- breaking tool to help companies stay competitive through Outcome-Driven Innovation. |
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Author: Anthony Ulwick
Publisher: McGraw Hill
Pub. in: August, 2005
ISBN: 0071408673
Pages: 256
Measurements: 9.4 x 6.1 x 0.8 inches
Origin of product: USA
Order code: BA00057
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- MSL Picks -
In his new landmark book What Customers Want, author Anthony Ulwick, the CEO of Strategyn, a corporate consulting and research firm, unveils to readers new thinking that challenges the customer-driven paradigm and addresses innovation myths that have for years stifled company growth. He details a revolutionary and compelling innovation theory and a systematic process that removes the mystery, clutter and noise from the practice of innovation. Ulwick calls this methodology Outcome-Driven Innovation(TM) and explains how this new thinking transforms innovation from a nebulous art form into predictable science. Already used by dozens of Fortune 1000 companies to achieve core market growth, create new markets, pursue disruptive strategies and streamline internal business processes, outcome-driven innovation is changing the way companies do business.
Strategyn's methodology has been adopted by leading companies such as Microsoft, was voted one of the best business ideas by the Harvard Business Review, and is revered by thought leader and Harvard Business School professor Clayton Christensen in his book, The Innovator's Solution. Moreover, Strategyn's methodology has supplanted Quality Function Deployment (QFD) and Voice of Customer (VOC) programs in many firms as a best practice and new standard for innovation. The dynamics that define this methodology are revealed in What Customers Want.
What Customers Want challenges historical procedures and perceptions about what it truly means to be customer-driven. In this engaging and strategic guide to the evolution of innovation, Ulwick reveals the secret weapons behind some of the most successful companies of recent years - from new ways of capturing customer inputs and new methods for segmenting markets to new methods for identifying opportunities and creating, evaluating and positioning breakthrough concepts.
"Contrary to popular belief, innovation is not a random, unpredictable process. Although the process appears to be an intangible art form, it is in fact a measurable science that can be replicated given the proper inputs," said Ulwick. "I wrote this book to educate executives and product managers about a more effective approach to innovation. Companies have lived in a world of unchallenged myths for far too long. It is time to break convention and to think about innovation differently."
Based on more than 200 studies spanning more than 70 companies and 25 industries, Ulwick contends that when it comes to innovation, the traditional methods companies use to engage with customers are the root cause of chronic waste and missed opportunities. In What Customers Want, Ulwick argues that researchers should silence the literal voice of the customer and focus on the metrics that customers use to measure success when executing the jobs, tasks or activities they are trying to get done.
After publishing the article "Turn Customer-Input into Innovation" in the Harvard Business Review in January 2002, Ulwick's thinking was recognized by the magazine's editors as one of the year's best business ideas in the March 2002 issue. Since 1991, Ulwick has served as a consultant to a variety of corporations, including AIG, Microsoft, the Robert Bosch Corp., Chiquita Brands, Hallmark, Hewlett-Packard Co., IBM, Johnson & Johnson, Motorola and Pfizer and other organizations around the world - helping each create new products and services.
Target readers:
Executives, managers, entrepreneurs, professionals, government leaders, and MBAs.
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Anthony Ulwick is the CEO of Strategyn, a pioneer and world leader in outcome-driven innovation. Since 1991 he has served as a consultant to Johnson & Johnson, Microsoft, Hewlett-Packard, AIG, Chiquita Brands, and dozens of other leading corporations. Mr. Ulwick's innovation practices were recognized by the editors of the Harvard Business Review as some of the best business ideas of 2002.
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From the Publisher:
For years, companies have accepted the underlying principles that define the customer-driven paradigm - that is, using customer "requirements" to guide growth and innovation. But twenty years into this movement, breakthrough innovations are still rare, and most companies find that 50 to 90 percent of their innovation initiatives flop. The cost of these failures to U.S. companies alone is estimated to be well over $100 billion annually.
In a book that challenges everything you have learned about being customer driven, internationally acclaimed innovation leader Anthony Ulwick reveals the secret weapon behind some of the most successful companies of recent years. Known as "outcome-driven" innovation, this revolutionary approach to new product and service creation transforms innovation from a nebulous art into a rigorous science from which randomness and uncertainty are eliminated.
Based on more than 200 studies spanning more than seventy companies and twenty-five industries, Ulwick contends that, when it comes to innovation, the traditional methods companies use to communicate with customers are the root cause of chronic waste and missed opportunity. In What Customers Want, Ulwick demonstrates that all popular qualitative research methods yield well-intentioned but unfitting and dreadfully misleading information that serves to derail the innovation process. Rather than accepting customer inputs such as "needs," "benefits," "specifications," and "solutions," Ulwick argues that researchers should silence the literal "voice of the customer" and focus on the "metrics that customers use to measure success when executing the jobs, tasks or activities they are trying to get done." Using these customer desired outcomes as inputs into the innovation process eliminates much of the chaos and variability that typically derails innovation initiatives.
With the same profound insight, simplicity, and uncommon sense that propelled The Innovator's Solution to worldwide acclaim, this paradigm - changing book details an eight-step approach that uses outcome-driven thinking to dramatically improve every aspect of the innovation process - from segmenting markets and identifying opportunities to creating, evaluating, and positioning breakthrough concepts. Using case studies from Microsoft, Johnson & Johnson, AIG, Pfizer, and other leading companies, What Customers Want shows companies how to:
- Obtain unique customer inputs that make predictable innovation possible
- Recognize opportunities for disruption, new market creation, and core market growth - well before competitors do
- Identify which ideas, technologies, and acquisitions have the greatest potential for creating customer value
- Systematically define breakthrough products and services concepts
Innovation is fundamental to success and business growth. Offering a proven alternative to failed customer-driven thinking, this landmark book arms you with the tools to unleash innovation, lower costs, and reduce failure rates - and create the products and services customers really want.
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Formulating the Innovation Strategy
Who Is the Target of Value Creation and How Should It Be Achieved?
- What types of innovation are possible?
- What growth options should be considered?
- Where in the value chain should we focus to maximize the value creation?
- How do we handle the multiple constituents with potentially conflicting outcomes?
The first step in the innovation process is to define the innovation strategy. Specifically, companies need to figure out what type of innovation initiative they're going to pursue; what growth options are best; and who in the value chain should be targeted to maximize value creation in the market. They must know who they want to create value for before they can get the customer inputs they need to make it happen. An upfront evaluation of strategic options is crucial; otherwise, companies run the risk of failure farther down the line. This chapter addresses the questions managers should consider as they formulate their innovation strategies.
What Types of Innovation Are Possible?
There are 4 types of innovation that companies should consider for pursuit. Some are more attracting than others depending on whether the company is a start-up or an existing firm and whether it is competing in a growing or mature market.
Production innovation, or service innovation, which is the most common type of innovation, results from improvements that are made to existing products and services. Nearly all established companies must focus on product or service innovation or risk losing market share to a more aggressive competitor. To succeed at this, companies must discover which customer outcomes (the metrics used by customers to define the successful execution of a specific job) are being underserved and then devise and provide creative features in their products and services that do a better job of addressing those outcomes. Addressing one outcome may result in incremental improvement whereas a product that addresses many underserved outcomes is likely to produce a breakthrough improvement. For example in 2004, Robert Bosch Tool Corporation, known as Bosch, successfully entered the North American circular saw market with a feature-rich CS20 professional saw that addressed a number of underserved outcomes. Bosch came up with a very unique idea of keeping dust off the cut line and debris away from the user's eyes. This is accomplished with a rather powerful that is built into the housing between the motor and the blade guard with vents aimed at the cutting path. Drawing air into the motor to cool it is an old idea. Accelerating and directing that air to clean sawdust from the cutting path and away from the user is new and helpful thinking. Bosch also removed the cord from the saw and replaced it with a socket and cord retention hook in the handle that allows the user to plug an extension cord directly into the saw. This idea has a couple of benefits for the user. It allows for easy replacement of the extension cord if the saw cuts the cord (a common occurrence), eliminating downtime and saving money. It also prevents the knot in the cord (where the traditional cord is attached to the extension cord) from catching on every edge it runs across. The Direct Connect system is designed such that it cannot come loose, enabling users to continue to lower the saw by the cord from atop the ladder. This saw includes many features that were purposefully included to address the customers' underserved outcomes, making it one of the Popular Science’s "100 Best of What's New in 2004".
A new market innovation occurs when a company discovers that people (individuals or businesses) are struggling to get a job done on their own because no products exist and devises a creative product or service that enables customers to get the job done faster and cheaper than ever before; ultimately, the company creates a new market. This type of innovation is attractive to start-ups and new entrants and also outstretching established firms. New market innovation often [provides the best path for revenue growth, because it does not siphon revenue away from existing product lines and ultimately results in net new growth. Under this innovation option, companies need to find "underserved jobs" – those unsatisfied tasks that may be related to ones already being handled by the companies' existing products – even if it means developing new competencies as a result. For example, the Palmz Schatz stent developed in 1994 by Codis Corporation was a market innovation in the field of angioplasty because it was a new, high-margin product that enabled doctors specializing in intervening heart procedures, to get a job done that they struggled with when performing the angioplasty procedure – significantly reducing restenosis (the recurrence of a blockage). This product gave them a new, profitable product line. The PC, the cell phone, and, more recently, the wireless network are also examples of new market innovations.
Operational operation happens when a company discovers inefficiencies in a business operation and works to address those inefficiencies through creative solutions. This type of innovation typically appeals to companies in a commodity business, a mature market, or in other markets where product or service innovation is proving difficult. Operational operation often requires companies to rethink their value chains and reconstruct them in ways that cut costs and waste; that often means making massive investments in infrastructure. To succeed in this type of innovation, companies must understand all the outcomes employees and customers are trying to achieve when engaged in a company/customer interaction – the manufacture, purchase, or distribution of a product. Armed with this information, companies can then devise breakthrough process improvements that result in new, low-cost business models. Dell, for example, successfully achieved operational innovation in the computer industry by cutting out the middleman with their "buy direct" approach. Progressive Insurance cut out claims-handling inefficiencies by cutting checks at the scene of an accident. Wal-Mart redefined retail with breakthrough in procurement, warehousing, inventory tracking, and sales. And Toyota created a super-advanced production system that led to the speedy customization of their automobiles. Any business that comprises complex and inefficient business processes is well suited for operational innovation. The pharmaceutical industry, for instance, could benefit from this strategy; the sector's drug-discovery process currently takes nearly 15 years and an average $800 million to produce a successful new drug.
Disruptive innovation, as made popular by Harvard Business School Professor Clayton M. Christensen, results when a new technology to disrupt the prevailing business model in an existing market that is filled with overserved customers. This approach to innovation is different. The other 3 approaches of innovation start with a focus on the customers' outcomes; the technology is created in response. In contrast, with disruptive innovation, the technology exists, and the company is in search of a customer and an opportunity. Disruptive innovation is much more difficult to systematize because there is no guarantee that the technology a company has in hand addressed any particular underserved outcome in any market and trying to find one can be a tedious and expensive process. Nonetheless, many companies (especially those far back in the value chain, such as raw-material and chemical producers) are forced to follow this growth path as they are constantly trying to grow by finding new markets for their core technologies.
In his book The Innovator's Solution, Christensen describes two approaches to disruptive innovation. The first is low-end disruption. This strategy is employed when a low-cost technology is targeted at a segment of core-market customers who are overserved with the current products and services and are willing to acquire a less costly, lower-performance product. This strategy disrupts the existing business model and provides a foundation upon which to eventually attract the mainstream customers. The second approach is new-market innovation. This strategy is employed when a technology is targeted at a new set of customers (nonconsumers) who do not have the skill or wealth needed to acquire or use available products (if any exist).
The eight-step outcome-driven innovation process is defined in What Customers Want is applicable to each innovation option. The process works in each case because the objective is always the same: to uncover and address opportunities, whether those opportunities are underserved jobs (new market innovation) or underserved outcomes (product or operational innovation). The process for disruptive innovation is slightly different in that it first requires a company to decide in which market they want to introduce a technology. The company must ascertain in which market the technology will address overserved jobs and enable the creation of a new, low-cost business model. Once this decision is made, the opportunities can be validated, and the solution can be refined using the same 8-step approach. (From Chapter One: Formulating the Innovation Strategy)
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| View all 9 comments |
Jeff Baker (Senior Market Research Manager, Corporate Market Research, Microsoft) (MSL quote), USA
<2006-12-28 00:00>
We are institutionalizing across the entire company desired outcomes as the essential form of customer input we collect in research, and we've seen the powerful results it's had in our product development, marketing, and sales groups. |
Dr. Robert Pennisi (Director, Advanced Product Technology Center, Motorola) (MSL quote), USA
<2006-12-28 00:00>
This methodology was used to create the PRO7150 and the TalkAbout - two of our best-selling radio products to date. It was also used to build a valuable patent portfolio in the fuel cell market without making a large investment in technology. |
Mitchell Auren (MSL quote), USA
<2006-12-28 00:00>
I have read several new books on innovation and I finally understand why Clayton Christensen referenced the work of Tony Ulwick frequently in his book the Innovator's Solution. Although at first blush, Ulwick's thinking could be cast aside as common sense, this book has made me realize that there is a brilliant, new way to think about innovation.
Let me try to explain how Ulwick frames his thinking. Generally speaking, innovation is the process of finding solutions that address the customer's unmet needs. Most companies agree that they should first uncover and prioritize the customer's unmet needs and then devise solutions that address them - but, as Ulwick explains very well, although companies think they understand this concept, they continue to get it so very wrong - to the point where their customer-driven, "voice of the customer" led efforts are causing the failures they are trying to avoid!
This book makes it clear that because companies are focused on customers and products (and not the job the customer is trying to get done), they are simply getting the wrong inputs into innovation, and incredibly, they don't know it. In my experience, this is exactly right. Ulwick contends that to truly succeed at innovation companies must understand just what a customer "need" is. Ulwick's notion that different innovation strategies require different customer inputs (needs) was an epiphany for me.
In his books and articles on innovation, Clayton Christensen mentions the jobs-to-be-done theory, but Ulwick turns this theory into a science by making the job the customer is trying to get done - not the customer or competition - the focal point of innovation. Ulwick provides ample evidence that the customers desired outcomes are the building blocks of innovation - the customers' measures of value - but they are rarely the company's focus of capture when using traditional "voice of the customer" techniques. In fact, Ulwick suggests that companies should "silence the literal voice of the customer", an argument that I now understand and agree with. His argument that there is no such thing as a latent, unarticulated need is also quite compelling.
Rarely does a book offer such new insight and theory along with practical ideas for execution and implementation. I have since read other articles on their web site (strategyn.com) and have become a fan. This sounds like the future of innovation to me. |
An American reader (MSL quote), USA
<2006-12-28 00:00>
Whether you are in product development or a CEO, if you are looking to grow your company this book is a must read. The book is easy to read and Tony describes the process step by step. The methodology helped me reduce the variability in my product development process and create a breakthrough product. It took the ambiguity out of the fuzzy front end and gave me the data to make a difference. In addition, the process helped me prioritize my existing product pipeline and drive effective marketing. The process works and it made a difference for me and my team. |
View all 9 comments |
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