Customer Crossroads

A three-part framework for creating breakthrough innovation

People talk about the high rate of new product failures (about 85%) as if there is no way to change it, and no way to understand the market. Like innovation is some kind of hit and miss affair, or magic. It's not.

Nielsen, a well known quant-focused research group, has been deconstructing and quantifying innovation successes for a few years now with the Breakthrough Innovation studies. I recently heard Lauren Galletta present at a professional meeting on this topic, and it was terrific stuff.

They have studied tens of thousands of product launches, and have strict criteria for being a winner -- there has to be something new happening (distinctiveness) not just a reformulation. The sales of the new thing need to be big enough to be relevant. And the sales have to continue at close to the launch levels for at least a second year.

Their framework for how to create these kinds of wins is this: Demand driven insight, demand driven development, and demand driven activation. Let's look at what they mean by this.

The power of small numbers: n=1 insights

I'm a big believer in the power of insights. Insights come from stories, anecdotes, observations. You might later need to verify or deepen that ah-ha moment. You might decide to look for supporting big data. All good. But the individual incident is still important.

When I managed sales people way back in the last century, there was a great saying I learned: "If you see it once, it's a pattern." I believe this is true, mostly. People are creatures of habit. It is challenging for us to change our behavior "just once" -- much more likely that you have actually stumbled into a pattern worth investigating.

Which is why I thought it was very interesting to find out that Jeff Bezos at Amazon reads a certain number of customer e-mails sent directly to him, and that he makes specific enquiry about some of these. One result is that entire teams drop what they are doing to respond. That might seem a bit extreme, but it's their way of keeping the focus on the customer experience.

So a company like Amazon listens to individual customer anecdotes. N=1. To keep focused on the customer.

It's a question we could all ask ourselves -- how do we keep the focus on the customer? How do we do it culturally, not just with processes, or slogans, but really constantly. How do we keep the focus on the customer.

 

When surveys don't work

A recent international study about blood donors shows why asking direct questions of people is not always a good basis for decision making.

The background

International guidelines prohibit monetary incentives for blood donation, based on concerns that any form of incentive may actually reduce motivation, at the same time as it puts the blood supply at risk from those motivated only by the cash rewards.

Extrinsic rewards (i.e. cash) can sometimes interfere with intrinsic rewards (feeling good about yourself).

The surveys showed one result

These policies have had support from surveys that ask people if they would donate blood based on receiving cash rewards.

"Policies that prohibit monetary incentives have been based primarily on population surveys in which respondents were asked if they would donate blood if offered a cash reward, and the majority nixed that idea. But Lacetera said responses were based on a hypothetical premise, not on studies of actual potential donors who were offered an incentive."

Nico Lacetera quoted in Globe and Mail

The real world experiments showed another

Actual experiments showed very different results. Donations increased for all sorts of things, like a day off work (Italy), a $5 lottery ticket (Switzerland), a $10 gift card (USA.)

What it all means: be careful with hypotheticals

We need to be careful when asking people direct questions about hypothetical situations. Human beings are great at coming up with answers, but our own ideas about our behavior are not always accurate. The futher removed we are from the real world situation the more this is true.

Running small experiments is a much better approach, whenever possible. In digital marketing and in things like loyalty programs, it is pretty easy to do this, and marketers are learning a lot from testing approaches.

But what if you can't run an experiment? 

You should still try to avoid just asking the direct question. As a researcher, what I try to do is set up tasks that are similar, ask indirect questions, observe actual behavior, and otherwise try to overcome this problem.

Topics that are most likely to give you problems are direct questions involving motivation, hypothetical situations, and any topic where there are strong social beliefs or taboos, or where people might desire to paint themselves in a positive light. (A great many things, in fact!)

Resources

Here's a more detailed discussion from researcher Nicola Lacetera written in 2008

Here's the source of the scientific article in Science: Economic Rewards to Motivate Blood Donations published in 2013

Translating consumer insight into product design: take the icemaker

Somewhere between the research insight and the design criteria, there often seems to be a gap.

Case in point: the icemaker in my (and likely your) freezer.

The consumer wish: ice drawer is never empty

The design specs: ice drawer is always full

Annoying reality: ice drawer is overflowing and jams up unless you shut the switch off.

But we're not supposed to need the switch, so it is hidden behind a secret panel that you have to contort to reach.

What can I say, the work continues!

Seasonal electronic greetings - the sad reality

I just got another one today.

Since there's virtually no cost to send these things out, why not send them to everyone on your list, right? So what if you barely know them?

Here's the impact I think these things actually have:

Customer context: urban versus suburban transportation

I'm continuing the thread from the last couple of posts where I spent a brief period in Manhattan, and was flooded with insights.[Something of a professional problem for people like me, we never shut it off.]

After speaking at an industry event held on a Friday afternoon, there was a wine and cheese reception. An event like this in my city would have people being very cautious about their wine consumption, and many people would not have any, because they were driving.

But at this event, almost everyone had a glass, and some had two or more. I don't think a single person drove themselves to that meeting. (see the earlier post about parking).

Context influences a tremendous number of behavioral decisions your customers make every day of the week. Without a little insight into context, you can make really dumb mistakes. On the other hand, having that nugget of insight can help you find opportunities that no one else has found.

Observing your customers where they live, work and play: urban or suburban?

I was speaking in Manhattan at an industry event, and had a chance to observe a different city up close for a few hours walking around. It reminded me how important it is to marketers to see how their customers really live.

I stayed with a friend, and got to see a Manhattan apartment up close. This one was lovely and much larger than average at about 750 square feet. In fact, apartments in New York City are likely to get smaller, according to planners. There is currently a law requiring new apartments to be at least 400 square feet in size.

It's not just New York that has this challenge -- some other urban areas do, too, such as San Francisco.

Curation of space

Objects in a personal space like this must be carefully curated, and they are. This is not Costco and Walmart country by any means. Not because of the prices, but because of the size and quantity of stuff. You just don't need or want a lot of stuff in a small space.

People who choose to live in this kind of density think differently about how they spend personal time than people who live in a sprawling place in the suburbs. They value their location highly, or they wouldn't pay the price to live there.

It's just a completely different mindset, and one you really need to understand if you want to gain access to one of the world's biggest markets. 

By the same reasoning, if you are a marketer who lives in a small apartment in Manhattan, you'd do well to remind yourself that life in Springville is very different. And it's different in ways that might surprise.

And really, there's no substitute for actually observing these things up close. I was just learning all this on a virtual drive-by, not a deep dive. Imagine what we would learn if we really set out to explore a topic like this.

When we assume that others are "just like us", we are usually wrong.

Context is everything: to understand your market, get out there

If you don't understand how your customers live, work and play, you will make dumb mistakes. It's crucial to get into their environment and into their frame of mind. Because we tend to assume things are the same everywhere, and they just aren't.

I had the pleasure of a short trip to Manhattan to speak at an industry event, and was just overwhelmed with observations. 

Here's one for you -- check out the photos below -- parking:

 

Bicycle parking

I have never seen paid bicycle parking before. In most cities, the bicycles are just chained up here and there. In my own city, we have cleverly designed things to chain them to. But I did not see this on the streets of Manhattan, which made me wonder if the rules are different there.

Segmenting your parking customers - bicycles, motorcycles, scooters, cars and limos

The price segmentation is pretty interesting too. $1 a day or $20 per month for a bicycle is probably what you can charge when the alternative is taking it up to your office. Much more, and people would figure out something else. And the bikes can go on the walls, so it's an easy expansion to make to utilize some wasted space.

Motorcycles take up more room than scooters, so they pay more.

But limos paying more than other cars is interesting. Is it because they can? Because they are a business, not a just someone's personal car? After all, there's only so much you can learn from a sign, and I didn't talk to the parking attendant.

Customer experience in a parking garage

I have never seen a parking special quite like the one in the second photo.All the signage looks great doesn't it?

And just look at how beautiful and bright and nice this place is. Parking in urban centres may come at a premium, but it is still very competitive. In a place like this, you want maximum occupancy all the time, so it makes sense to make the place nice.

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Reverse innovation: a story that's just getting started

We may finally solve our productivity issues by looking to emerging markets for ideas. [The government and any number of think tanks keep telling me I need to get my productivity up. Pretty much the pot calling the kettle black, but whatever, right?]

I read a marvellous article about this recently, that describes a phenomenon called Reverse Innovation. Here's the definition:

A reverse innovation is any innovation that is adopted first in the developing world.

The innovators could be anywhere, it's where the customers are that is crucial to the distinction. 

Author Chris Trimble, a professor at Dartmouth College's Tuck School of Business, provides some interesting examples that challenge the common assumption that the Third World will "gradually catch up" by adopting products. Kind of a trickle-down approach to development.

The implicit assumption is that their problems and aspirations are the same. Except they aren't.

Logitech mouse example

Prof. Trimble relates the example of Logitech finding itself being outpaced in China by Rapoo. Logitech had a product line that offered increasingly powerful wireless chips only in their high-priced models, because that matches the North American market structure. 

But Chinese consumers are often using a mouse to control a monitor that is being used like a television (or actually hooking the computer up to the tv monitor). Cable is too pricey, so internet video is used for entertainment. A mouse used in this way needs to have a much longer range, only available with the better chip. The other high-end features are not needed for this purpose.

Rapoo, with their better understanding of the customers' needs, provided a stripped down mouse with great range at a low price point.

Change your thinking in five ways

Prof. Trimble suggests five key differences in LDC markets that you need to get your head around if you want to innovate your way to success:

1. The performance gap. Emerging markets do not need your low-end product stripped down and reduced in price. They need a radically redesigned product that delivers good-enough functionality at a radically lower price, matching the disparity in incomes.

2. The infrastructure gap. You can't assume the presence of the same kinds of infrastructure that we enjoy in the First World, whether it's land lines, power, roads, or anything else. Everything from battery life to how to recharge to durability has to be considered from a fresh perspective.

3. The sustainability gap. Environmental concerns will play out differently in these markets.

4. The regulatory gap. Like infrastructure, the systems of regulatory approvals and consumer safety laws are still forming. This can work in your favor or against you.

5. The preferences gap. History, culture, ritual and access to different raw materials has generated different preferences in everything from food to decor to social rituals.

Clean slate product design is the prescription Prof. Trimble offers, and he describes the approach John Deere took to making a tractor for India as an example.He also suggests that teams working in this way cannot also work on First World innovation efforts, because the mindset is so different.

My take

Emerging markets offer tremendous potential for growth, but it isn't a simple export opportunity. Immersion in the customer experience is essential for success, and the kind of innovation needed is more radical than the sustaining innovations that often work in the home market.

Scary yes. But also exciting! Perhaps even fun.

Resources

Reverse innovation and the emerging market growth imperative, by Chris Trimble. Ivey Business Journal, March-April 2012

Webcast on Creativity: Finding Aha moments

I'm headed to the annual QRCA conference in October, and am particularly looking forward to hearing a presentation on creativity from Dr. Joanne Brunn, who studies this sort of thing, and also has a lot of practical, real-world experience.

Fortunately for you, this particular presentation will be webcast (free). Here's the topic description:

Why is it so hard to get to that Aha moment? Creativity is often misunderstood and may seem overwhelming to put into practical use. However, we all naturally follow the creative stages of preparation, incubation, illumination, and verification. Through understanding these research-based stages of creativity, you will learn how to identify and manage the stages to encourage creativity. The stage that often gets neglected or outright prohibited is incubation – yet that is the major factor in getting to that Aha moment of illumination. Come and learn practical and fun ways to best take advantage of everyone’s natural creative flow.

To find out more and register for this Q-Cast, click here. These sessions are archived and can be viewed later if you miss the live session.

This event is unusual in that we don't allow a lot of veiled "pitching" -- presentations are usually excellent. So if you can't be in Vegas at the conference having a great time, you can take in some of the cool learning, and it's even free.

I'll be speaking as well, so will have to contain my partying. [I have a 9 am slot on a Friday, so wish me luck!]

Sugru - cool stuff to modify your own stuff

I stumbled across this interesting new product call Sugru.

It's sort of like plasticine with a purpose -- it hardens at room temperature into a soft, pliable, silicone rubber. It adheres to lots of materials, and you can form it by hand. (Don't you just want some already??)

Quite apart from the cool factor here, and the general usefulness of such a product, I think it could be awesomely good for design purposes.

Here's how we could use Sugru to support our own innovations:

• Watch the web to see what people are doing to modify products, especially YOUR product
• What new features are people making to standard products, such as bicycle pedals?
• How about giving people some Sugru in a customer innovation lab or workshop, and asking them to modify your product?
• Send people home with some Sugru, and visit their house a week later to see what they've done with it

The photo at top shows a great example of what I'm talking about, from one of my favorite innovative web sites, Instructables.

It's a camera that has been modified so it's easy to hold by a child, and won't easily break when dropped. The fun colors are just a bonus.

Here's the lovely video from the creator that tells you all about it.

 

 

Data visualization as a path to insight

I write a lot of large-ish reports for clients to capture the work I do for them. And I work hard to make them interesting, but at the end of it all, there's still A LOT of reading to do. And the clients are already swamped. Panic ... what if they never glean the amazing insights???

Solution: In the last few years, I've been trying to condense more and more of the insights into compelling graphics that condense and distill the key ideas into something memorable.

I was truly delighted to find a fellow traveller in this regard, Barbara Egel, a quallie based in Illinois. I attended a really great conference presentation with Barbara about a year ago, and she has recently written an excellent article on the same topic -- what she calls "the one page debrief."

Here's the link to the article: Meanings, Metaphors and Maps, the Power of the Visual Summary.

The challenge with this kind of thing is that you need a really great metaphor to link together your ideas. For example, I'm into a report right now where I'm using an iceberg as a metaphor.

 

I've used hills and valleys. I've created giant pipeline diagrams with whirring things at their centre. When unable to find a fabulous metaphor, I've used simple timelines or arrows between bits of stock art.

Finding a good graphics tool is of course tremendously helpful. I often use SmartDraw, which is not perfect, but it does simplify the process. You can do a lot with PowerPoint, but my advice is to stay away from the canned diagrams and figure out your own thing with boxes and arrows. Stock art can be helpful, too.

But I kneel at the feet of the graphic brilliance you can find here, the

50 most stunning examples of data visualization and infographics

A few of these are incredible, either for the information (like #22 about PETA), or for the graphic brilliance (like #6, the human subway map), or the great metaphor (#32, The Periodic Table of typefaces)

Kulula Airlines (#9) takes infogrpahics to the outsides of their planes. Makes me wonder what other businesses could do with murals, for example.

Need an edge in a competitive job market? You could try showing your stuff as an infographic, which is, let's face it, a lot more fun than reading a conventional resume (#13).

Thanks to @CBWhittemore on Twitter for pointing to the data visualization and infographics link

By the way, if you are interested in qualitative stuff, you can get our magazine Views free. Yes, free. Sign up here, or just read it online.

A bank introduces Woops feature: ING Direct New Free Chequing

I never expected ING Direct to launch a chequing account. Why enter the ugly and expensive transaction part of the business? Well, they have proved me wrong, and good for them.

Their new Thrive chequing promises to give back the average $185 a year Canadians pay in bank fees.The pitch: unlimited free chequing, and access to deposits and withdrawals at ATM machines. (ING has no branches, only a few ING Cafes in major markets).

The splashy launch included women in orange bathing suits jumping in fountains, billboards that reveal themselves when passersby remove coins, and fun contests.

The marketing message at launch: "Today we bring you Freedom." Nice insight behind that one -- speaks to deeply felt wishes, especially in a tough economy.

Where the Woops comes in

The Woops feature offers to cover your mistakes up to $250. A much better name than "Overdraft Protection" and again, speaks to the reality for most people, that an unintended overdraft is a mistake, not a moral failure.

There are also e-mail alert features included, to give people quick updates about their account balances. Another nice touch that acknowledges the reality that few people maintain detailed banking records now. And also leverages mobile without having mobile transaction capability.

How to reach people -- send the President to a shopping mall

Imagine a bank president speaking at a shopping mall -- that's what happened here. Of course ING Direct is a consumer bank, but even so, this is a big departure from the staid and stodgy approach we usually see.  And of course, what a great way to reach people from coast-to-coast, in a major tourist destination.

They've also added scarcity to the mix -- the account is only available initially to 10,000 of their million plus customers.

Yup, there's a social media strategy.

Finally, clever leverage of social media, with Flikr, YouTube videos, a Facebook site, and Twitter. With some content worth following, at least for a while.

Full disclosure

I didn't do the qualitative on this project. I just wish I had, because I think they have nailed it.

My take

So there's some new disruption in the marketplace. It should make for some interesting times.

What do you think?

More info: Finextra story, ING Thrive Microsite

Where does insight come from?

I have had people ask me how I can be so sure of finding insights, or helping other people find them. I wish I could tell you I had a brilliant answer ready to hand, thereby reinforcing my insight-guru mission. I was thinking about this today.

One way you find insight is to develop a lot of good questions, and be willing to open your mind to ask these questions. It helps to organize the environment to be conducive to asking questions (even silent ones), but the questions themselves are paramount.

I saw a great list of such questions today, aimed at helping people solve problems, which is known as the Phoenix List. It is purported to originate with CIA training, but who knows? [And who cares. It's a good list of questions.]

The list is published in Thinkertoys, an excellent book of creative thinking techniques by Michael Michalko [see resources below]. The list has also been reproduced online in a few places, such as here and here.

So I guess the answer is actually a question. Find good questions. Ask them. Listen. Ask more.

Resources:

Thinkertoys, by Michael Michalko, 1991 + 2006, Ten Speed Press. There are so many methods in this book, it's a bit overwhelming. But it works very well as a desk reference, a place to find new ideas, as well as many of the classics, such as the SCAMPER method. I like that it uses business examples, and acknowledges the reality of the workplace (lots of people who are not comfortable with creative thinking methods).