Introduction by Luminas Founder and CEO, D. Keith Pigues
Customers bring specific problems to be solved — sometimes without understanding what the problem is or realizing a solution is possible.” Truer words have never been spoken than these by David Peace in this article. He makes a clear and compelling case for the impact of customer insight in developing strategies for product and services innovation. He outlines two important contributors to success with product innovation. The second strategy, matching technology and product development priorities with customer needs, is where we believe there is an opportunity for you, in light of uncertain times.
As David urges, “market research will identify broad market needs…”, however organizations desperately need a validated perspective from customers to truly understand the “specific problems to be solved.” This granularity of customer problems to be solved, how they are alike or different from customer to customer, and gaining an understanding of the value of solving these problems (from the customer’s point of view) is the key to unlocking opportunities for accelerated organic growth. Our approach at Luminas is designed specifically to get down to a granular level of understanding customers’ problems with a dollars-and-cents impact of solving the problem – for both the customer’s business and yours! This understanding of the measurable value you deliver to customers in solving problems builds on the typical qualitative assessment and enables you to see the customer requests in a whole new financial light. This new insight helps you answer key questions and make decisions with greater confidence: What should we fix in the business to better serve customers and what is the financial impact to the customer’s business if we do so? What enhancements should we make to our offerings, why are they important to the customer and what impact will they have on the customer’s sales growth or expense reduction? What new things should we create and how will they enable the customer’s growth and profit strategy over the next few years? These are key factors in achieving success in product innovation.
In short, we help you capture and use customer insight to assess and make improvements to your current value proposition, while identifying the most important additions to your value proposition going forward. We could not agree more with David, helping customers to articulate the problem without realizing a solution is possible, sets your organization up to deliver new value versus your competitors and helps you and your customer succeed – we call this winning with customers.
by David Peace
Two strategies prime your pipeline for faster, more profitable product development.
Every manufacturer must define its approach to innovation. At some companies, including Swagelok Co., innovation is a core value. The innovation mindset extends across the entire enterprise at these companies, from the business offices to the shop floor.
So, how does product innovation benefit a manufacturer? Product innovation and the developments that flow from it enable companies to differentiate themselves in the marketplace. Product innovation opens the door to increased brand equity, faster technology adoption rates, larger returns and an environment primed for further innovation. It also makes work fun. Associates are challenged, invigorated and feel appreciated when they know their best ideas will become reality — for everyone’s benefit.
I’ll describe two key strategies for success in product innovation. One, determine the relationship between technology development and product development in your company and how they can best work together. And two, follow best practices in matching technology and product development priorities with customer needs.
The Yin and Yang of Technology and Product Development
Technology development and product development are different processes, but they are interrelated, interdependent and often occur in parallel. In technology development, companies develop multiple approaches to overcoming a problem — generating, evaluating and iterating ideas rapidly through prototyping and piloting. By comparison, in product development, a single best solution is developed and implemented as efficiently as possible.
Both activities align with an organization’s marketing goals for product development. The market aspect is important because innovation is just invention until value is realized.
The first strategy for successful product innovation is establishing how technology development and product development will best work together in your organization. One way is to create separate but parallel tracks for the two processes. In the technology development track, companies explore alternative solutions for specific technological challenges. The resulting solutions — nuggets of information — are stored so they can be drawn upon later. In the product development track, the company creates new products, new product lines or enhanced products.
The two tracks must interact, with product development engineers drawing from the advancements in the technology storehouse and technology developers learning about new challenges from the product developers. This interactive process enhances the time-to-market, cost effectiveness and performance of the products.
For example, responding to a need in the semiconductor market, our company set out to develop a new ultrahigh-purity diaphragm valve. Our technology development team had been working on a variety of new assembly and sealing methods for potential use in valves. Drawing on this work, our product development group was able to quickly develop and commercialize a new valve that met market demand.
Collaboration is essential for success in the strategy outlined above. For example, product developers are vital to identifying problems and opportunities for technology development. The interactive, two-track approach recognizes the incremental nature of innovation, in which major advancements are often the result of existing technologies combined in new ways.
Best Practices for Meeting Customer Requests
Companies realize innovations through a combination of market research, internal idea generation, customer requests and a variety of other factors. They also frequently discover innovative solutions by chance.
Manufacturers typically maintain a balance between market- and customer-driven innovation efforts. Market research will identify broad market needs or specific market demand that will drive innovation, and resources will be devoted to support organizational goals for product and technology development. Customers bring specific problems to be solved — sometimes without understanding what the problem is or realizing a solution is possible.
Customer requests represent an external force driving innovation. Succeeding in customer-driven product innovation can be made easier if companies follow a set of four best practices centering on clear and open communication between the parties. Following this disciplined process is the second strategy in creating product innovation that delivers results.
1. Gather all the facts. Creating a solution for a customer challenge begins with a deep understanding of the customer’s needs — the real needs, not just the stated needs. Developers should not simply respond to the request. They need to first ask a series of in-depth questions to clarify the context, which may include: Why do you need the requested product or technology? How does it fit into a complete system? What processes affect its performance? What alternatives have worked and/or failed? Gaining comprehensive insight may reveal that a more complete solution exists rather than one that simply fulfills the customer’s initial request.
2. Get the right parties together and on the same page. Open communication is vital to arriving at the best possible solution for customer-centric development challenges. Often, customers share their initial requests with marketing and sales contacts. It is important for these parties to facilitate collaboration between technical groups on both sides to ensure the proper handoff of information and encourage peer-to-peer communication, which adds richness to the relationship and helps to ensure the most relevant solutions.
Engineers from both organizations need to share detailed application information and explore technical challenges together as early in the design cycle as possible. Bringing people together who speak the same technical language encourages information sharing, brainstorming and efficiency, while enabling the parties to gain as in-depth an understanding of the project as possible.
3. Stay ahead of the curve. Technology developers have a greater chance of successfully meeting future customer requests when they proactively explore potential market opportunities and applications. As discussed earlier, one way to structure these proactive efforts is to set up a technology development track operating separately from but parallel to product development. Developing solutions for specific problems within emerging technologies in advance of customer demands ensures that developers can properly apply those solutions when needed to meet application requirements. In doing so, developers will be able to respond more quickly and effectively to customer needs.
4. Prototype early and often. Developing early prototypes — even for individual components — enables developers to test and refine parts before moving too far down the product development path. Techniques can include virtual prototyping and virtual design analysis. Developers should test concepts and engage in continuous feasibility studies throughout a project to determine the potential for success or failure. Then, as development proceeds, opportunities exist to make adjustments without requiring major overhauls. Such early prototypes are often less expensive than complete systems and can be made more rapidly, decreasing costs and shortening development time.
In collaboration with the customer, it is wise to test those parts that present the highest risk or biggest challenges first. In doing so, companies and their customers are better able to determine if any barriers are insurmountable — and would necessitate putting the brakes on a project — prior to substantive investments in time, energy or dollars. Even if a project does not meet its initial goals, it can still be considered a success. The collaborative process strengthens customer-developer relationships and gives each party a better idea of the other’s needs and capabilities, which can help facilitate the next project.
The Process Pays Off
Manufacturers that implement best practices in customer-driven product development can reap unique benefits. Activities in this area generally represent lower investment and lower risk. Though anticipated returns are also lower, because the potential user base is smaller, these activities can be especially important with major customers to build a sense of responsiveness and develop brand equity.
Further, because customers are involved, companies are tackling real, current problems. If the problem is solved, the customer normally will buy the solution, resulting in faster adoption rates of the technology and better financial returns. Customer-based activities also create a fertile environment for developing complementary ideas and enlarging a product portfolio. In addition, the process can strengthen customer-developer relationships and lead to future collaboration and mutual successes.
Following best practices in working with customers, while strategically approaching the relationship between technology development and product development, can help a company achieve success in product innovation. The effort is well worth it. A manufacturer known for innovation stands apart in the marketplace. Internally, product innovation offers companies a meaningful payoff as well — the opportunity to celebrate success and the many team members who contribute to it.
originally published by Industry Week.