The Innovators

Secret Weapon
Talk all you want to about the importance of strategy
or operational efficiency, but the truth is that firms
succeed because they offer a product or service that
customers find irresistible.

The Innovators Secret Weapon

Companies devote a lot of time, effort, and resources to achieve success but the bottom line
is this: The product or service offered needs to be one that people want above all others. This
means developing a product that holds more value to the customer than the money theyre
willing to pay for it and more value than competitors products. A great product may not be all
that is needed to ensure a companys long-term successmany seemingly great technical
innovations fail commerciallybut it is certainly necessary.
When we evaluate a new business plan, the first questions we ask are, Who are your target
customers? and Why would they pay good money to you, and not to your competitors, for
your product or service? Irresistible products do not just happenthey are developed
through creativity and painstaking work. Thats why new-product development is so critical
to business success. A vital step in the process is understanding how your customers define
value: It represents, as we describe here, a true secret weapon for innovators.

The Role of Voice-of-the-Customer

Once you have identified your target customers, you have to find out what they really want.
The late Apple founder Steve Jobs famously said he did not really believe in focus groups or
surveys because customers do not really know what they want until they see it. We think he
was able to succeed with that attitude because the target customer for whom he was developing
products was actually himself. Of course, if you are designing a product based on what you want,
you need only to rely on your own instincts and experience as a customer. For the 90 percent
of businesses that develop products for people other than themselves, however, it can be
dangerous to assume you know what the customer wantswhich is where capturing the
voice of the customer (VOC) comes in (see figure 1).

Figure 1
Steps and inputs for successful product development

Voice-of-the-customer
related task
Select target
customers

Who the
customer is

Identify customer
definition of value
What the customer
wants

Understand
competitor offerings

What competitors
offer

Develop product
or service

What we
will offer

Customer-valued
and differentiated
product or service

What we can offer

Understand regulatory
requirements

What we
must offer

Understand technical
solution options

Source: A.T. Kearney analysis

The Innovators Secret Weapon

Traditionally, VOC is captured using various qualitative and quantitative methods. The most
passive approach is simply to wait for customers to come to you and tell you what they want or
what they do not like about existing products. For business-to-business products or services
much of this passively gathered information comes as unsolicited feedback from sales or service
personnel. Companies using a proactive approach gather voice-of-the-customer feedback
through planned studies, first employing more qualitative or discovery-oriented methods. These
methods might be in-depth customer interviews, focus groups, or ethnographic observation
(studying how customers actually use a product or service in their own environment).
Companies then often use quantitative customer surveys to develop a statistically significant
fact base to validate customer needs (see figure 2).

Figure 2
How voice-of-the-customer capturing techniques support information gathering

Ethnographic observation

In-depth interviews

Quantitative surveys

Shows how customers use

products or services
Provides direct insights into
the customer experience

Focus on individual customers

Use open or closed questions
Explore unanticipated issues

Gather data across an entire

customer population
Allow for statistically significant
analysis and segmentation
of needs

Focus groups
Allow communication with
groups of customers
Save time compared to individual
interviews, and let customers
play off each others comments

More qualitative or discovery oriented

More quantitative or validation oriented

Source: A.T. Kearney analysis

Voice-of-the-Customer Shortcomings
The information captured through traditional VOC methods often includes several needs,
or types of needs, which makes it difficult to compare and prioritize their importance or
translate them into product specifications. We often see survey results that claim to show the
relative importance of so-called needs, such as comfort, reliability, and safety. But customers
view each of these needs differentlyhow one customer defines comfort will vary greatly
from how another defines it. Even if you were to understand what each meant to each
customer, what would you do with information such as Safety is 50 percent more important
than reliability according to our customers? How do you best allocate product cost to deliver
a solution that optimizes customer value?
Other needs are specific technical solutions requested by customers who are deeply familiar
with the options. But while an Intel Core i5 CPU M560 running at 2.67 GHz may be one
customers need, how many others want it? How do you make trade-offs between filling this
customer need and meeting those that are less specific?
The Innovators Secret Weapon

Another kind of VOC feedback is about problems customers have with a product: It is too
loud or the on-off button needs a prolonged push to activate it. This is helpful information,
but in what context was the customer using the product? How important is it to make
changes? Is the problem just a nuisance that customers can live with? Or does it mean they
wont buy your product again?
The downside with using these types of information is that they lack a common descriptive
framework that can be compared to other needs and easily understood by both the user of the
product and the engineers who design it.

Desired OutcomeBased Innovation

As proposed by Clayton Christensen in his work on innovation at Harvard University and
Anthony Ulwick in his book on outcome-driven innovation, the desired outcomebased VOC
uses a framework of customer jobs-to-be-done and the desired outcomes for these jobs.1,2
The method is based on the assumption that customers buy a product or service to help them
accomplish a specific task, such as the job of safely transporting passengers from point A to
point B. Associated with each job-to-be-done is a desired outcome, which is the customers
ideal result of the job getting done. A desired outcome might be to minimize the jerking motion
a passenger feels while being transported from point A to point B. It is important to ensure that
jobs-to-be-done and desired-outcome statements use consistent, unambiguous language so
as to be easily understood and readily translated into technical specifications (see figure 3).

Figure 3
Structure of job-to-be-done and desired-outcome statements
Job-to-be-done statement
Verb

Object of the verb

Transport

me and my belongings

Contextual modifier
via the ground

Example of object of the verb

Customers buy products

and services to help them
get functional and emotional
jobs done

for example, from my temporary work location to my hometown

Desired-outcome statement
Direction of
improvement

Unit of measure

Minimize

Contextual clarifier
while riding a bus

jerking motion

Object of control
of me and my belongings

Customers use metrics to judge

how well a job is getting done and
how a product performs

Example of object of control

for example, bumping up and down
or jerking left or right

Sources: Giving Customers a Fair Hearing, Anthony Ulwick; Lance Bettencourt, MIT Sloan Management Review, Vol. 49, No. 3, Spring 2008; A.T. Kearney analysis

Clayton Christensen, Scott Cook, and Taddy Hall, Marketing Malpractice: The Cause and the Cure, Harvard Business Review,
December 2005
1

Anthony W. Ulwick, What Customers Want: Using Outcome-Driven Innovation to Create Breakthrough Products and Services,
McGraw-Hill, 2005

The Innovators Secret Weapon

During data-gathering interactions, you can confirm desired-outcome statements with the
customers themselves. After selecting the most relevant desired outcomes you can then
conduct a quantitative survey to determine how important each desired outcome is and how
satisfied customers are with their current product or service. You can then use the survey results
to conduct brainstorming sessions to identify innovative design solutions. Combined with
competitor and regulatory analysis, these innovations can be used to formalize a new-product
concept using simplified quality function deployment (QFD), a means for linking customer
needs with product-performance and product-function specifications.

Advantages of Outcome-Driven Framework

The structure and consistency of the outcome-driven customer-needs framework offers four
advantages over traditional VOC approaches:
Directly identifies underlying customer-value drivers
Ensures innovation efforts that are more focused with clear articulation
of required improvements
Makes it easier to translate customer language to engineering language
Provides a clear, supportable connection between future marketing messages and
customer-value propositions
Heres a case in point. We were retained by a motor coach manufacturer to help design its
next-generation product model. The manufacturer faced intense competition in some of its
traditionally strong segments and had trouble growing share in others. It was obvious that
gathering and analyzing customer needs was going to be important in developing a successful
product that customers would value.

While it may not be the only factor

many seemingly great technical
innovations fail commerciallya great
product is certainly necessary for
long-term success.
The clients customer-needs-collection methods had been varied, which made it difficult to
compare requests. Many customers had specific technical requests, but sales and engineering
did not always know the underlying reasons that customers had those needs or how common
the needs were. Simply put, the company needed a better way to identify and analyze customer
needs and translate them into product concepts.
We gathered and analyzed customer needs as defined by customer jobs-to-be-done and
desired-outcome statements. We prioritized product-innovation opportunities based on our
analysis of the importance and degree of satisfaction related to desired outcomes, then helped
The Innovators Secret Weapon

the client translate important and unsatisfactory desired outcomes into new functional and
performance specifications. The end result was a product concept that delivered a muchimproved competitive value proposition (see figure 4).

Tasks

Figure 4
Translating customer needs into an irresistible product or service

Roughly segment
market and select
target customers

Undertake
in-depth
interviews

Conduct
quantitative
surveys

Analyze data
and further
segment

Define preliminary
market position of
product or service

Prepare interview
plan

Determine survey
scope and sample
distribution

Conduct innovation
Analyze client vs.
competitor perceived
team workshops
performance
Perform competitive
Compute market
benchmarking or
opportunity scores
QFD analysis
and categorize
Analyze regulatory
opportunity areas
requirements

Determine scope of
current and potential
customers

Objectives

Determine target market

for product under study
Select customers for
interviews and surveys

Design questionnaire and conduct

interviews

Design
questionnaire

Analyze and
Conduct survey
summarize responses

Define new
product concept

Further segment
customers based
on scores

Quantify importance Identify innovation

Compile list of
desired outcomes for
and satisfaction for
opportunity areas
each job-to-be-done
each desired outcome Identify new
and customer type
Gather customer
customer segments
with unique unmet
usage and
needs
demographic data

Define new product

concept(s), including
key specifications

Note: QFD is quality function deployment, a process for translating what the customer wants into detailed functional or performance specifications.
Source: A.T. Kearney analysis

Managing Challenges
One challenge common to many business-to-business products is arriving at a precise
definition of the customer. In our bus company case study, for example, was the new product
going to be targeted at the bus owner? Was the purchasing director the important customer?
What about the driver, the maintenance staff, even the passengers? In this case, for each target
segment we selected the customers who had the greatest impact on the purchase decision and
focused on understanding and satisfying their needs.
To better facilitate customer in-depth interviews, we broke down the job steps in all the major
job phases. The goal was to get interviewers to imagine they were the customers and consider
specific details relating to each phase of the buying and usage process rather than rely on
vague concepts such as reliability or comfort. We then listed each customers jobs to help
the interviewer direct comprehensive questions about real customer needs, even those of
which the customers themselves may not have been consciously aware.
To ensure that our interviewers maintained consistency in the needs statements they defined
during customer interviews we conducted extensive internal training. We also undertook several
pilot interviews to ensure that the interviewers had learned the techniques required to extract
and validate desired-outcome statements from customers.
The Innovators Secret Weapon

Using a quantitative survey, we validated the importance of and satisfaction with the customerdesired-outcome statements. One challenge was determining how deeply to delve into
customer needs. For a complex product such as a long-distance motor coach there are many
complicated systems and operating steps, or jobs-to-be-done. To keep the survey scope
feasible, we limited the number of customer-desired-outcome statements to be tested for each
customer to between 50 and 75.

Some Unexpected Results

Using the outcome-driven VOC techniques we identified six value-proposition innovation areas
and discovered design solutions that significantly improved the value proposition of the new
bus compared to previous generation and competitors bus models. Some customer needs
were not surprising, such as fuel efficiency, which the company already knew about and had
many ideas for improving. As a result of our joint study, however, the companys engineers
were able to realize fully the extreme importance of this desired outcome and the level of
dissatisfaction their customers had with current products on the market. Within six months
of the studys completion, the company developed a new product platform that reduced fuel
consumption by 10 percent through improved aerodynamics, reduced vehicle weight, and
a recalibrated power-train control system, to name just a few innovations.

Within six months of the studys

completion, the company developed
a new product platform that reduced
fuel consumption by 10 percent.
Thanks to the outcome-driven VOC assessment techniques, we helped the company identify
other new value propositions that the engineers had not thought of before but were able to
incorporate into the new product. For example, we learned that bus passengers wanted a clean,
germ-free environment, something they believed the current products lacked. So the engineers
designed an air refresh indicator to let passengers know that interior air was being constantly
exchanged with fresh outdoor air. (In fact, air was well refreshed in the older busesthe
passengers just didnt know it. Now, in the new buses, they are aware of it.)
Another example is an innovative feature for drivers. During ethnographic observation, the team
noticed that many tour bus drivers used the underside baggage storage compartment to nap
during rest stops. The team investigated and found that tour bus drivers wanted to rest in a cool,
secure environment, and that the cramped drivers-seat area didnt accommodate this need. So
the engineers designed a movable divider panel behind the drivers seat that allowed the seat to
tilt back into the first row of passenger seats. Now drivers can easily recline and nap in safe,
air-conditioned comfort while waiting for passengers to return.
By applying the desired-outcome-based customer-needs framework, the company developed
a new product that increased customer value by 8-10 percent, as measured by satisfaction in the
desired outcomes customers said they most valued. At the same time, by reducing unimportant
The Innovators Secret Weapon

attributes and redeploying resources to deliver the more valued customer-desired outcomes,
the team reduced product cost by 3-5 percent. Many of the design changes identified could be
adopted across other product lines, further increasing the impact.

Define, Translate, Communicate

Customer needs are best defined by two factors: the jobs customers want to get done, and
those jobs desired outcomes. Capturing desired-outcome statements in the structured,
systematic way described allows for easy comparison, prioritization, translation into innovative
design specifications, and communication with customers, using language that resonates with
them. This is the innovators secret weapon, a framework for measuring customer value that
allows you to create innovative products your customers will be happy to pay for.

Authors
Stephen W. Dyer, partner, Shanghai
stephen.dyer@atkearney.com

Jian Sun, partner, Shanghai

jian.sun@atkearney.com

Bill Ding, principal, Shanghai

tao.ding@atkearney.com

The authors wish to thank their colleague Frank Zeng for his valuable contributions to this paper.

The Innovators Secret Weapon

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