expo v4

Define Your Requirements Not The Product Features: Effective Skills To Improve Co-Innovation

By:Miki Tokola, MICOM ConsultingRoger Hicks, RHC LLC

NWFPA Expo 2011 visit us at BeMarketDriven.com

Characteristic Product Orientation

Driver Technology

Definition of value Product features

Competition Similar products

Value chain Parts suppliers

Offering Product

Market Stable


What’s Happening?• Customer Expectations have Expanded

– Evaluating the whole solution not just the product features

• Market Relationship Structures are Complex– Supply chains being replaced by ecosystems

• High Need for Agility– High uncertainty about future and less control of outcomes

• Co-Innovation is an Imperative– More situations where customers don’t know and vendors

don’t know

“The future ain’t what it used to be”- Yogi Berra


Customer Expectations Have Expanded

Changing Definition of the “Product”

Good

Better

Best

Pric

e /

Cost

Features / CapabilityGeneric Product

The right components and

related design support

Ideal ProductA unique Service that extends Value in

Quality, Price, Delivery and defers / minimizes customer costs

Expected ProductBase Price, Delivery and Quality Levels


Relationship Structures Are More Complex

Supply Chain Value Delivery NetworkThe Market Relationship Model Has Changed


High Need for Agility

Number of Success Factors That Are Not Easy to Control

Few Many

Futu

re C

ondi

tions

Tha

t Are

Har

d to

Pre

dict

Few

Man

y Adaptive Market Navigation(agility - move fast to stay aligned

with constant changes)

Envision the Future(define and invest in

a clear set of objectives)

Transformative Collaboration

(co-create goals and work together on a possible future)

Contingency Planning

(extra efforts to analyze & position accurately)


Co-Innovation is an ImperativeCustomer Requirements

Supplier OfferingsUn-known SolutionsKnown Products

Know

nU

nkno

wn

Customer & Supplier Co-

Innovation and Value Discovery

Processes

Customer Driven – Operational

Efficient Purchasing & RFQ

Processes

Supplier Driven - Needs & Product

Requirements Definition Processes

Supplier Driven -Sales, Proposal &

Promotion Processes

Existing wants

Latent wants

Incipient wants

Changing Emphasis in the Customer/Supplier Interaction Processes


Is There a Better Solution Creation Process?

Challenge of collecting and integrating useful input for better solutions

HighLow

Impa

ct o

n Re

sults

Low

Hig

h

Optimal SolutionRequirements

Based Solution

Requested Features

A Co-innovation approach that is market driven

A new approach is needed to achieve better results with

less effort

A needs discovery approach that is product driven

Effort Needed to Get Results


Market-Driven

Strategy and culture

superior business performance

focusing

operating

working

current and future problems

enabling

on chosen markets

to deliver superior value

collaboratively

solving


A Cautionary Tale


Benefits of Market-Driven

• 31% more profitable• 2X faster to bring products to market• 20% higher satisfaction rates• Command higher prices• Gain higher market share


Characteristic Product Orientation

Market Orientation

Driver Technology Markets’ problem

Definition of value Product features User defined

Competition Similar products Alternatives

Value chain Parts suppliers Added value

Offering Product “Whole product”

Market Stable Dynamic


Product Driven

Market

Competition

Supply chain

Operations

Product

Sales


Market Driven

Market

Competition

Supply chain

Operations

Product

Sales


Definition of Value

• All value is in the mind of the customer• Value is situational• Value implies tradeoffs• Value has several dimensions

Value = benefits – costs


The 5 Dimensions of Benefits

Technical“I need to solve

a problem”

Operational“I need to improve

throughput”

Economic“I need to

reduce costs”

Emotional“I want to feel that I own the

best”

Network“I want to

leverage other people’s

knowledge”


The 5 Dimensions of Cost

Monetary“How much is it going to cost?”

Resources“What additional resources will I

need”

Troubles“How

troublesome will the installation

be?”” Risks“What are the

risks if it does not work as planned””

Lost Opportunities“What are the risks if it does not work

as planned””


Co-Innovation

• New style of market-oriented engagement• Improved relationship with supply chain

– Clearly define problems– Requirements, not features

• Suppliers discover latent needs


Innovation Perspectives

Innovation is the profitable implementation of ideas and is used by suppliers to bring “new value” to their customers.

Co-innovation is the ability of a company to improve productivity by collaborating with their value network to identify, characterize and address specific problems; thus, creating innovative solutions, which would otherwise not be possible.

[Veneer lathe video]


Kano Modeldelighted

disgusted

done welldone poorlyor not at all

Satisfiers

Delighters

Dissatisfiers


Market Research


Primary Research Tools

Ethnographic Studies

Customer Panels

Usability Testing

In-person Interviews

Focus Groups

Telephone Interviews

Print Surveys

Web surveys


Primary Research Tools

Qualitative Deep knowledge about a few Insights below the surface

Discover unknown needs Implicit info Early stages of product process

Tip of the iceberg Thin knowledge about manyQuantitative

Later stages of product process Explicit infoInfo about know needs


5 WHYS

• Help customers reflect their true needs• Root message – most fundamental

message• Get to actionable input


Finding Unstated Requirements

How do you feel about this software product?

It is very difficult to use.

Tell me more.The menu system is not intuitive

Tell me why it’s not intuitive.

I get lost all the time.


Finding Unstated Requirements

Why do you think you get lost using the menu?

Well, there are too many layers and no way to get back.

Root Message: The menu system has too many layers and no way to get back which makes customers feel that the product is too difficult to use.


Outcome to Feature

• Desired outcome– The fundamental measures of performance

inherent to the execution of a specific job

• Product requirement– What the product shall be able to do/have to

satisfy customer needs

• Product feature– A functional attribute of a product that is

included in the design specification


Desired Outcome

Minimize the time it takes to change a blade

Direction Desired Outcome

Unit of Measure


Outcome AnalysisOutcome Imp Sat Opp Comp1 Comp2

Minimize the likelihood of debris blowing in the user’s eyes

8.5 6.9 10.1 6.5 7.2

Minimize the likelihood of the cut going off track

6.5 5.5 7.5 5.3 5.5

Minimize the time it takes to change a blade

5.7 4.1 7.3 6.1 4.9

Minimize the frequency of blade change

6.7 6.7 6.7 8.8 6.4


Types of Requirements

• Product• Business• Non-functional• Constraints


Voice to Req’s to Specs

Customer voices, images and outcomes

Requirements

Features and attributes Concepts

Engineering specification

1

2

3

4

5


Voice of Customer Research - An Overview

Plan it outWhy is the VOC

necessary?

What questions need to

be answered?

Who are the participants?

Where will you go?

How will you document?

InvestigateDiscussion guide

Interviews prep

Probe and listen

Observe & capture

Supplemental

surveys

InterpretExtract key points

Analyze and organize

Note key statements

Record useful images

Extract insights

Translate into

requirements

Stages of a VOC Research Project


What to Look For with VOC in Market Driven Process


A VOC StoryQuestion – what do wine makers need to help them process grapes?The VOC Project - 2009Talk to over 30 wine makers. Listen and learn to understand how the wine making process works. Understand the business challenges. Gain insight into what the value drivers are for wine makers.Size the potential market segments. Pick an area of focus.Result - November 30, 2010 – Key Technology introduces its family of Crush Pad Equipment Solutions for wineries.

The sorting table is the critical link between the vineyard and the winery.

Key developed the Grape Receiving and Inspection Platform along with other modular equipment to help small and medium sized wineries produce the highest quality product possible in a highly efficient and operator friendly process.

http://www.key.net/industry-solutions/fruits-berries/wine-grapes/crush-pad-solutions/default.html


Closing Remarks

and

Recommendations for Action


How Do Companies Create Value?

Successful companies do not just add value, they

reinvent it!

To achieve superior results companies should strive to be more market oriented and focus on how they

can co-produce value with other stakeholders in their eco-system.


Understand the Business Problems You Want to Solve

• Late to the market• Low market share• Weak brand position• Insufficient product and service capabilities• Costly relationship management• Low Customer Satisfaction• Poor financial results (growth and profits)• Damage from un-managed risks• High cost marketing and selling channels• Poor win-loss statistics• ??


What Should We Be Working On?

A Rethinking of the Approaches Used to Create and Develop Solutions

– Gaining Deep Insight into Customer/Market Needs• Know enough to appreciate the unspoken wants• Know enough to anticipate market trends and new requirements

– Real Understanding of Markets and Segments• Align with and serve target groups that desire common benefits• Profiling of customer clusters based on the benefits they value

– Competencies to Rapidly Discover and Implement Ideas

• Coordinated actions to profitably deliver whole solutions with superior value

• Supplier partnerships to quickly bring new innovations to market


Recommendations for Action

1. Identify one supplier and start focusing how you can help them to understand your problems and co-innovate with you.– Forget about features, it’s all about value

creation.

2. Build a Outcomes Table to help you explain your problems and objectives.

3. Practice the 5-why’s on anyone you can.


Thank You For Your AttentionFor More Information or to Continue the Discussion Please Contact Us

Roger Hicks – [email protected] Tokola – [email protected] Campos - [email protected]

Or Visit:www.beMarketDriven.com

mailto:[email protected]



http://www.bemarketdriven.com/

expo v4

Documents

market research

product drivenimpact

software product

benefits of market

new value

coinnovation approach

value network

customers dont