Is there agreement in your company that innovation is the key to growth? Is there agreement that understanding customer needs is the key to success in innovation? Is there agreement on what a customer need is? We have asked this series of questions to people in hundreds of companies, and in doing so have made a surprising discovery. Even though there is broad agreement that innovation is the key to growth and that understanding customer needs is the key to innovation, not even 5% of the companies said there was agreement within their company as to what a customer need is. This suggests a very disconcerting question: How can a company confidently uncover customer needs, determine which are unmet and systematically create products that address them if it cannot agree on what a customer need is to begin with? The answer is it can’t — and this is a root cause of failure in the innovation process.
Most companies already understand that there are four basic approaches to product and service innovation: growing core markets, capitalizing on adjacent market opportunities, discovering new markets and disrupting existing markets. But when it comes to understanding customer needs, voice-of-the-customer programs are undermined in two ways. First, there is no consistent standard that defines just what a “need” is — what its purpose, structure, content and format should be. Although companies talk to customers, the inputs they gather differ in purpose, structure, content and format, introducing variability that can derail the innovation process. Second, companies do not understand that to succeed at all these innovation strategies, two very different types of customer inputs are needed — in other words, they do not realize just how a “need” must be defined given the type of innovation initiative being pursued. Only when companies learn what needs are will they be able to consistently uncover hidden opportunities for growth through innovation.
Our purpose here is to introduce a set of timeless standards that define the purpose, structure, content and format of a customer need statement and thereby to transform the art of requirements gathering, and hence innovation, into a rules-based discipline. These standards, and the theory that supports them, are the result of our analysis of over 10,000 customer need statements collected for products and services covering nearly every industry.