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5 Steps to Predictable Innovation

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By controlling the causal factors that bring randomness to
the innovation process, companies can bring predictability to innovation.
By Tony Ulwick
Innovation appears to be a random, inherently unpredictable
process. But what if we could understand the causal factors that contribute variability
to the innovation process and learn how to control them? Would that bring
predictability to innovation? The answer is yes'we have proven it can be done,
but it requires new thinking.
Innovation is the process of devising product/service
solutions that address unmet customer needs. There are 2 key inputs into the
innovation process: (1) solutions: ideas for new products or product features
that use new or existing technology in a new, unique or novel way, and (2) customer
needs.
It is rare that we see companies struggle to generate
ideas'in fact the opposite is usually true'they often have more ideas than they
know what to do with. The reality is companies struggle with innovation because
those responsible for conceptualizing, developing and evaluating ideas for new
product/service offerings struggle with the 'needs' side of the equation.
Our experience has led us to conclude that companies struggle
with 5 key issues related to understanding and targeting customer needs. These
factors contribute significant variability to the innovation process. In nearly
all our consulting engagements, we often find that the members of the product
team:
1.     
Do not agree on what a 'need' is or what types
of customer needs exist.
2.     
Do not agree on how a 'need' statement should be
constructed to effectively inform the innovation process.
3.     
Do not know what all the customer's needs are.
4.     
Do not know with certainty which customer needs
are unmet.
5.     
Do not know if segments of customers exist with
different sets of unmet needs.
Clearly, if these issues cannot be resolved, the chance of
devising a solution that effectively addresses the customer's unmet needs is
highly unlikely'thus making the innovation process appear random. But it
doesn't have to be. These issues can be resolved using the research methods we
have devised as part of our innovation
process
, Outcome-Driven Innovation.
1. What types of
customer needs exist?
Customer inputs must be captured that inform the development
team what functions the product should perform, how customers want to interact
with the product throughout its lifecycle, the emotional benefits they want to
receive, and their financial goals and constraints. These types of inputs are
detailed in the Jobs-to-be-Done Needs Framework (Figure 1). 

The customer's desired outcomes related to the core
functional job inform product function. The desired outcomes associated with
the consumption chain jobs done inform product lifecycle activities. Related
jobs explore additional function that may be desired, while emotional jobs
detail the desired emotional benefits. Lastly, the financial outcomes detail
the customer's financial goals and constraints. Each need type is defined in
more detail in the book JOBS
TO BE DONE: Theory to Practice
.
2. How should a
'need' statement be constructed?
A need statement must unfortunately be stated in words.
Therefore those words must be organized in a sentence that communicates how the
customer measures success and value when getting a 'job' done. That same set of
words must provide actionable input to the development team'in other words, it
must inform the product function and design. The ideal 'need' statement should
also be stable over time and devoid of solutions'this means they must be
associated with the job-to-be-done, not the product.
For these reasons, we structure a need statement as follows:
Verb (minimize) + metric + object of control + contextual clarifier. For
example, 'minimize the time it takes to get the songs in the desired order for
listening' is a desired outcome associated with the core job of listening to
music. For all the details on structuring need statements go to Giving
Customers A Fair Hearing
(MIT Sloan article).
3. How do you collect
all the customer's needs?
Need collection begins with the creation of a job map. A job
map breaks down the customer's core functional job-to-be-done into discrete
steps, detailing what the customer is trying to accomplish'independent of
solution. The job map is created through customer interviews and refined
throughout the qualitative research process. Additional details on job mapping
can be found in the HBR article, The
Customer-Centered Innovation Map
.
The job map bounds the need-gathering process. With a job
map in hand the next step is to capture/create a complete set of desired
outcome statements for the core functional job and relevant consumption chain
jobs. It is often the case that 5 to 10 outcomes are captured for each job
step, and 100 or more desired outcomes statements are collected in total.
A complete set of outcome statements will detail (in
chronological order) exactly how customers measure success as they go about
getting the job done step-by-step, from beginning to end. Outcome statements
can be captured through customer interviews, but can also be extracted from
literature, books or papers written on the subject.
4. How do you
determine which needs are unmet?
A need is unmet when it is important to customers, but not
satisfied with the products/services (or ad hoc solutions) they are using
today. Knowing which of the 100 or more desired outcomes are most important and
least satisfied pinpoints the opportunities for value creation.
Statistically valid quantitative research is required to
determine which outcomes are underserved. First we create a survey that
includes the 100 or more desired outcome statements. Then we survey anywhere
from 120 to 1200 customers (depending on a variety of factors), asking them to
tell us the importance of each outcome and their current level of satisfaction.
With these inputs we can determine which needs are most underserved (and
overserved). See the HBR article Turn
Customer Input into Innovation
for more details.
5. How do you
discover segments of customers with different unmet needs?
To discover segments of customers with different unmet needs
you must segment the market using unmet needs as the bases for segmentation'not
demographic, psychographic or other classification schemes. Companies rarely
segment their markets in this manner because they cannot agree on what a need
is, what the needs are and which are unmet. This is why so many innovation
efforts fail.
In nearly every market we've analyzed over the past 25 years
we discovered segments of customers with different unmet needs. This means that
most markets are not homogeneous'and that a one-size-fits-all solution will
rarely win in the marketplace. Outcome-based segmentation is critical to
success.
We segment markets using the data collected in the
quantitative survey. We first run factor analysis to discover which outcomes customers
rate differently, and then run cluster analysis to place the customers into a
predetermined number of segments. We then profile the segments to determine
what unique complexities they face that cause them to have different sets of
unmet outcomes. Learn more about our approach to segmentation in this white
paper
.
Once a product team knows precisely what unmet needs exist
in an attractive, underserved segment of the market, it can apply its
creativity to create a product that will deliver significant value to the
customer. With the causal factors under control and a well-defined target in
its sights, a product team is more likely to create a winning product. This is
how you bring predictability to innovation.

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