catching the innovation wave

Catching the Innovation Wave…through the new science of B2B customer insight

Dan AdamsAdvanced Industrial Marketing

[email protected] www.newproductblueprinting.com

.

© AIM, Inc.

mailto:[email protected]

http://www.newproductblueprinting.com/

Current operations

Diminishing returns

Unlimited potential

Future sales

Quality Wave Productivity Wave

Profitable SustainableOrganic Growth

1970 1980 1990 2000 2010 2020© AIM, Inc.

The New Science ofB2B Customer Insight

100 books per weekInnovation Wave

Questions we will address…

1. What will change in this Wave?

2. Do B2B suppliers have an advantage?

3. What is the science of B2B customer insight?

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Dan’s first rule of battles:

“Never be in a battle you don’t know you’re in.”

SellDevelopIdea Validate

Front End 25% Success Rate

Source: Cooper, Winning at New Products-3rd Ed, p. 11. © AIM, Inc.

Some Independent Research…

Manufacturing(with Six Sigma Success)

New Product Development

3 Defects per

1,000,000Attempts

3 Defects per

4Attempts

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What must change?

Customers

1. Does your company have bright R&D people?

2. Do your competitors have bright R&D people?

3. So how will your company win?

YourCompany

Competitor A

Competitor B

Competitor D

Competitor C

What if your R&D worked only on problems that

truly cared about

and competitors kept guessing what to work on?

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Problem 1. What’s the right question?

Problem 2. What’s the right answer?

What unmet needs will this market reward us to satisfy?

How can we satisfy these needs?

1. Which Problem consumes most of your innovation investment?1

2. Which Problem area leads to most new product failures?2

3. Which Problem area could be turned into a science?

Two parts to…

Market Needs

Supplier Solutions

© AIM, Inc.1 Improving New Product Development Performance and Practices, American Productivity & Quality Center, 20032 The Conference Board, Adapted by Robert S. Cooper, Winning at New Products, from D. S. Hopkins & E. L. Bailey, “New Product Pressures” 1971

Whose Idea?

SellDevelopIdea Validate

Yours … or Your Customer’s?

Most suppliers fail to engage customers…

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SellDevelopValidateIdea

Assumed market need

See if anyone buys product

SupplierSolution

MarketNeed

When do most companies understand market needs?

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can usually offer more insight than

B2B Customers B2C Customers

Education

Training

Time on the Job

1. Knowledge

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Financial Impact

2. Interest

Personal Recognition

HERO

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3. Objectivity

Group Decisions

Procedures

Accountability

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4. Foresight

Financial Objectives

Predictable Benefits

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5. Concentration

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Millions of Buyers

Fewer Buyers



Concentration

So What?

Knowledge

Interest

Objectivity

Foresight

B2B Customers are able to help supplier design better products.

Customers are willing to help supplier design better products.

Customer decision-making is rational, stable & understandable.

Customers can be directly engaged …and primed to buy later.

Customers can discuss their needs before seeing a prototype.

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© AIM, Inc.

Let’s introduce 1 term and 2 principles…

What is a Customer “Outcome”?

Increased abrasion resistance

Faster operating speed

Reduced maintenance costs

Quicker change-over timeImproved grease resistance

Greater weight capacity

Reduced inspection frequency

Higher fill levelsReduced roller wear

Less slippage with wet ore

1. Customer value is only created when an important, unmet outcome is improved.2. Suppliers’ only path to profitable, sustainable growth is customer value creation.

… a desired customer end-result

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2 Principles:

19

B2B Suppliers can understand outcomes at 9 levels…

1 Uncover all outcomes

2 Understand importance

3 Define & set direction

4 Prioritize outcomes

5 Learn how to measure

6 Identify satisfaction levels

7 Measure next best alternative

8 Quantify value created

9 Quantify value captured

Conduct qualitative Discovery interviews and project your notes. 1 Uncover all outcomes

Diverge Converge

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Ask “what else?”

20











During Discovery interviews, probe deeply to understand why they want this.

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1. Supplier learns more

2. Customer opens up more

21











For customer’s Top Picks, create “outcome statements” to clarify outcome.

“Outcome Statements” were pioneered by Tony Ulwick of Strategyn© AIM, Inc.

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During quantitative Preference interviews, ask how Important and Satisfied…

Diverge Converge

MSG = IMP x (10 – SAT)Ex: Avg. IMP=9; SAT=6MSG = 9 x (10-6) = 36%

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During Preference interviews, ask how customers would measure each outcome.

1. How would you measure abrasion resistance? Measure loss of belt thickness over time

when conveying DSO-grade iron ore Use a ball mill for lab simulations, try with

iron ore and small squares of belting …

With B2B customers, this is often a very rich conversation

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Then ask for “barely acceptable” and “totally satisfied” points.

1. What would be barely acceptable? 1 millimeter of belt thickness loss per

week

2. What would make you totally satisfied? No loss of belt thickness at all

This gives you all the information you need to replicate the customer

experience in your operation.

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You will be able to predict customer reaction to all these products…

Abrasion Resistance

Maintenance Costs Belt Velocity

Grease Resist.

Belt Change Time

Weight Capacity

Your New Design

Your Old Product

Competitors© AIM, Inc.

26











Use customer interviews and tours to gather economic data…

Value Calculator – Acme Belt A100

Then use this economic data to create a value calculator… to quantify the

value customers will receive.

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Give value calculator to customers so they can document benefits themselves.

Value Calculator – Acme Belt A100

Value calculators raise customers perception of value (the ceiling)… and help the supplier set optimum pricing.

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Seem like too much bother?

1. These 4 levels alone yield great value

Control Chart

2. In the 1980’s, it seemed hard to move from quality inspectors to statistics.

3 points…

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MarketResearch Discovery

InterviewsPreferenceInterviews

Side-by-SideTesting

TechnicalBrainstorming

ProductObjectives

BusinessCase






6 Identify satisfaction levels7 Measure next best alternative8 Quantify value created


1 2 3

4 5 6

7

Probing, Top Picks

Outcome statements

1-10 IMP, SAT ratings

Recommended test method

Barely acceptable, totally satisfied

Side-by-side testing, Outside-In Score

“What else?”

Calculate customer value

Raise perceived value, set price

ValueCalculator

8 9

3. New Product Blueprinting covers all 9

© AIM, Inc.

B2C

Why will B2B suppliers enjoy more “science”?

PotentialInsight

It’s difficult to predict how consumers will respond to non-economic benefits, e.g. amusement.

Supplier ability to predict

customer buying behavior

B2B100% Certainty

100% Guessing

PotentialInsight

Knowledgeable, interested, economically-driven buyers can help suppliers design new products with confidence.

TypicalInsight

B2C suppliers are consumers themselves… and tend to spend liberally on research.

TypicalInsight

Most B2B suppliers don’t use their own products & conduct limited VOC

Today, this large B2B Insight Gap can provide competitive advantage.

Small B2C Insight Gap

© AIM

The Customer Insight Gap

catching the innovation wave

Business

knowledge aim

concentration aim

b2b suppliers

new products

new product pressures

new product failures

personal recognition

company competitor