Innovate What Your Customers Buy
By Jeffrey Baumgartner
Theodore Levitt, a marketing professor at Harvard University famously said, “People don’t want to buy a quarter-inch drill. They want a quarter-inch hole.” Mr Levitt's quote is also a relevant concept for innovation managers. If your customers are buying holes, then you should be innovating the ability to make the hole rather than the drill. Most drill manufacturers, however, focus on improving the drill in ways which sometimes facilitate hole making, but often just make the drill sexier.
If you focus on improving the technical or design aspects of your product (ie the drill) without regard to results that your customers seek (the hole), your innovation effort is likely to be in vain. Sure, you can make your drills sexier and that will appeal to the kind of guys who like power tools a lot. But if those improvements do not translate into an improved hole making experience for your customers, your innovation effort is unlikely to result in increased sales or market share.
Moreover, focusing on the drill rather than the holes leaves you open to being the victim of intentional or unintentional disruptive innovation. One morning you may wake up to see that a laser manufacturer is selling lasers that can make cleaner more precise holes than any power drill can; and they are selling the lasers for half the price of your drills!
Not Product Improvement But Results Improvement
When it comes time to innovate your product, don't waste time thinking about product improvement. Focus on results improvement -- and if that requires changing your product, so be it. Improving the hole making performance of your drill will almost certainly result in changes to your drill. But if the innovation focus is on the result rather than the product, your innovation efforts are much more likely to pay off.
As technology changes, it may very well be that your product is no longer the best tool for your customers. Film cameras are no longer the most convenient tool for capturing and sharing images. Typewriters are no longer the best tools for producing professional looking documents. Printed road maps are no longer the best tools for directing drivers to the places they want to go to. What about your product? Is it the best tool for delivering the results your customers want? What new technologies might make your product as obsolete as a typewriter in a few years?
Of course, in order to improve the results your customers are buying, you need to identify just what the result is. This may not always be obvious. For instance, Bubble Wrap was originally sold as a wallpaper. When that did not work, the inventors tried selling it as greenhouse insulation. It was only in 1960 that someone finally worked out that it was a great, lightweight packaging material.
What your customers are buying from you may change over time. Early mobile telephone customers were buying the ability to communicate any time and anywhere. Today, smartphone customers are buying much more: the ability to find, share, communicate and connect any time and anywhere.
What your customers are buying from you may be complex. A car buyer is on one level merely buying the ability to travel from point A to point B conveniently. However, there are issues of style, status and making a personal statement. The buyer of a basic Toyota is probably looking for comfortable, reliable transportation from point A to point B. The buyer of a Porsche is clearly buying much more than basic transportation.
The First Step: Identify What Your Customers Are Buying
The first step in product innovation is to forget what you are selling and work out what your customers are really buying. Then work out how you can deliver that to your customers in ways that will make your customers happier. You need to do this from the perspective of your own product and not your competitors' products. And you need to do this on a regular basis, because what your customers are buying from you, or hoping to buy from you, might change over time.
This simple strategy ensures that you are using innovation to make your customers happy. And that is what product innovation is all about, isn't it?
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