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a presentation about tools and techniques to help companies be more market driven
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Define Your Requirements Not The Product Features: Effective Skills To Improve Co-Innovation
By:Miki Tokola, MICOM ConsultingRoger Hicks, RHC LLC
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Characteristic Product Orientation
Driver Technology
Definition of value Product features
Competition Similar products
Value chain Parts suppliers
Offering Product
Market Stable
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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
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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
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Relationship Structures Are More Complex
Supply Chain Value Delivery NetworkThe Market Relationship Model Has Changed
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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)
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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
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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
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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
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A Cautionary Tale
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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
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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
NWFPA Expo 2011 visit us at BeMarketDriven.com
Product Driven
Market
Competition
Supply chain
Operations
Product
Sales
NWFPA Expo 2011 visit us at BeMarketDriven.com
Market Driven
Market
Competition
Supply chain
Operations
Product
Sales
NWFPA Expo 2011 visit us at BeMarketDriven.com
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
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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”
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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””
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Co-Innovation
• New style of market-oriented engagement• Improved relationship with supply chain
– Clearly define problems– Requirements, not features
• Suppliers discover latent needs
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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]
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Kano Modeldelighted
disgusted
done welldone poorlyor not at all
Satisfiers
Delighters
Dissatisfiers
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Market Research
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Primary Research Tools
Ethnographic Studies
Customer Panels
Usability Testing
In-person Interviews
Focus Groups
Telephone Interviews
Print Surveys
Web surveys
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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
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5 WHYS
• Help customers reflect their true needs• Root message – most fundamental
message• Get to actionable input
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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.
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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.
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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
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Desired Outcome
Minimize the time it takes to change a blade
Direction Desired Outcome
Unit of Measure
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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
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Types of Requirements
• Product• Business• Non-functional• Constraints
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Voice to Req’s to Specs
Customer voices, images and outcomes
Requirements
Features and attributes Concepts
Engineering specification
1
2
3
4
5
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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
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What to Look For with VOC in Market Driven Process
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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.
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Closing Remarks
and
Recommendations for Action
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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.
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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• ??
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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
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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.
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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