Rethink Your MRD & Improve Differentiation and … Your MRD & Improve Differentiation and Gross Margin How to optimize your MRD process to improve customer value & achieve margin Authors:

Rethink Your MRD & Improve Differentiation and Gross MarginHow to optimize your MRD process to improve customer value & achieve margin

Authors: Jose Campos ([email protected])

Bob Buxton

Jean-Claude Balland Ph.D..

Rapidinnovation.com

PurposeThis article focuses on the opportunities for collaboration between the Marketing and R&D professionals using the MRD as a document of reference to protect the integrity of the voice of the customer from initiation to public announcement, and create alignment within functions.

BackgroundMarket-driven companies have adopted new methods to better discover customer requirements in order to develop innovative products faster and better than their competitors; these methodologies share the same “framework”:

● It starts with the Investigation phase, the ability to select the right individuals to interview, obtain and capture the right information from your customers.

● Next in the “framework” is the Interpretation of the message from the customer; this requires a set of tools and methods to decipher customer input and translate it into prioritized customer requirements. The output of this step is the MRD. (Market Requirements Document)

● The next phase in the “framework” is Innovate; once customer requirements have been defined, documented and prioritized, the opportunity to innovate sets in.

This is where R&D, in collaboration with Marketing, can create innovative solutions that deliver high value to the customers — naturally, using the MRD as the guide.

● The final part of the “framework” is Incorporate; this is the ability to translate the innovation into a viable product that customers will value

Click here for additional details on the framework Appendix A).

IntroductionIn most product development organizations, the marketing organization communicates customer requirements to the R&D team through a document generally called the MRD (Market Requirements Document)

1. It may go by different names,

but regardless of the name, in many cases, the document simply does not serve its purpose, which is: to effectively communicate the prioritized customer requirements to the engineering team so that they can develop innovative solutions.

1 The advent of Agile has caused some organizations to do away with the MRD. The principles outlined in this article are valid regardless of the name given to the documentation to capture and communicate customer requirements from Marketing to R&D.

* MRD: Market Requirements Document — The process that establishes and defines a document that contains the prioritized customer requirements for a new product. It is the process that the marketing organization uses to communicate the priority and substance of requirements that will result in differentiated new products.

*

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2Rapidinnovation.com

Rethnik Your MRD & Improve Differentiation and Gross Margin

In addition this innocent-sounding document often creates frustration, confusion, and internal battles because the R&D team does not find what it needs. That leads to products that are late, poorly executed, and fail more frequently than they should. One study associated 74% of failed products with deficient or missing market studies (customer requirements).

This article will discuss the problem, its causes, and make four simple recommendations for changes that will build an effective bridge between Marketing and Engineering groups, create an environment better suited to respond to market and customer needs, and increase the chances of success for your new products. .

MisunderstandingsIn some organizations there a misunderstanding about the very word “requirement” and consequently what should be in the MRD. Many MRDs today do not include actual requirements, but rather a list of features generated by Marketing. These features are seldom justified in terms of why they are needed, let alone what customers are striving to achieve — click here for more on the topic of requirements Appendix B.

To further add to the misunderstanding, in a B2B environment, it takes more than a single document to effectively communicate customer requirements to R&D; in reality it should be treated as a succession of activities; i.e., a process. As a result, we advise moving from thinking about a single document to a full-fledged process, The Market Requirements Process. Take a “process” view, where Marketing and Engineering (R&D) collaborate from the start — (please see Figure 1 on page 3 for additional context on the MRD Process).

Further on the misunderstanding, the protocol associated with the MRD is either not known or has deteriorated over time, specifically:

● Marketing leads the effort to obtain customer requirements, in collaboration with R&D

● Marketing creates the MRD and then “tenders” it to R&D

● Marketing and R&D collaborate to ensure complete clarity and priority

● R&D responds with the PRD (Product Requirements Document) or similar vehicle

● Trade-offs and collaboration follow in order to achieve “value creation” and meet the business objectives of the organization

Why the Misunderstanding?The conventional MRD is a result of the “silo mentality” that prevails in some organizations; where, the MRD is the way of communicating between the Marketing silo and the Engineering silo — with little or no collaboration.

In addition, R&D often does indeed request a list of features to do its work. The new trend is for Engineering (R&D) to fully partner with Inbound Marketing

2 to obtain, process and prioritize

customer requirements.

Least likely is the case where requirements come from an actual analysis of what customers want to achieve and the problems they are trying to solve.

Consider that if your MRD is simply a list of features, you have stifled Engineering’s ability to innovate. The role of Engineering is to understand the customer problems and then design innovative solutions that create value; thus, when Marketing merely delivers a set of features it defeats the purpose of creating innovative new products.

Yet another reason for inadequate MRDs is that some marketing people do not clearly understand the intent of the MRD.

2 For a White Paper on the concept of Inbound and Outbound Marketing, please contact the author with your request: [email protected]

The purpose of the MRD:To effectively establish clarity and a common understanding between Marketing and R&D of a prioritized set of customer requirements

The outcome of an MRD:To enable the R&D organization create customer value through innovative products

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Rethink Your MRD & Improve Differentiation and Gross Margin

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Figure 1( The above representation is a simplified version of the traditional New Product Development Process (NPD). You may need to extrapolate to identify the corresponding milestones to match your NPD)

The above diagram shows the suggested Market Requirements Process (MRD) incorporated into a traditional “initiation” or “fuzzy-front-end” in the New Product Development Process (NPD).

See item 1 and notice the first draft of an MRD, subsequent versions should be expected as more information about the customer is obtained. Version 1.0 is expected to be incomplete, with many gaps, which point the way for further investigation with the customer

See item 2 which represent subsequent versions of the MRD. The numbers of versions vary depending on the complexity of the product being developed, the number of rounds of customers interviews needed. Marketing and R&D collaborate along the way to ensure the best-possible MRD, until there is alignment on a FINAL version.

Item 3 represents a period of time where innovation, breakthroughs and collaboration take place to satisfy the set of prioritized requirements contained in the MRD. Note that item 3 happens after there is clarity about the priority and description of the customer requirements.

See item 4 which represents the response to the MRD by engineering. Collaboration between Marketing and R&D continues as the desired outcome is to develop a solution that your customers will value. The PRD contains a number of features and capabilities needed to respond to the set of customer requirements.

Please note that the intent proposed in this article is to focus the MRD and the MRD process on the list of prioritized customer requirements; where all other information is contained in other documents so as not to burden the MRD or confuse the stakeholders.

Click here if you have questions or comments about this diagram.

3

1 2 4

Marketing sees it as the way to convey a list of features for a new product without understanding the context or the problem facing the customer.

Few companies have mastered the art and science of this process; it is difficult and takes both tenacity and a robust framework (process).

Today’s SituationModern product development (B2B) is too complex to depend on a single document. Marketing needs

to reassess the way customer requirements are communicated, and get away from the idea of a single document. Rather, we suggest looking at various ways to help Engineering understand the requirements. Rich tools are available, such as videos of use cases, photographs of the major steps in the customer’s process, and in-depth interviews performed jointly by Engineering and Marketing. New tools have also emerged that facilitate the clear description of customer requirements

Click here for more on the tools Appendix C

Product Proposal

MRDV 1.0

First draft of the MRD

Second customer investigation

MRDFinal

Final draft of an MRD

Tendered to R&D by Marketing

PRD

R&D responds with the PRD (Product Req. Document)

Marketing and R&D collaborate on innovative solutions Development

continuesInitial customer investigation

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What Are Requirements?Requirements articulate what the product

3 must

have or must do to solve problems or satisfy needs that your customers have expressed. Alternatively, it could also be expressed by what customers must be able to do or have as a result (outcome) of using the product. But — and this is where many marketing people fail — requirements should not specify how the product will do what it must do. That is why features and specs are not requirements per se. Let’s take a simple example: A business traveler wants to use a laptop during a five-hour flight. Most people would say that the battery must last at least five hours, but that would not be a valid requirement by our definition. “Five-hour battery life” is one solution, but there may be others (and actually there are others). The correct, although incomplete, requirement is: The user shall be able to work on the laptop for five hours during air travel.

Furthermore, a requirement may need several features to be fulfilled; said another way, to satisfy a single requirement you may need an aggregate of several features — For additional information about requirements, please see Appendix B.

Four Recommendations for Improvement

1Stop thinking about a single document, move towards a process

Turn the articulation of customer requirements into a process and away from a single document .

Turning the MRD into a process results in Marketing and Engineering collaborating on documenting

3 The term “product” is used to represent all the tangible and intangible capabilities that your customers anticipate getting from your offering upon purchase

requirements in a way that works for the entire team — (See figure 1, page 3 for additional details).

This new process starts very early in the definition of the new product where Marketing and R&D partner from the start. Together

4 they identify customers to

interview, and set about performing the research. Then they proceed to use modern methods to describe customer requirements, including use cases, personas, scenarios, storyboards, process maps and others. And finally agree on a clear priority.

The MRD starts during the Investigate and Interpret phases of the Four-I Framework (See Appendix A, page 7) , with initial investigation and detailed VOC (Voice of the Customer) capture taking place in the Investigate phase, followed by the conversion of customer input into requirements.

In order to keep the team focused on the customer requirements it is essential that discussion about features and solutions be delayed until the Innovate phase. This then raises the question about how to handle documentation market descriptions such as sizing, driving forces, competition, etc. In many cases these have historically been part of the MRD; so after keeping them out of the MRD, where should they go? Put the market-related information into a separate market description document — all of this to clear the MRD of all information that is not directly relevant to requirements, but still available to the team.

The overall intent is to preserve the integrity of the voice of your customers by dedicating the MRD only to describing the prioritized customer requirements.

2Forget about featuresAs mentioned, the MRD often includes

features. However, Marketing must communicate customer problems and specific areas for value creation. A list of features stifles R&D’s ability to discover richer solutions, and therefore constrains

4 Marketing leads the process of obtaining customer requirements, but engineering is a visible stakeholder and a participant.

A feature is not a requirement!

A feature is a response to a requirement



innovation — not to mention that features are not requirements, instead they are your response to solving your customers’ problems.

3Make prioritizing a priority. Having a list of clearly articulated customer

requirements minus a list of features is a good start. However, if these are not prioritized and associated with target market segments, they will be useless. Prioritizing the requirements can achieve three things:

● Provides clarity to the team when trade-offs have to happen (typically versus time and cost) during the development program

● If the requirements are prioritized and associated with the relevant market segments, it can help in identifying the business impact if features, which support specific requirements, are dropped during the development process (Trade-offs)

● R&D will be better able to assign the right resources to focus only on development that, by definition, is important to your customers. This results in reduced time-to-market and a better design

4 Collaboration between Marketing and R&D from the start!

We recommend that Marketing and R&D partner very early in the development project and jointly discover and prioritize customer requirements, this should be done under the leadership of the marketing person. Do not wait until the end to start engaging R&D; rather resist the urge to start designing the product until the requirements are clearly understood. The job description of R&D must include the responsibility of understanding customer requirements and their priorities.

The lone Marketing cowboy going out with his notebook to “talk to the customer” and coming back delivering his message to the R&D organization is gone. A market-driven organization is one in which there is a strong partnership between Marketing and Engineering. Therefore, demand that engineers team up with Marketing to interview customers and capture voices.

We often hear some senior managers making the objection “We don’t have the time because of cost and time-to-market pressure”. This is not valid! It was similar false assumptions that made American companies believe that good quality cost more money. No! — Good requirements and time-to-market are not contradictory. Good requirements shorten time to market.

Organizations that have indeed adopted such a process report an actual shortening of time to market because having clear requirements at the beginning leads to a clearer product definition which in turn leads to faster implementation and fewer do-overs in the development phase. On the other hand, consider that many of the sources of delay have to do with poor or absent requirements, lack of prioritization, lack of understanding of the problems and outcomes that your customers expect as a result of using your product.

A message to ManagementCareful review of the MRD by the leaders of the organization is a way to evaluate and track the integrity of the voice of your customers.

Ask these critical questions when reviewing an MRD:

● Is the MRD simply a list of features without a clear description of the problems that your customers are striving to solve?

● Is the MRD written with sufficient clarity to enable R&D to innovate?

● Does your MRD clearly and unequivocally present the priority of all the requirements?

● Do your R&D personnel believe that your MRD’s are of high quality that enable them to create innovative solutions for your customers?

As you can see, the MRD can serve as an actual metric to track and improve the ability of your marketing and R&D to describe, prioritize and take action on the voice of your customers.

ConclusionPoor or incomplete requirements are the number-one reason why new products fail. In light of this, it’s incomprehensible that so few organizations give the quality of requirements proper attention. There



are two reasons this happens. The first occurs if the process to properly capture requirements has only recently been implemented, and Marketing and Engineering have not mastered it yet. This can be fixed by institutionalizing the new MRD process into the actual New Product Development Process (NPD).

The second reason is more pernicious. It is based on the false assumptions held by many managers that capturing requirements takes too much time and will lengthen time to market and that in any case they already know what the market needs.

By developing a prioritized set of customer requirements where features are relegated to later stages in the development process and by having

Marketing and Engineering collaborate creates clarity at the initiation stage. You will have a firm foundation on which to develop products that:

● Customers love to own, use — and pay for.

● Improved gross margin

● Reduce the waste that come by developing capabilities that your customers do not value — and consequently are not willing to pay

● Accelerate time-to-market due to the alignment between Marketing and R&D, which results in the development of only the capabilities your customers need.

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The above diagram shows a mental model of the framework needed to enable the development of innovative products that achieve business objectives.

It all starts with an extraordinary effort to capture customer input (Investigate) through carefully planned customer interviews. Followed with the ability to Interpret the message from the customers for the creation of requirements — these requirements are communicated to R&D through the MRD (Market Requirements Document). Once the customer requirements have been identified and prioritized through the investigate and interpret phases, your team can set about Innovating solutions from your customers. The final “I” is the ability to Incorporate the innovation into a solution that the customers will value.

The Market Requirements Document (MRD) Process

The Product Requirements Document (PRD) Process

The disciplined approach to gathering and documenting unfiltered customers, articulated and unarticulated needs through a variety of techniques that always include in-depth interviews and some level of observation of the customer’s world.

VOICES

Output

At the end of this phase you should have captured (documented) the voice of the customer: the raw data from each of the interviews that you and your team conducted.DOcumentatiOn

This should be in the form of notes, photos, video and audiotape, plus the vivid memories that you and your interview teams captured.

The process of organizing the customers’ data and processing them into a set of prioritized and documented requirements that clearly express the customers’ unsatisfied needs.

REQUIREMENTS

Output

At the end of this phase, you should have a clear, prioritized and approved list of Customer Requirements.DOcumentatiOn

Generally, this list is relatively short, between two and 10. In some cases it may be longer, but we encourage prioritization to reduce the number of the requirements, which capture the value expressed by your customers and also create the needed differentiation to win in the market place

The process of transforming requirements into one or a few product concepts that will address the customers’ articulated and unarticulated needs.

PRODUCT CONCEPTS

Output

At the end of this phase you should have innovative solutions that address the requirements expressed by your customers.This phase is where engineering and marketing collaborate to find the solutions and to innovate.DOcumentatiOn

The documentation should be a prioritized list of solutions, or a collection of product features that in aggregate (cumulatively) provide a solution.

The disciplined refinement of the product concepts into a single one validated by customer feedback, and its full articulation into a set of features and specifications that engineering can implement.

SOLUTIONS

Output

Naturally, the desired output of this phase is a profitable product.DOcumentatiOn

On the more practical side, the output of this phase generally is an engineering document, which takes into account the technical trade-offs, the timeline, design costs and other parameters. Engineering and marketing collaborate to ensure that the customer always wins; that is, that the product always has maximum value.

Investigate Interpret Innovate Incorporate1 2 3 4

the VOice Of YOur custOmer the VOice Of YOur cOmpanY(Value Creation)

Appendix: A — The FrameworkBack

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What’s a requirement?Introduction

Expressing good requirements is one of the most important steps in new product development. Actually, it has been shown that “bad” requirements are the key reason for product failures. But to get started, what is a requirement? And what is a good requirement? And how do you know if you have a good set of requirements? It is important that the product team has a common answer to these questions.

Customer Requirements

Customer requirements express what the customer or the user shall be able to obtain/do/have. Alternatively it can also be what the product shall1 be able to do/have in order to satisfy customer needs. Requirements are not descriptions of how the product will do or perform. The how’s are solutions.

Expressing customer requirements is the responsibility of marketers and is generally documented in a Market Requirement Document (MRD). From customer requirements the team then looks for possible solutions that will satisfy these requirements; this is commonly called the “innovation” phase of product development. Too often product teams jump directly from customer needs to product features and even specifications without expressing clearly the customer requirements — and that is an error. Bypassing this step hinders the team from finding innovative solutions to market problems.

Examples of a Customer Requirement

Customer requirement: “The user shall be able to comfortably work on her laptop in an airplane coach seat for five hours.” This requirement can also be expressed as a product requirement, which is the passive-tense version. Customer requirement: “The laptop shall be able to be operated comfortably

1 The word “shall” is used to denote the abso-lute need to address and satisfy the customer requirement. It is up to the design team to in-novate and create one or several ways to satisfy the customer requirement.

for up to five hours in an airplane by a user in a coach seat.” Notice that these requirements do not mention how the product shall address the customer needs. This is the role of the solutions your team develops.

Examples of Product Requirements and Solutions

Below are a mix of requirements and solutions. Try to determine which is which.

● The battery of the laptop shall have a minimum life of five hours.

● The laptop shall contain a spare battery so that it can be operated for five hours with battery power.

● The user shall be able to plug the laptop into a reliable source of power close to his seat.

● The laptop shall be no larger than 11.5” x 17” (to fit on a coach tray table).

● The laptop shall pass the security check without physical damage.

● The screen shall have side blinders (to not be viewed by neighbors).

● The laptop keyboard shall incline so that it is comfortable when used on the tray table or lap.

● The laptop base shall not get hotter than 55°F (to be operated comfortably on the user’s lap).

Please note the way requirements are expressed with a short and clear sentence containing the verb “shall.” Adopting a structured way to express requirements is a discipline that will go a long way in facilitating understanding between engineering and marketing.

Types of Requirements

There are several types of requirements to consider. First, a particular product will generally have several stakeholders that will be involved at the various stages of the product life-cycle, for example: buying, installation, use, maintenance, disposal and overall results. Each of these stakeholders has requirements that need to be elicited and documented. When expressed as a product requirement, there are at a minimum four types of requirements to consider.

Appendix: B — RequirementsBack

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Business Requirements

Business requirements relate to the business results the customers want to obtain. Going back to the five categories of benefits and costs, these business requirements deal mainly with the operational and economic benefits, and most of the costs categories. Examples:

● “The customer shall be able to increase yield by 2 percent minimum.”

● “The product shall allow the customer to increase yield by 2 percent.”

Functional Requirements

Functional requirements relate to what the product shall DO. Examples:

● “The product shall warn the user when the battery reaches a low level.”

● “The product shall play MP3 songs and DVDs without booting up. “

Non-Functional Requirement

Non-functional requirements relate to a quality the product shall have. Example:

● “The product shall be ready to use by people of age 65-70 within 30 minutes of unpacking.”

● “The product must communicate the sense of power, ease of use and modern design”

The most-frequently required non-functional requirements include:

● Look and feel

● Usability

● Performance

● Operation

● Maintainability or serviceability

● Portability

● Security

● Cultural and political

● Disposal and recycling

● Legal

Constraints

Constraints restrict the options available to the development team. Examples:

● “The product shall have a manufacturing cost of $1,200.”

● “The product shall interface with an IBM 567 server.”

● “The product shall be used by all teenagers, male or female.” Characteristics of Good Requirements

The major attributes of a good requirement:

1. Complete: A requirement must fully describe what the user shall be able to do or experience. Please note that a requirement is never a “product feature”. A feature is the response of your design team to the requirement expressed by your customer.

2. Documented: Every requirement must be fully documented to ensure clarity. The test for clarity is your design team, do they understand the requirement clearly? All the members of the product teams shall have the same interpretation of what the requirement means.

3. Traceable : Each requirement should be traceable to a real customer need, and that need should be contained in the MRD document

4. Focused: Each requirement should express a single need.

5. Verifiable: The product team should be able to verify if the product meets the requirement or not. A typical example of a non-testable requirement is, “The product shall be easy to use.” A version of this requirement that is testable is, “The target user, who is a technician with an Associate degree in electronics, shall be able to perform basic functions (detail what functions) within 30 minutes after operating the product for the first time.”

6. Prioritized: Each requirement should be accompanied by a level of priority. Not all requirements are priority 1.

7. Modifiable: Each requirement should be able to be modified without unsettling the entire set of requirements. Modifications are needed as additional information from the customers is discovered.

Appendix: B — continued

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Req.

Two use cases describing the critical tests to be performed and the customer’s desired outcomes as well as the reasons for performing the tests, i.e., the design strategy

The fully described, narrative of the requirements stated as a customer problem

Photographs of the work station where the tests were performed

Detailed process map describing the steps, setup and other information on how the tests were performed

A “Persona” describing the traits, preferences, training and other critical informations about the person performing the test

Figure 2

The above diagram shows the outline of a set of actual requirements for a complex technology product. There were six major requirements, and all of them used the same outline to describe them.

The diagram illustrates that articulating requirements for complex products is not trivial. Much information is needed in order to R&D to innovate and later create solutions that customers will value.

Item 1 is the traditional narrative of the customer requirements, but articulated in a way that everyone in R&D can understand the problems that the customers are striving to solve.

Item 2 shows the use cases, that the product team decided to add for clarity.

Item 3 includes photographs, and video of the work space. This is very helpful for those that did not visit the actual site.

Conclusion: The purpose of any requirement is to communicate the entirety of the problem that a customer is striving to solve or the objectives that she is trying to achieve. It takes creativity and collaboration from R&D to arrive at a description that they find understandable and actionable to create innovation and deliver solutions that customers will value.

Important Note:

The outline was created for a specific product and is not intended to set a rule or guideline for other products. The authors encourage you to develop outlines that will meet the needs of R&D and not be limited by arbitrary rules. Do not hesitate to be creative, and consult with R&D to understand what it will take to develop a clear understanding in order for them to create innovative solutions for your customers

End of AppEndix B

The outline of an actual requirements contained in an MRD for a complex technology product

Block diagram of the test setup

1

2

Appendix: B — continued

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3



IntroductionCommunicating customer requirements to the R&D and the rest of your team can be daunting — at times it may seem almost impossible. Customers do not buy products or features; they buy solutions and benefits. Most of all they buy differentiation; that is, the demonstrated ability of your offering to deliver greater benefits and value than that of your competitors.

All of the above can only start with understanding customer requirements, then implementing solutions, which then become your offering. Note that features and specifications are simply a means to an end; they are your efforts to satisfy your customers’ requirements better than your competitors.

The Tool BoxFortunately, there are many tools and methods available to effectively articulate and communicate requirements. It all starts with a profound understanding of your customer, as superficial understanding will not yield valuable requirements.

A typical customer requirements would read something like: “The user shall be able to work on the laptop for five hours during a flight.” Note that there are no features or specifications in the statement, that comes much later.

In addition to the methodology to articulate a requirement statement there are additional methods to effectively describe requirements, here are a few examples:

PersonasThe profile of a fictitious individual for the purpose of understanding the behavior, personality, experience and other personal traits of a typical individual in a market segment or a function. A Persona is a description of the education, training, experience, preferences, skills, abilities and other personal traits that help understand the user of your product at the personal level. For example a Persona might describe the typical business traveler that uses a laptop during extended business trips.

Use CasesA formal methodology to describe the specific action, thoughts, and steps that a particular customer uses to perform an action or her duties. Use cases describe the interaction between a user and a particular product or a between the user and a feature of a particular product, for example a use case might be the description of the actions performed by a traveler when using a laptop during an extended flight.

Process MapsThe documented, sequential steps performed to achieve a result. Process maps are similar to Use Cases but the focus is on the accurate description of the sequential steps with minor focus on the person performing the steps. For example mapping the process to set up and initiate a laptop in an airplane seat.

ScenariosSynthetic description of an event. A scenario could be the description of what a customer does to perform part of her job. It is also a description of a particular event under a specific set of conditions that involve a customer and her reaction to it. For example a scenario might be describing what happens to the user of a laptop on an extended flight during heavy turbulence.

StoryboardsStoryboarding is the sequential visualization of a customer’s activities. The methodology had its starts in the theatrical and film industries as a way to visualize the sequence of scenes in a film, opera or theater production. Widely used in software development it is finding its way into hardware and other product development arenas. The methodology helps understand the process, interdependence and relationship of all the activities of a customer under a specific situation. For example, storyboarding what a user does to get the laptop from his luggage, set it up and start working.

Appendix: C — Tools Back

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Time and motion StudiesA technique started by Frederick Winslow Taylor, used to map, time and describe a task or a process with focus on the individual performing the task. The resulting data is analyzed to find opportunities for improvement and create solutions which might improve performance. For example doing time-and-motion study on a person performing a set of tests on a device in order to create a better solution.

SemanticsThe study of how humans interpret words and language. It is the difference that may exist between the meaning of a word or phrase as meant by the “sender” and the interpretation of that same word or phrase as interpreted by the “receiver”. For example, the phrase “easy to use” may have simple meaning or may imply a highly technical one; it can also be misinterpret by the “receiver” in this case you, during a customer interview.

HeuristicsIn the area of gathering of customer requirements is the ability to closely observe a customer performing a task or function in order to discover the “thought processes”, to learn the attitude and motivation of the customer and how customers solve problems. The observer then develops a set of Heuristics that describes the rules to be used in developing a new product. Heuristics are commonly used to

determine the man-machine interaction, human interfaces and other areas related to ease of use.

NeurolinguisticsIn short, the study of the neural framework of the human brain. Practically speaking Neurolinguistics is a multi-discipline area of study of how the brain processes information, and how this information becomes language and communication. For example the study on how customers interpret a GUI or a set of instructions.

There is moreEthnographic studies, demographics, contextual analysis. There is no shortage of methodologies. While we do not recommend that you adopt all these tools; nevertheless, you should create your own “tool box”, which is appropriate to your situation.

ConclusionThere are indeed many tools, methods and templates to help you describe customer requirements with clarity. It all starts with your commitment to an in-depth understanding of your customers and their requirements.

End of AppEndix C

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Appendix: C — Continued



About RapidinnovationEight of the many critical questions we have helped answer for our customers:

1. How can we get closer to our customers in order to create more profitable products, beat our competitors and delight our customers?

2. How do we “price for value” to maximize profits and please our customers

3. How can we optimize our R&D investments and execute the best roadmap to maximize prof-its?

4. How do we grow beyond our core and manage the risks?

5. How can we accelerate time-to-market and shorten time-to-profit?

6. How can we make Agile work for us?

7. How do segment our markets to consistently optimize profits and ensure growth?

8. How do we improve the financial skills of the Engineering and Product Mangers to obtain better business cases and overall financial performance?

We have been serving the high-technology community around the world for the last 17 years. Our ability to concentrate on high technology has given us a unique insight into the dynamics of the fastest-moving market around. Every one of our Business Consultants is a seasoned veteran of corporate life in high-tech companies. All have engineering degrees with advanced degrees in business plus years of experience helping technology companies achieve their business goals — credentials that are brought to bear to solve our customers’ challenges.

We work with our customers by focusing on the high-leverage areas of the company: R&D and Marketing where we collaborate, train, coach and facilitate every aspect of product development, innovation, and profitability. We also work with Senior Staff to develop measurable growth management strategies and then help in the clear execution.

Our list of satisfied customers includes some of the leading global technology companies. Visit us at: www.rapidinnovation.com

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The Voice of the Customer for Product Development

Your illustrated guide to obtaining, prioritizing and using customer requirements and creating winning products

Step 2: Organize Your Visits

85 For comments, questions or additional copies please e-mail the authors: [email protected]

CONTINUED

Detailed Process: Discussion Guide

SET THE FOUNDATION

Ensure that the objectives for the customer visits are documented and nal.Circulate the objectives and any other relevant material to the members of your team and any other relevant stakeholder.

1

CALL A BRAINSTORMING MEETING

Decide who needs to attend based on the objectives and each person’s ability to contribute.Schedule the meeting for at least three hours. This may reduce attendance, but quality is more important than quantity.Secure a conference room with ample space.

2

HintPRIORITIZE TOPICS FOR THE MEETING

In step #3 (Brainstorm), you are defi ning and prioritizing the topics of conversation. A good way to start the brainstorm is to ask your team members to write down all the questions they wish to ask their customers (use Yellow Sticky Notes).

BRAINSTORM

Use the Af nity Diagram method or any other formal framework for brainstorming.

Brainstorm all possible • topics.Organize the topics or • questions.Consolidate the topics.• Prioritize the topics.•

You should end up with no more than three to ve topics. Prioritize based on importance to the objectives and using a clear criteria for selection.

3

HintGenerally, you will need one hour to

cover three topics, or perhaps fewer. Remember that you need to allow the customer to talk, and this takes time. It is not a survey, it is a conversation where you need to probe and let the customer talk and think.



Types of Customers Subsegment A Subsegment B

Customers you have lost. 1. That is, customers who no longer buy from you for a negative reason.

Customers you never had. 2. That is, customers who ought to have bought from you, but never did.

Customers who have stopped buying from you.3. That is, you have not lost them, but they have not bought from you in some time. Different than Item 1 above.

Future customers.4. That is, customers in new markets, new companies, new applications, etc.

Customers who are buying much less from you.5. Those who, in the last six, 12 or 18 months have shown a drastic reduction in purchases.

Customers who are buying much more from 6. you.

Subsegments A and B are there to provide one additional level of segmentation. For example, you might make A the U.S. and B Europe or you can make A Managers and B Technicians. You need not use both A and B in your sample selection; it’s your choice.

Example: Customer Archetypes T


OUNDATION

Ensure that the objectives for the customer visits are documented and Circulate the objectives and any other relevant material to the members of your team and any other relevant stakeholder.

Understand What Customers Value


RankCustomer Value Driversin Order of Importance Category

Competitor A

Competitor B

No.Rating (1-10)

Score Rating (1-10)

Score

1 29% Ability to address existing and anticipated technical Ben/Tech 8 2.32 10 2.90 You need to

be the BEST in satisfying the most important Customer Value Drivers (CVDs).

2 18% Positive experience with the product. Ben/Emo 9.5 1.71 8 1.44

3 15% Positive experience with the company. Ben/Emo 5 0.75 9.5 1.43

4 12% Ease of operating and maintaining the system Ben/Tech 7 0.84 8.5 1.02

You can be COMPARABLE to competitors in the second tier of CVDs.

5 8% Increased asset utilization. Ben/Eco 8 0.64 4 0.32

6 5% Ease of integration into company processes and Ben/Oper 9.5 0.48 4 0.20

7 5% Cost of ownership (CoO). Cost/Money 8.5 0.43 6 0.30

8 3% Impact on the organization if something goes wrong. Cost/Risk 9 0.27 7 0.21 You can be

INFERIOR in satisfying CVDs that are the least important, provided your performance is still

9 3% Increased revenue/throughput. Ben/Eco 7 0.21 4 0.12

10 2% Purchase price. Cost/Money 6 0.12 4 0.08

All 100% Product Value Index 7.77 8.02

Example: Product Value Index

1 2 3 4

The Product Value Index (PVI) is a numerical expression of value. By quantifying the value that a product represents to a target segment, you can determine how the offering of one company ranks compared to that of another company. The PVI is calculated by first multiplying the Importance percentage (item 2) by the Rating (item 5)—this generates the Score (item 6) for each CVD—and then totalling the Scores to create the PVI (item 7).

5 6

7

T Step 3: Interview Your Customers


INTERVIEWER: How do you feel about this software product?CUSTOMER: It is very dif cult to use.

INTERVIEWER: Tell me more?CUSTOMER: The menu system is not intuitive.

INTERVIEWER: Tell me why it’s not intuitive?CUSTOMER: I get lost all the time.

INTERVIEWER: Why do you think you get lost using the menu?CUSTOMER: 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 dif cult to use.

Q1st Why

2nd Why

3rd Why

ANote the root message — i.e., actionable input from the customer.

Example 1: The 5 Why’s

INTERVIEWER: Tell me about your printing needs.CUSTOMER: I want a printer that prints at more than 20 pages per minute, and 30 would be better.

INTERVIEWER: Why is that important to you?CUSTOMER: The one we have now does 10 pages/min and it is too slow.

INTERVIEWER: In what circumstances is it too slow?CUSTOMER: In particular when we have a queue of documents with heavy graphics.

INTERVIEWER: Tell me more.CUSTOMER: We often have to print 60-100 page reports at the last minute before a presentation, and these reports contain lots of graphics. It is not atypical to have 3-5 users printing reports at the same time.

INTERVIEWER: What about documents with text only?CUSTOMER: No problem there. It is only when we have these heavy graphics reports and when 3-5 users are queueing.

Q1st Why

2nd Why

3rd Why

AFrom feature to problem — i.e., don’t stop probing until the customer voices the problem.


4th

Edit

ion

tools fully-illustra

ted

processes

examples

templates and

worksheets

The Voice of the Customer for Product Development This VOC guidebook addresses the pressure to obtain customer require-ments rapidly — and shows you how to turn this knowledge into innovative products faster and better than your competitors.

It’s a step-by-step guide to every aspect of obtaining, processing and applying knowledge of your custom-ers — so you can create a steady flow of winning products.

Flexible Project Management for Product Development

Your illustrated guide to making project management work in tumultuous development



CONTINUED


SET THE FOUNDATION


1



2



BRAINSTORM




3

















Competitor A

Competitor B

No.Rating (1-10)

Score Rating (1-10)

Score
















1 2 3 4


5 6

7








Q1st Why

2nd Why

3rd Why








Q1st Why

2nd Why

3rd Why



4th

Edit

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processes

examples

templates and

worksheets

Flexible Project Management for Product Development Designed for product developers who are tired of traditional project management approaches that don’t account for the real-world intricacies and challenges of product develop-ment.

The step-by-step design of this guidebook makes it a valuable refer-ence for you and your development team — for years to come.

Risk Management and FMEAfor Product Development

Your illustrated guide to reducing time-to-market through risk management and FMEA



CONTINUED


SET THE FOUNDATION


1



2



BRAINSTORM




3















OUNDATION





Competitor A

Competitor B

No.Rating (1-10)

Score Rating (1-10)

Score
















1 2 3 4


5 6

7








Q1st Why

2nd Why

3rd Why








Q1st Why

2nd Why

3rd Why



4th

Edit

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processes

examples

templates and

worksheets

Risk Management and FMEA for Product DevelopmentIn product development, the im-perative to reduce time-to-market is always present — and risks can cause catastrophic delays. What if you could predict and manage risks, so they don’t interfere with your time-to-market goals?

This step-by-step guide addresses every aspect of identifying, pri-oritizing and mitigating product development risks. It’s written by veteran product developers who understand the pressures of creat-ing innovative products faster than your competitors.Debriefs and Postmortems

for Product DevelopmentYour illustrated guide to improving performance through lessons learned



CONTINUED


SET THE FOUNDATION


1



2



BRAINSTORM




3















OUNDATION





Competitor A

Competitor B

No.Rating (1-10)

Score Rating (1-10)

Score
















1 2 3 4


5 6

7








Q1st Why

2nd Why

3rd Why








Q1st Why

2nd Why

3rd Why



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examples

templates and

worksheets

Debriefs and Postmortems for Product De-velopment Debriefs are the most effective way to improve development-team performance — and that trans-lates to shorter time-to-market and more reward-ing innovation development.

This step-by-step guide covers every aspect of postmortems, identifying what to do-more-of and what to do-less-of to improve future product-development performance. It’s written by veteran product developers who understand how to obtain the right input from your team, and how to apply it to future projects.

Actionable Metrics for Product Development

Your illustrated guide to developing and using metrics to improve product margins and reduce time-to-market



CONTINUED


SET THE FOUNDATION


1



2



BRAINSTORM




3















OUNDATION





Competitor A

Competitor B

No.Rating (1-10)

Score Rating (1-10)

Score
















1 2 3 4


5 6

7








Q1st Why

2nd Why

3rd Why








Q1st Why

2nd Why

3rd Why



4th

Edit

ion


ted

processes

examples

templates and

worksheets

Actionable Metrics for Product Development“What gets measured gets done” says the refrain. This is particularly true in product development due to the many competing priorities, from time-to-market, to gross margin to time-to-profit and many more.

This book will guide you through an assessment of your current metrics and their impact on the bottom line to de-scribing the critical metrics used by product development organizations.

Coming soon

Coming soon

ContACt us: [email protected]

Additional ResourcesRapidinnovation has published a series of books on product development. They were written by experienced product devel-opers for those who must implement critical business processes in product development environments.


About Us

Jean-Claude Balland Ph. D. (Regrettably Dr. Balland passed away since the publication of this White Paper, we shall miss him) was a high-technology marketing executive, consultant, professor, and lecturer with extensive experience in sales and marketing management in Europe, the United States, and Japan for technology products. Jean-Claude helped companies develop breakthrough offerings and strategies. He is was

adjunct professor at OHSU School of Engineering and Computer Sciences and at Portland State University where he taught Technology Marketing and other courses related to creating breakthrough products. Prior to his present occupation, Jean-Claude was Director of Internet Marketing at Mentor Graphics Corporation. He worked nineteen years at Tektronix, Inc. and left after several years as the Division Marketing Manager of a large and highly successful division.

Bob Buxton brings more than twenty years of experience in both R&D, marketing and business segment management within high-technology companies including M/A-COM, Marconi Command and Control Systems, Marconi Instruments, Advantest, Tektronix and Anritsu. His R&D experiences were primarily in connection with Radar and Communications equipment design. His marketing and business management experience spans the range of strategy development, portfolio management, new product definition and development, creation and execution of go-to-

market strategies and product life cycle management.

Bob holds a bachelors degree in General Science, a masters degree in Microwave and Modern Optics from University College, London and an MBA from George Fox University, Newberg Oregon.

He is a Chartered Engineer and a Member of the Institution of Engineering and Technology.

Jose Campos, Founder RapidinnovationJose and his team of seasoned consultants collaborate with B2B companies around the world on the methods, tools and cultural shifts needed to rapidly and consistently deliver superior value to customers.

He has spent his career working to define and deliver innovative products to market. For 30 years he has passionately concentrated on developing new methods to discover and deliver customer value in the tumultuous world of high-tech.

Jose has written several acclaimed books, including Voice of the customer for Product deVeloPment, a methodology for discovering, prioritizing and using customer requirements to create clearly differentiated products faster than the competition, and risk management for Product deVeloPment, which includes strategies and methods to reduce the impact of uncertainty on your investment. flexible Project management for Product Development is his latest publication. Jose was also coauthor of Project management toolbox in collaboration with Dr. Dragan Milosevic.

His focus on high-tech and their technical background allow Jose and his team of experienced consultants to provide meaningful and practical coaching to technology professionals. They have traveled the world to help R&D and Marketing teams improve their ability to create innovative products customers love.

Contact Jose: [email protected]

mailto:[email protected]

Documents

Rethink Your MRD & Improve Differentiation and … Your MRD & Improve Differentiation and Gross Margin How to optimize your MRD process to improve customer value & achieve margin Authors: