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How to Put Customer Needs at the Centre of Business Strategy

By on Sep 27, 2009 Editor's Pick 9 Comments

One of the foundations of successful business is understanding customer needs. Really understanding their needs. Developing a deep, almost visceral understanding of what customers’ need lies at the heart of innovation to create winning new products and their marketing to target customers. As Peter Drucker said, ‘because the purpose of business is to create a customer, the business enterprise has two–and only two–basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs’.

But understanding customer needs is not as easy as it sounds. You can’t just go out and ask customers what they need. As Lance Bettencourt showed in a recent article on the Debunking Myths about Customer Needs, it isn’t because customers don’t know what their needs are, but because they come mixed-up with wants, expectations, benefits, and above all solutions. If we struggle to define what a need is in a universally accepted way, what chance do we have of marketing, sales and service agreeing on a common customer management strategy? Precisely nil, if like me, you often sit in meetings with marketing and sales people (service is not usually invited) talking mutually incomprehensible languages.

I have been scanning the academic and practitioner literature for over 15 years, looking for insights and tools to help me better understand and define clearly what customers really need. I was about ready to give up when I came across Tony Ulwick and Clayton Christensen’s work on customer ‘jobs-to-be-done’ a couple of years ago.

Customer live their lives in a constant struggle to get things done efficiently and effectively. Sometimes these are simple functional things like getting the kids to school on time, or keeping the old family car running. Sometimes they are personal things, like the satisfaction of cooking a tasty meal for the family, or the feeling after you finish a hard training session at the pool. And sometimes they are social things like enjoying a drink with friends after work, or proudly showing them your new car (the old family car really was on its last legs!). What all these things have in common are that they are different jobs-to-be-done by the customer. In fact, if you look at pretty much everything about your life, or about customers’ lives, they are nothing more than a combination of functional, personal and social jobs-to-be-done, each with a range of different outcomes that customers are trying to achieve.

Once you reorientate your thinking away from the nebulous concept of customer needs, and towards the concrete jobs customers are trying to do and the outcomes they are trying to achieve, you can use the insights to create innovative new products, services and experiences that exactly meet customers’ needs. What Tony Ulwick of Strategyn calls Outcome-Driven Innovation. For example, Microsoft innovated around its software assurance product after carefully looking at the corporate customer jobs associated with licensing and upgrading Microsoft software. Customers hire products to help them get jobs done more effectively. Think of Ted Levitt’s famous example of the job of drilling a hole in a wall. As Clayton Christensen writes, the customer doesn’t actually want a drill at all, he wants a hole in a wall. You can also use the insights to go to market in ways that speak directly to customers about how products help them with important jobs. For example, after looking at the job of sawing during home building and improvement to improve its own range of circular saws, Bosch identified a number of different customer segments that had different sawing needs. It used the insights about customer jobs to target each segment with different messages about how the improved circular saws helped them to get the jobs important to them done better.

Understanding the jobs customers are trying to get done and the outcomes they desire from doing so, really does provide a robust way to cut through the psychobabble of needs, wants, expectations, benefits and solutions. And it provides a simple language to describe the world from the customer’s perspective, something that has been missing for years. This language can be used to drive both customer-centric innovation, and the marketing, sales and service that supports innovative new products.

Tip of the hat to Fergus Bisset’s blog post on What Are User Needs? for giving me the inspiration to write this one.

Graham Hill
Customer-centric Innovator
@grahamhill

Further Reading:

Lance Bettencourt, Debunking Myths about Customer Needs,

Bettencourt & Ulwick, The Customer-Centered Innovation Map

Clayton Christensen, What Customers Want from Your Products

Strategyn, Microsoft Case Study

Strategyn, Bosch Case Study

Fergus Bisset, What Are User Needs?

Ulwick & Bettencourt, Giving Customers a Fair Hearing

Nicki Sutton, Outcome-Driven Innovation: A Critical Review

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9 Responses to How to Put Customer Needs at the Centre of Business Strategy

  1. Mike Boysen September 27, 2009 at 1:33 pm #

    Thanks for the links. This is the kind of discussion that we need to have in the CRM world. OK, now back to that software implmentation I was working on!

    Mike Boysen
    Effective CRM

  2. Graham Hill September 27, 2009 at 3:21 pm #

    Hi Mike. Thanks for the comment.

    You know me. Always one to try and stimulate discussion abot what is going on at the edges of CRM. This is important for CRM. Today’s edges are tomorrows centre. Looking at customer needs as jobs-to-be-done is already being taught to the next generation of business leaders at B-school. I’ll not forget taking a B-school executive education course about Building a Customer-Centric Organisation earlier this year at the IE Business School in Madrid. When the Prof discovered I have actively used jobs-to-be-done thinking in my work for a couple of years he asked me to lead that part of his course. Surreal. Soon, it will be as much a part of daily business as SWOT analysis or NPV calculations.

    Graham Hill
    Customer-centric Innovator
    Follow me on Twitter

    Interested in Customer Driven Innovation? Join the Customer Driven Innovation groups on LinkedIn or Facebook to learn more.

  3. Mark Tamis September 27, 2009 at 4:56 pm #

    Agreed, understanding jobs that customers are trying to achieve is a great basis for driving innovation. You made me think about at another dimension, namely the “why” of it all?

    Why drill a hole in the wall – because you want attach a hook to hang up a picture frame. In that case using strong blue-tack could also be a good innovation, right?

    Understanding what the hole adds to the whole scheme of things (the combined job outcomes), such as decorating a room may add some inspiration for innovation for the initial job.

    Cheers,
    Mark

  4. Vijay Wadhwani September 28, 2009 at 3:46 am #

    Nice Article ..
    Spine of CRM is Customer and therefore understanding Customer needs becomes really important. This will allow us to design cutting edge solutions to help the Customers to do their jobs effectively and reinstate the fact that CRM starts with C the Customer.

    The comment posted by Mark on “WHY” adds richness to the post.

  5. Graham Hill September 28, 2009 at 4:39 am #

    Hi Mark

    Thanks for your comment.

    You took the words right out of my mouth. The drill a hole in the wall example comes from a famous 1970s article by Ted Levitt. They hadn’t invented things like Blu-Tack at that time. When I use the hole in the wall example, I point out that the underlying job of hanging a picture on the wall can be accomplished by drilling a hole in the wall (and screwing in a picture hook), but it can also be accomplished by using a sticky (but removable) wall hook. And the future will no doubt bring new solutions to the customer’s job of hanging a picture on the wall.

    The key think is to understand the job (or jobs) the customer is trying to do and the associated outcomes they are looking for. These are the fundamental basis for innovation and for the marketing that follows.

    Graham Hill
    Customer-centric Innovator
    Follow me on Twitter

    Interested in Customer Driven Innovation? Join the Customer Driven Innovation groups on LinkedIn or Facebook to learn more.

  6. Ed Gillespie October 1, 2009 at 8:57 am #

    Graham — is there a difference between what a customer needs and what a customer values?

    I’ve seen companies conduct research to identify a clear set of needs, design solutions to address those needs and yet fail to convince customers to buy these solutions.

    Perhaps, as you mention, these companies need to do a better job of identifying the true, underlying needs. But perhaps, there also needs to be a way to capture level of importance and priority, too. Would be interested in your thoughts. Thanks!

  7. Graham Hill October 2, 2009 at 2:42 am #

    Hi Ed

    Thanks for your comment. And your question.

    The situation you describe is all too common. Companies spend time gathering customers needs and creating new products, only to see them fail miserably in the market. An estimated 80% of new products fail first time in the market. And 60% fail on reintroduction too.

    Experience shows that this is often down to a failure to understand customers’ needs in their entirety. Shallow Voice of the Customer programmes that don’t get to the heart of the different jobs customers are trying to do and the outcomes they are looking for, are partly to blame. But so is a failure to quantitatively prioritise jobs & outcomes to identify the ‘innovation sweetspot’; the important customer needs where customer satisfaction with delivery is the lowest. Prioritisation is a critical part of the Outcome-driven Innovation approach develeloped by Strategyn’s Tony Ulwick.

    Once you understand customer needs – in the form of the different jobs & outcomes they are trying to achieve – and have quantitatively prioritised them, you are in the best position to identify where and how to innovate. Failure does not have to be an option.

    Graham Hill
    Customer-centric Innovator
    Follow me on Twitter

    Interested in Customer Driven Innovation? Join the Customer Driven Innovation groups on LinkedIn or Facebook to learn more.

  8. Chris Lawer March 13, 2010 at 5:48 am #

    If anyone wants to find out more about the theory and how to put Outcome-Driven Innovation into practice, feel free to contact me. Strategyn UK has completed over 30 successful ODI job studies in past four years.

  9. Guest May 20, 2011 at 10:49 am #

    Graham

    I am really interested in your ideas around the customer , especially that everybodies life consists of jobs to be done and Outcomes achieved.

    With this in mind why do so many organisations roll out the mantra of putting the customer at the centre of everything they do ?? ( not that many of them actually do put the customer there!!)

    Surely making it easier to do the most common jobs, is possibly the best way of putting the customer first ?

    but one area where this can cause confusion is retail, how often do I stand at a machine waiting for a human before I can complete the transaction !!!!Whilst the people who queued at a regular checkout seem to have a more pleasant experience , so has technology failed or have the Supermarkets just tried to cut costs ??

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