3 Things You Must Know to Win at Innovation

You know how companies often struggle to truly understand their customers’ needs?

In fact, misunderstanding customer needs and their competitive options are the leading contributors to new product failure. While studies cite various reasons for innovation failure, the ones I have examined consistently point to these two key issues. There are 3 things you must know to overcome these issues.

The FIRST thing you must know is that over-confidence biascan cause leadership teams to miss critical insights– insights that could lead to simple improvements or even breakthrough innovations. Bain & Company famously documented this:

“Management teams tend to overestimate the degree to which they are really better than the competition. In a well-known Bain study of 362 companies, 80% of management teams felt they delivered a better customer experience than rivals – but only 8% of customers agreed. Companies need to make sure they aren’t exaggerating what makes them special in the eyes of their customers.”

The SECOND thing you must know is that most companies struggle to obtain a solid understanding of their target customers’ unmet needs, leading them to collect the wrong customer information.

Many companies conduct focus groups and one-on-one interviews asking customers what product features they want, what they can change or improve, run satisfaction surveys, or analyze past purchase data. But these methods are anchored to current products and services and are, therefore, deeply flawed for innovation (future products and services).

When customers are asked what they want, they often suggest minor improvements to existing solutions rather than revealing their true needs. Customer satisfaction data tells us how well current products work but nothing about unmet needs or competitive vulnerabilities. Historical data only shows us what customers settled for in the past – not what they really wanted. It’s like trying to design a better horse and buggy in 1990 by asking customers what features they’d like added to their carriage – you’d never get to the automobile.

The THIRD thing you must know is that true customer needs are separate and distinct from product and service solutions.JTBD naturally decouples needs from solutions because it’s based on the insight that people “hire” products and services to get their jobs done. By “job,” I simply mean a problem to solve or an objective to be achieved.

A good illustration of this is Theodore Levitt’s famous quote: “People don’t want to buy a ¼” drill; they want a ¼” hole!” This clearly illustrates the point: the drill is not the hole. The drill is one solution, but it could be a pick, a punch, a laser, or some yet-to-be-invented tool. Regardless, those solutions are separate and distinct from true customer needs, which, at a high level, are a JTBD like “make a hole.”

Notice that the job statement “make a hole” doesn’t mention any product or service. That prevents companies from being constrained by current products and services and makes them more likely to generate breakthrough innovations.

Decoupling needs from product or service solutions offers many benefits, but the most important one is that customers can now tell us what they want. That’s because we’re asking them what they want to accomplish rather than asking them for product or service specifications.

Hence, the old adage that “customers cannot tell us what they want” is only half true. It’s only true if we’re asking customers for product or service specifications, which, of course, isn’t their area of expertise, so they don’t know. That’s like a doctor asking patients what the best treatment plan is.

But customers can tell us what they want to accomplish, how they want to feel, and how they want to be perceived. In fact, customers can tell us virtually everything the leadership or product team needs to know to generate winning ideas with confidencebecause you’ll know you’re addressing the top unmet needs in the market. That’s because JTBD enables you to identify and rank the unmet needs (i.e., opportunities) with statistical validity, thereby incorporating competitive strengths and weaknesses.