TEI 045: Understand What Customers Need Before Developing a Product – with Tony Ulwick

Summary: In this episode I’m talking with the creator of an entire category of product innovation – one that significantly changed how I think about the process of innovation. Clayton Christensen said his approaches “bring discipline and predictability to the often random process of innovation.” The category of innovation is known as ODI, Outcome-Driven Innovation, and it was created by Tony Ulwick. When ODI was published in the Harvard Business Review, they declared it one of “the ideas that will profoundly affect business as we forge ahead in today’s complex times.” Tony also authored the best-selling book What Customers Want, explaining how the jobs-to-be-done framework is transformed into practice with ODI.<br> Practices and Ideas for Product Managers, Developers, and Innovators<br> Summary of questions discussed:<br> <br> * What experiences led to you creating Outcome Driven Innovation (ODI)? At IBM, Tony worked on the PC Junior as a manufacturing engineer. The team was very excited to launch the product but within a day the Wall Street Journal declared it a flop! It turned out that they were right and the cost to IBM in a failed product was over $1B. This got Tony thinking about the metrics to determine what makes a good product – a product that customers want. This was the start to Outcome Driven Innovation, which has matured over the last three decades.<br> <br> <br> * Can you briefly share the key components that make ODI work? The key component is understanding the metrics people use for getting the job done – measuring what people want the product to accomplish for them. Customers don’t describe metrics for a product but do discuss the job they want to accomplish in terms of metrics. An example is a product for teeth whitening and the job customers want done is to have whiter teeth. Associated metrics include how much whiter their teeth can be, the convenience involved, and the financial costs. All the metrics are categorized into one of three areas – core/functional, consumption, and financial.<br> <br> <br> * What is the specific language associated with a customer need? A perfect need statement uses a specific syntax based on three characteristics of needs: (1) it has to be a measure of customer value, (2) it has to be measurable and controllable in the design of the product, and (3) it must be stable over time. Details of the syntax are described in What Customers Want.<br> <br> <br> * How are need statements captured? There are many approaches, such as ethnographic research and face-to-face interviews, but we have found that phone-based interviews work well when performed by a skilled practitioner. Interviews focus on the job the customer is trying to get done and understanding the details of this job and why they are doing it. A “job map” is then created that lays out all of the jobs the customer is trying to get done.<br> <br> <br> * How are customer needs ranked? A complete set of customer outcome statements (needs) is often over 100 items. The objective of ODI is to cast a wide net and capture all possible customer needs. Customers rank the needs by importance and satisfaction. This can also lead to identifying underserved customer segments – segments that cluster around specific unmet needs and who may be willing to pay a premium price to have their needs met.<br> <br> <br> * What about the satisfaction ranking – what have you found about that? ODI allows a composite satisfaction ranking for the product concept to be calculated. If the composite satisfaction is 20% or higher than existing products on the market, people are willing to make the switch and buy the new product.<br> <br> <br> * What about seeing ODI in action – do you have a case study to share that illustrates the process? One example is the Bosch circular saw. ODI was used to examine unmet customer needs.