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What customers want

January 4, 2017 Leave a comment

Update: Just after writing this post, I started reading a great book – “The Hard Thing About Hard Things: Building a Business When There Are No Easy Answers” by Ben Horowitz, and stumbled upon a quote that really articulates what I am trying to say with this post.  I decided to add the quote to the top of this post:

“It turns out that is exactly what product strategy is all about—figuring out the right product is the innovator’s job, not the customer’s job. The customer only knows what she thinks she wants based on her experience with the current product. The innovator can take into account everything that’s possible, but often must go against what she knows to be true. As a result, innovation requires a combination of knowledge, skill, and courage.”

What customers want.  Does it matter?  Depending on the kind of business you are trying to run, it may matter less than you think.

Is there a difference between a Customer-driven business and a Product-driven business?  After all, there is really only one goal – happy customers.  Right?  You either make things that people want, or make people want the things you make.  Business experts would postulate that there is a big difference.  And those differences are critical to how managers should run their business.

T0 the Customer-driven business, customer feedback is the cornerstone of success.  The entire product pipeline is based on information gathered on customers, and the focus is first and foremost on the customer. How to make the customer happy, how to meet or even exceed their expectations.  This type of business often operates under the assumption that it can only survive if the customers are satisfied.

In terms of marketing, the Customer-driven business is not greatly invested in marketing the product. After all, the product has been designed and created with the customer in mind, so it goes without saying that there is already a market (and customers) for it.

Speed and flexibility become the pillars of the Customer-driven business.  Unfortunately, in many cases the Customer-driven business is heavy on Sales, heavy on Marketing, and a little thin in Product and Technology.  Product Management is well poised to offer the benefits of process and discipline, but methodologies such as Agile and Lean are misunderstood and often shunned by Sales and Marketing heavy businesses. Without such discipline, products become ad-hoc and  meandering under the load of unending customer requirements.

The Product-driven business, on the other hand, cares much less about customer feedback.  Why?  The Product-driven business works under the assumption that with great products come great customers.  The Product-driven business exists to expand and create markets, create customers, and thereby create profits.  They are highly dependent on marketing since they make people want things rather than make things that people want.

In an existing Product-driven business, customer feedback at the aggregate level is crucial, but feedback at an individual level is almost irrelevant.  The Product-driven business is laser focused on the market they are trying to create.  Outliers most often point to customer-product mismatches.  Aggregate feedback should be used to validate the new market – not market fit.  Market fit implies that the target market already exists, which it does not.

Lean and Agile processes are essential to the Product-driven business because the new markets and customers are, in a manner of speaking, an educated guess.  The technology teams need to be flexible and fast as knowledge about the new market and new customers emerge.  MVP’s (minimal viable products) and validated learning cycles are the essential processes for the Product-driven business.  Sales teams need to be able to say “no” and move on quickly on the quest for the defined but unknown customer.  And Marketing is the portal through which these new customers will come.

One process internal, one  external.  Both require different approaches. Often times a hybrid approach results in an in-between process that serves neither.  Product Management needs to provide the leadership to help the company clarify the type of business, and then provide the tools and processes for success.

As a Product Manager, ask your self the following questions:

  • Is yours a Customer-driven business?  If yes, then
    • Customer feedback is crucial
    • Understand the role of Marketing.  If your business is truly Customer facing, then you should already know who and where your customers are.  Use marketing to build awareness, not to build a market.
    • Implement an Agile process for speed and flexibility.  Customer feedback should be coming in fast and furious, you will need resources and process to deal with it.
  • Is yours a Product-driven business?  If yes, then
    • Use customer feedback to support validated learning.  Focus on finding new customers and creating or expanding markets.
    • Rely heavily on Marketing to bring in the customers who need you, but probably don’t even know you exist
    • Implement an Agile process.
    • Create beta programs, identify evaluation customers, build MVP’s and Validated Learning loops

And remember attempts at hybrid models tend to die in an unlivable no-man’s land between product and customer-driven territories.

So yes, it matters what customers want.  But more importantly, know what you want from your customers.

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