The Product Development and Management Association (PDMA) is a global community of professional members whose skills, expertise and experience drive the world's most recognized and respected innovative companies. In the following interview, Beat Walther and Yann Wermuth discuss together with Scott Burleson the Customer-Focused Innovation process and which benefits it entails.
Scott Burleson: Beat and Yann, thanks for taking the time for this interview. I’d like to understand your core process, “Customer-Focused Innovation”, as I believe it would be highly interesting to our practitioner and leader members of PDMA. Let’s begin there. What exactly is the “Customer-Focused Innovation“ approach?
Beat: The Customer-Focused Innovation (CFI) process is a systematic approach to identify and sharpen winning ideas and concepts from the customer’s view. We have designed it over the past 20 years together with dozens of our clients: corporates from various industries and early-stage technology startups. A co-creation effort, if you want, to achieve actionability.
Scott: How is it different than other popular methods?
Yann: As opposed to conventional innovation and strategy development methods, like design thinking or strategy processes, CFI quantitatively measures customer needs early in the process on a very granular and concrete level, not just on an abstract level. That way, it gives companies a validated fact base with maximal decision comfort when developing innovation strategies or selecting and sharpening solution ideas. Moreover, CFI consciously manages the transition from customer findings to the development work with specific tools. We call that “spinning”.
Scott: What are the major phases of CFI?
Beat: There are four steps: Frame, Discover, Spin and Develop. In Frame we scope the project from the customer perspective. Discover is a combination of qualitative and quantitative customer exploration methods to uncover pain points and opportunities. In Spin we spin solutions and ideas towards those pain points and create compelling Value Propositions that deeply resonate both internally as well as with the customers. Lastly, in Develop, we do customer advocacy, i.e. we accompany keep the teams on the customer track. Because during development, there are a lot of critical moments where the customer focus again can get lost.
Scott: So, it’s a customer-needs first method. One of the first things that I notice from this description is the care for the framing stage. This is something that I see companies get wrong often. Can you tell me a bit more about that?
Yann: We begin with the strategic intention of the business. That’s critical, and as you say, is often missed, or, just isn’t discussed enough upfront. But just as importantly, we need to understand who the targeted customers are, where the source of growth is. And of course, we need to think through the jobs they want to achieve. All that follows is built upon this.
Scott: I’m obviously a fan of jobs-to-be-done! For folks who may not be familiar, could you describe this a bit?
Yann: Jobs-to-be-done (JTBD) is the underlying logic. You could even say that CFI is powered by Jobs-to-be-done. JTBD says: To successfully innovate you must first focus on the Job your customer wants to get done. The technology (or solutions) comes later. Jobs are goals or purposes people want to achieve. The Job is the unit of analysis, and not socio-demographics or other attributes. People want a hole in the wall, not a drill.
We frame the business challenge from the Jobs-to-be-done angle to discover and quantify the unmet needs when customers are trying to get the Job done. This initial switch is facilitated by our Jobs-to-be-done hierarchy tool. This phase is solution-agnostic. The outcome of the Discover phase is a quantitatively measured understanding of the unmet need opportunities. Pain points are ranked from most to least relevant with the Value Map or analyzed along the journey with the Job Journey Navigator.
Scott: That’s a great approach. That sounds like we’ve discussed your first two steps, frame and discover. But what comes next? How does the „Spin-mode“ work?
Beat: Exactly! Just as you say, we switch into solution mode after Discover. We call this next step „Spin“ and consider it crucial to ensure customer-focused development. It removes the risk that companies are again driven by technology biases or internal priorities such as profit considerations. Spin is like a catalyst to keep the customer at the table. That’s also why we insist on defining compelling value propositions of promising ideas early on, i.e., before many resources are invested. There is a missing link between discovering customer insights and developing solutions. “Spin” – with tools like e.g. Pain Matching to identify the winning ideas - fills this missing link.
Scott: Is idea generation part of Spin? If so, how does it work?
Beat: Idea generation can be part of Spin but not necessarily. We have noticed that companies have plenty of ideas. In fact, they have too many! There is no need to generate even more. It’s one of the main reasons why development processes are slow. Endless discussions debating which ideas to implement. That’s why “Spin” is mainly about focus, about selecting the winning ideas and about sharpening them. It can happen that no idea in the roadmap addresses or solves a customer’s Pain Point. That’s a white spot. In this case, we would perform targeted idea generation, in other words: develop new ideas that exactly address this white spot.
Yann: To make the idea selection in the Spin phase we use our tool called "Pain Matching". The tool matches unmet needs with solution ideas to determine the winners. In one of our more recent projects – about a new software for teachers to prepare and manage lessons – we prioritized more than 100 feature ideas andfunctionalities. The development roadmap prioritized the five most promising features that teachers would pay for. Another tool is our Value Proposition Canvas to compose compelling Value Propositions
Scott: Can CFI help with market segmentation?
Beat: Market segmentation can be a tough challenge, but is of great benefit. If companies segment a market the right way, they can focus their efforts and come up with solutions and messages that resonate much better with the target groups.
Scott: Great segmentation is the dream of many JTBD projects. But in practice, it often seems that it doesn’t live up to the promise. What’s the key to getting it right?
Yann: The key is to use the right segmentation criteria. Socio-demographic criteria, such as age or income, or behavioral criteria alone, such as purchasing patterns, often fall short. Customer segments must be formed on the basis of unmet needs. A customer segment groups people with the same unmet needs, which are different from the unmet needs of another segment.
Scott: In practice, how do you move this forward?
Yann: We have developed an index called Cut Difference Index (CDI) to quickly calculate and compare segments based on need patterns. We find for example two segments with totally different needs and look at the respective behavioral patterns, attitudes, values, but also socio-demographics and also people’s attitudes and values form a segment with the same unmet needs. So you see, we strongly believe in needs-based segmentation. These segments can then be translated into personas which are truly actionable because the unmet needs are known and quantitatively validated.
Scott: One thing that is unique about Vendbridge is that you encourage your clients to participate in customer interviewers as moderators. How does this work?
Beat: This often happens in a coaching setting or when a project has a coaching element. Generally, we encourage as many people as possible to observe or participate in customers interviews conducted in a Jobs-to-be-done way. It can be eye opening and has much greater impact than slides or reports. We want our clients not only get the results, but also embrace the Jobs-to-be-done logic. The best way to learn is by doing. I remember in a project for a car manufacturer, about designing the seats, the engineers were in the meeting and in real-time sketched solution ideas which were then tested in the next round. That was funny and efficient.
Scott: It’s common for a product manager to have not enough budget to hire a company like yours. And yet they’re working on a new concept that requires customer insights. What advice would you give these folks?
Yann: Being better than yesterday is better than trying to be perfect. CFI is modular and scalable to different levels. Of course, it would be ideal to talk to 24 customers or do a survey with 1000 customers. Maybe you can't do that. But talking to 8 and surveying 50 is better than having no data at all. It's about taking the steps that are possible and make sense. Sometimes we tell our clients that the full-fledged CFI process also would be an overshoot for the challenge at hand. So we customize it.
Another thing we regularly do is what we call "Harvesting". That means we look at existing research and knowledge in a company and harvest it from a Jobs-to-be-done perspective. This can reduce the resources required immensely.
Beat: And let’s be clear. Development or marketing and sales costs are higher than what a proper need discovery early on costs by many factors. But a failed innovation costs even more than that.
Scott: Product managers sometimes feel sidelined when engineers develop things themselves. Especially when it comes to new products. How can a product manager get engineers to focus on the customer needs instead of just relying on their own ideas?
Beat: Sidelining engineers is not a good idea. Our experience has been that engineers and product managers must shape the process together to get buy-in and alignment. That’s why we encourage involving engineers, but also sales or management or anyone else that will work with the outcomes of the project. They need to shape and influence the approach to meet their needs.
The Spin modules in our approach, as well as the CFI process in general, are designed to bring teams together and remove all the biases which the different people in an organization have. We encourage the teams to work jointly with the results and findings and focus all energy on helping customers get the Job done. In our experience, a slide deck just won't do it. You need to bridge the gap between insights and implementation. That’s what Spin is all about.
Scott: For folks who are interested in learning more about CFI approach or Vendbridge, how can they find you?
Yann: The website www.vendbridge.com is a good place to start. We regularly host events and publish white papers and though pieces. There you can sign up to our newsletter so you won't miss anything. Alternatively, you can connect with Beat Walther (Managing Partner) or Yann Wermuth (Partner) on LinkedIn. Then there's the @Vendbridge Twitter profile or just drop us an email at email@example.com!
Beat Walther is the Co-founder and Managing Director of Vendbridge AG. Beat has more than 25 years of experience in business strategy, innovation and marketing & sales. He is an ex-McKinsey and ex-P&G.
Yann Wermuth is a partner at Vendbridge AG. Yann has more than 10 years of experience working and developing the CFI approach and JTBD thinking. He has an MA in philosophy and is currently writing his PhD.