Once upon a time, a company made a smartphone with a built-in tactile keyboard, and it ruled the market.
One day, a new competitor showed up with a smartphone that did away with this tactile keyboard by building a digital keyboard into the screen itself. The old company disdained the new company’s digital keyboard: “Who wants a phone without a tactile keyboard?”
As it turned out, a lot of their customers did. Within a few short years, the new competitor dominated the market, while the old company’s market share fell to 0.0%.
Don’t let this happen to you.
If you still rely on old initiatives to grow your business-to-business (B2B) organization, it’s time to make changes. But you might find innovation comes with unexpected challenges.
B2B innovation expert Dan Adams and his team at the AIM Institute recently uncovered several insights from a survey of 540 professionals with a combined 10,000 years of experience.
Another finding: If your competition delivers new customer value and you don’t, it doesn’t matter how friendly your salespeople are.
One insight from the survey: You can take a focus on quality too far. After you reach a certain level of quality, you may see diminishing returns. The same goes for cutting costs, which can degrade future rapidity and profitability if it’s not done carefully.
And while global expansion requires the skill and knowledge to grow acquisitions, undeveloped regions are becoming harder to find.
Understanding Customers’ Needs
Given these challenges, how do you create organic, profitable, and sustainable growth for your B2B organization?
“To drive growth, companies ought to replace their goal of maximizing shareholder wealth with a goal of understanding how to meet customer needs better than others,” says Adams.
But if your organization is set in its ways, getting and applying that understanding can be a challenge.
Most companies spend an average of 10% or less on understanding market needs in the preliminary phase of their product-development research, according to the American Productivity and Quality Center report “What Drives B2B Organic Growth?” But these companies found more success after shifting resources from developing solutions to helping them understand and meet market needs and competitive positions—increasing their spending in this area by 20% to 30%.
Front-end innovation is critical. But does your organization already have the skills and expertise you need to identify the right audiences and test-market needs, and to ask them the right questions for qualitative and quantitative research?
Many organizations don’t have these abilities in-house. To get the right information, these companies may introduce third-party consultants to acquire valuable information that’s not influenced by their own corporate culture or their existing assumptions. Using an outside consultant can help them make objective decisions—the right decisions—with insights they don’t have on their own.
Quantitative and Qualitative Insights
At the outset of innovation, it’s important to discover detailed and actionable qualitative and quantitative inputs about your customers’ desires before moving forward on any development process.
“You can clarify the ‘fuzzy front end,’ since B2B customers have high knowledge, interest, objectivity, and foresight,” Adams says. “They can explain their needs before you begin product development. This lets you dramatically reduce your commercial risk and focus on technical risk.”
And the information you gather must come from the customer segments that matter most. Your customers often have specialized needs, so you must first identify the customers who best represent your market’s needs and initiate qualitative divergent-discovery interviews—essentially, brainstorming sessions you facilitate for customers to identify and explain their many diverse needs.
It’s not always easy to get to the right insights. You want to make your respondents comfortable, without probing too much or introducing your own biases, so they talk freely.
It’s also a good idea to have a group of customer contacts in the room or on a web conference during expert interviews. “With all of these different functions in the room, you can brainstorm and build off of each other’s ideas,” Adams says. This added process provides much richer information for true qualitative discovery.
It’s also important to gather data that you can convert into usable statistics.
To do this, you should conduct quantitative convergent-preference interviews—a technique of asking the same closed-ended questions in a structured format to all participants and assigning the responses numerical values. Be sure to set up the appropriate processes to identify the right audience and obtain responses in an unbiased, structured way so you end up with unbiased and accurate data.
Gathering both qualitative and quantitative data may seem like a lot of work, but getting both sets is important. The sets overlap, so you avoid limitations and missing important insights.
When you uncover previously unarticulated customer needs, you can eliminate many innovation errors and reduce errors of commission, so you can avoid working on the wrong product features or products.
The Key to Growth
That’s why, according to Adams, it’s essential to invest 20% to 30% of your project spend to understand your market at the front end to achieve profitable, sustainable organic growth.
Focus on getting the appropriate qualitative and quantitative research before you move forward on the development process. With these powerful insights in hand, you can save valuable resources by avoiding customer needs you may be assuming incorrectly. Even more importantly, you’ll get a real-time pulse on your customers that will provide a competitive advantage for long-term success.
And bringing in third-party consultants with the appropriate insight, objectivity, and expertise may be the investment you need to make sure you’re looking at the right audiences, asking them the right questions, and getting the right answers about what they really need. That way, you’ll know what your customers really want—before you launch another smartphone with a tactile keyboard.
Find out how GLG’s network of more than 700,000 specialists can help your organization gain new insights from consultations, surveys, subject-matter experts, and more, at https://glginsights.com/.
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Front-End Innovation Starts with the Right Customer Insights - SPONSOR CONTENT FROM GLG INSIGHTS - Harvard Business Review
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