Are You Really Innovating Around Your Customers’ Needs?
Every company believes it is customer-centric. However, most of them are product- and service-centric first, focusing on how to enhance their offerings rather than putting themselves in their customers’ shoes. To come up with truly innovative customer-centric ideas, companies must 1) Understand the problem the customer is trying to solve; 2) Identify and eliminate pain points; and 3) Look beyond their products.
How would you reimagine a gas station for the future? Even with the increasing penetration of electric vehicles, gasoline cars are likely to remain the dominant automobile for years or even decades. I have asked this question of hundreds of senior executives. They typically suggest things like including a coffee shop, making the station a drop-off point for Amazon boxes, or having robots pump gas. Their rationale for such changes is to provide additional value to customers. But are these ideas really customer-centric? Are they addressing the job the customer is trying to do – conveniently refuel the car. No.
Most people consider going to the gas station an unavoidable inconvenience. If people need to refill their car but hate getting gas how can we solve this problem? Not by putting Starbucks in gas stations. How about, then, bringing the gas to them? This may seem far-fetched but in fact several on-demand gas services launched in recent years including Filld and Booster do exactly this. Customers use an app to order gas when they need it, and these companies deliver. It’s not much of stretch from there to imagine that cars might soon automatically order their own gas when they sense they’re getting low.
Every company believes it is customer-centric. However, most of them are product- and service-centric first, focusing on how to enhance their offerings (e.g., adding services to gas stations) rather than putting themselves in their customers’ shoes (and realizing that people want to avoid the gas station altogether). In this article, I describe three ways companies can come up with truly innovative ideas by thinking about customers first.
Often customers have difficulty articulating the problem they are trying to solve. Therefore, it is critical to dig deeper to understand the root cause of customers’ challenges. This sort of investigating led Deepak Garg to build what’s now a billion-dollar venture, Rivigo, which is revolutionizing the trucking industry in India.
Trained at McKinsey and looking to build a company, Deepak realized that the rise of e-commerce had dramatically increased the demand for trucks, yet in India the industry was struggling with the shortage of drivers. How could this be in a country of over a billion people with high unemployment rate — despite healthy wages for truck drivers?
To solve this puzzle, Deepak visited the small villages where many truck drivers were recruited. Instead of pursuing a typical consulting approach to research with its large samples and quantitative analysis, Deepak undertook an ethnographic exploration to understand the social roots of the problem. During his one-on-one conversations he discovered that since truck drivers are almost always on the road, they often develop bad habits such as excessive drinking, drug use, and visiting prostitutes. Partly because of this, they are considered the 37th caste in India — lower than the untouchables. No villager wanted a son to become a truck driver or a daughter to marry one. (Yes, almost all truck drivers in India are men.)
Deepak’s discussions made it clear that the root cause of the trucker shortage is that truck drivers are on the road for long stretches, away from home, and that encourages bad habits. What, then, is the solution? Could it be to bring the drivers back to their homes every night? That could work – but how could he make it happen if a trucker’s trip from Delhi to Mumbai took three or four days?
A relay-service, he realized, could solve the problem. Effectively, he built truck stops four hours apart along a selected route. A driver could go from point A to point B, drop his truck there and pick up another truck to drive from B back to A. Another driver in turn would pick up the truck from B and take to point C, and so on. This not only brought drivers home each night, it created immense value for logistics companies. A truck that was previously utilized for only 10 to 12 hours a day, allowing drivers time to sleep and eat, could now operate more than 20 hours, cutting total delivery times by almost half.
To be sure, there’s a lot of technology behind the scene that ensures that trucks and drivers are available at the appropriate times at the right truck stops. But the fundamental idea of Rivigo started by understanding the root cause of the problem.
Traditional retailers are under enormous pressure from Amazon and other e-commerce players. Many believe that part of their disadvantage is that they can’t track their customers in store, and so they’re investing in technologies that will help them do this. Yet most don’t have a clear idea of exactly how they are going to use the massive amounts of data they will capture to compete against the likes of Amazon.
Instead of throwing sophisticated technology at a general challenge (tracking customers) these companies might be better served by identifying and solving specific customer problems. Many of these are staring them in the face. How many times have you gone to a department store and left empty handed because you were unable to find things that you were looking for? Why not simply put a (carefully cleaned) iPad at select locations in the store to help customers navigate? And how often have you had to wait in slow-moving lines just to pay for your purchase? It is ironic that retailers make you wait to take your money! Enabling self-payment could easily reduce this source of friction. Amazon is using computer vision in its cashierless Go Stores to solve precisely this problem.
Hointer (now part of Wesfarmers), founded by a former Amazon executive, tested a new store concept to address both these consumer problems. The store sold high-end men’s pants that hung on bars for easy perusal. Instead of displaying all sizes, only one of each kind was on display. Consumers downloaded Hointer’s app, scanned the barcode of the desired item and selected their size. A robot then delivered the item via a chute in the nearby fitting room, where the consumer could try it on, drop it in another chute if he did not like it, or pay for it in the fitting room, which was equipped with a credit card scanner.
Mapping customer journeys has become a norm in the industry. However, almost every company starts and ends its consideration of the journey with its product — say a car or a mortgage. This can miss what’s driving customers in the first place, which can be highly useful in understanding consumer motivation and potential opportunities to add value.
Imagine a bank designing a mobile app for mortgage. It might identify steps in the application process to make it easier for consumers to search and apply for a mortgage, build algorithms to quickly respond to their applications, and enable live chat with an agent to help answer questions. This is a typical product-focused process. But it overlooks why the customer is seeking a mortgage.
Piyush Gupta, the CEO of Singapore-based DBS bank, encouraged his team to think beyond the bank’s products. The team realized that no one gets up in the morning excited about buying a mortgage. The true excitement is in buying their house. This part of the journey begins long before consumers think about applying for a mortgage. So, the team investigated what might help consumers in finding their dream house in the first place. The result was DBS’s Home Connect mobile app which integrates publicly available information to aid them in their search. Consumers download the app and when they visit a neighborhood to see houses, they can simply hold up their phone to scan the surroundings and view the latest transaction prices nearby. If their decision depends on schools or distance to public transportation or shopping, the app can provide that information. When consumers find their dream house, a mortgage calculator helps them determine if they can afford it. This process has enabled DBS to generate leads and gain market share.
Executives from every company want to engage consumers, but have they paused to think why a consumer should engage with a bar of soap or a can of soda? Every company in the world claims to be customer-centric, but are they really thinking from customers’ point of view? To become truly customer-centric, company executives need to look beyond their products and services to the problem the customer is trying to solve.
Sunil Gupta is the Edward W. Carter Professor of Business Administration at Harvard Business School.
Are You Really Innovating Around Your Customers’ Needs?
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