1. Innovation Leadership Training Day Two Insight Tools February 6, 2009 All materials © NetCentrics 2008 unless otherwise noted

2. Welcome We’ll spend the next hour or so examining several tools and techniques to gather more customer insight

3. What We Want to Accomplish

4. Goals for this section Our goal this section – Examine several techniques to gain more customer insight Voice of the Customer Ethnography Lead Users – Understand the value proposition of each technique and when to use them

5. Key Points Market research is an important component of innovation but we need other means to gather customer insights – Market research often imposes our perspective on the questions and therefore the answers Other helpful tools exist but we need to understand their value proposition and costs – Voice of the Customer, Ethnography and Lead users provide helpful information in certain circumstances

6. Market Research We all rely on traditional market research to understand what customers want and what they are thinking There are several significant risks if you rely on standard market research

7. Henry Ford “If I’d asked my customers what they wanted, they would have said a better horse.” People have a hard time conceptualizing future products and services and can’t easily respond to traditional market research where new products and services are concerned

8. Other Concerns Traditional market research is often conducted for a specific outcome or aligned to a specific product or service There’s a “Hawthorne” effect with traditional market research – the questions we ask, or don’t ask, frame the data we get. We usually ask existing customers about existing products and services

9. Insight Goals ExistingNew Existing Prospects Products/Services Customers Increasing difficulty and value Methods, tools and techniques change Frequency drops Value increases

10. Three other tools to consider To obtain insights that are less influenced and more actionable, consider – Voice of the Customer research – Ethnography or “cultural anthropology” – Lead user identification We’ll consider each of these briefly – Short definition – Why/when useful – Effort/commitment

11. Differences What makes these approaches different? – More interaction with the prospect or customer – More observation of what they do – More conclusions drawn from observation – Less quantitative, more qualitative – In many cases actions or needs are demonstrated

12. Voice of the Customer Voice of the Customer research seeks to gain stated and unstated needs from customers through deep interviews – Similar to market research in that it uses prepared questions – Usually much longer in duration, often taped or filmed – From these interviews or discussions need statements are extracted – The need statements are prioritized

13. Why or when useful The voice of the customer approach helps identify stated needs and by observation or deduction uncovers unstated or unmet needs Useful when your team can identify likely customers and can actively participate in the interactions to observe what customers say

14. Investment The investment in a Voice of the Customer study is similar to a standard market research effort, usually with less participants and more involvement from the sponsoring team A VoC effort usually lasts from 4 to 6 months and requires active involvement of the sponsoring team Typically a third party facilitator conducts the sessions

15. Ethnography Also called cultural anthropology, ethnography is an activity that relies less on prepared questions and surveys and more on intense observation Ethnographers or cultural anthropologists carefully study customers to ascertain their stated and unstated needs, and how they solve problems or address unmet needs They follow up the observation with specific questions about the activity

16. Why or When useful Ethnography is useful when you are trying to understand and define unspoken/undiscovered needs and align to existing practices – Keep the Change is a good example Ethnography is also valuable at identifying nascent trends or activities in customer segments – Trends in fashion and other areas that are just emerging are often discovered by ethnography

17. Investment Must identify a segment of customers who will agree to be observed in their day to day lives Ethnography requires an experienced observer to identify key actions If the first two conditions are met, the timeframe does not have to be long

18. Lead Users Coined by Eric von Hippl, the author of Democratizing Innovation Lead Users are people who are creating augmented or improved solutions with existing products or services Think “mashups” on the web or the classic example of mountain bikes

19. Early Mountain Bikes

20. Why / when useful Lead users are useful because they are individuals who are creating new solutions to solve unmet needs using your products or those in your market They are also often on the cusp of new trends

21. Investment The challenge with “lead users” is not a cost issue but a discovery issue You will need to find and interact with lead users Best place to find them is at trade shows, conferences and online on discussion forums Dell’s IdeaStorm site serves a dual role – to capture ideas and to identify lead users

22. Comparison ApproachValue PropositionIssues/Challenges Voice of the CustomerStated and unstated needsMust have experienced VoC observers EthnographyIdentifying unmet or undiscovered needs through observation; identification of new trends Identifying a sample of customers who will allow close observation; Experienced ethnographers Lead usersSolutions to unmet or undiscovered needs; identification of new trends Identifying the lead users

23. Key Takeaways Market research is important but only one tool to gather customer insights/feedback Market research contains some bias and is not always appropriate for unmet/undiscovered needs Voice of the Customer, Ethnography and Leader user identification can provide increased customer insight Understand each tool and its appropriate usage

24. Questions

25. Exercise