Marketers always believe that they are designing products that consumers want. If not, then why launch the product in the first place? Yet with fewer than one in five new products surviving the first year of launch, it is clear that the most common new product development processes are largely unsuccessful.
Now, you could argue that new products are like drugs — the goal is to have one hit every few years which pays for the cost of the failures. Yet I would claim that new products are like drugs in another way — their addictive quality. Many of the companies that proudly claim that X% of their products have been launched in the past five years do not conduct cannibalization analysis, which might show that the new products simply replace older products, usually at a higher cost of sales, particularly if you add the development and launch costs in.
The inevitable conclusion is that many products are not launched with customers in mind, especially Best Customers.
Today, in the New York Times business section, I read about companies that are engaging customers in their product development, “Seeing Customers as Partners in Invention.” These centers are different from typical product development centers because of the level of engagement between customers and the company. In a manufacturing B2B business, such as Pitney Bowes or 3M, retail or commercial customers are brought in for repeated visits to help refine or reinvent products.
“The terms “customer driven” and “solutions” seem to be in every manager’s lexicon. But as Professor Ranjay Gulati notes, “it’s an execution problem.” Companies, he says, “aren’t generally structured to access, absorb or utilize customer insights since they are organized by product, not by customer.” (NY Times, 12/27/09).
I couldn’t have put it better myself.
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{ 1 comment… read it below or add one }
Mark, thanks for mentioning Pitney Bowes. I do agree that customer-centered innovation is just a slogan unless you commit to do it right and involve customers in every aspect of the solution’s design. Another good example of customer-centered innovation is IBM’s project zero (www.projectzero.org) in case you want to check it out.
Thanks again
Aneta Hall
PItney Bowes