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No facts in the building …

April 15, 2013

As an advisor to mid-size companies, I continue to be struck by how few leaders make it a strategic priority to talk with their customers. If you’re searching for the next big thing for your business, be it an improved product or a brand new one, chances are your customers have most of the answers.

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Too many companies suffer from ‘customer amnesia’ – as though they’ve forgotten how to have routine conversations with their customers (I’m not including selling situations).  When it comes to new product development, these companies jump right to product design, assuming they know what customers need, and then ship the finished product as soon as possible.  They skip two critical steps that can insulate them from new product failures.  The first is to find out what problems you can solve for the customer before designing the product.  The second is to get early feedback on new product concepts from customers by showing them initial prototypes.

I recently read on Mashable about an interesting start-up called Charlie. Charlie is a web application that helps you prepare for meetings by doing research on the people and companies you will be meeting with. It will even tell you if you have anything in common with your meeting attendees, such as an alma mater or a love of the Red Sox. Charlie was a finalist in the Accelerator Competition at this year’s SXSW conference.

How did they achieve this early success? Charlie’s founders tested the product concept early and often with business professionals – their target audience – to get initial feedback. It was only after they discovered that their product filled a need that hadn’t been met by anything else in the market that they started building the first complete version of the product.

Dropbox took a similar approach en route to growing a multi-billion dollar business. The first ‘version’ of Dropbox was simply a landing page that described the product concept and asked for the email addresses of those who wanted to be beta users. Everything they built was something customers were asking for.  Think of the capital efficiency!

The founders of Charlie and Dropbox know what many, much larger companies have yet to learn– that listening to customer prospects before designing products, and getting feedback on early product concepts can save time and money in the innovation process.

If your company can overcome customer amnesia by setting up informal meetings on a regular basis, you’ll find the rewards can be invaluable. Think of it as sifting through sand for gold.  You might schedule ten customer conversations and even if the first nine don’t reveal new opportunities, you’ve still built a stronger relationship with your customers just by being there. But it’s that tenth meeting, the one that reveals a customer problem that no one has solved, that can point to product and service innovations and new sources of revenue. You won’t get that kind of insight on a white board in your office or in a conference room with your co-workers.

Steve Blank, author of The Start-Up Owner’s Manual: The Step by Step Guide for Building a Great Company, says it best: “There are no facts in the building, so get outside.”

If routine conversation with your customers is not in your company’s comfort zone, it’s time to step outside of it. Making time for these conversations might take your business in directions you have yet to imagine.

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This blog first appeared on Harvard Extension’s The Language of Business.

Follow Dave on Twitter: @wdavidpower

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