The Press, April 2008

“My market strategy was to put together a magazine that I myself would enjoy as a reader. I edited the magazine for myself. It was a handbook for the urban male,” says Hugh Hefner founder and ‘Chief Creative Officer’ of Playboy Enterprises.

His view doesn’t fit with the textbook view of creating products. In the ideal world you work to understand an unfulfilled customer need and then deliver something that meets it. A recipe for instant success.

The Government’s Better by Design programme has done some good work with local companies, but also tends to live in this unreal world. Their website, full of earnest types wearing black t-shirts and polar necks, paints a pretty picture of creating successful products. “It starts with an idea for a better product offering unique benefits that potential customers around the world may not even know they need yet.”

These great companies are “opinionated but sufficiently analytical to read the important trends before their competitors. They’re first to see the latent needs created by a changing world.” And they “. . . design their products for a tightly defined market niche.”

Although I’m not quite sure what all that means, it sounds nice. Basically you dream up a good idea, do some work on it and then start counting the dollars that roll in.

Often the reality is vastly different. Most companies have an existing product, or at the least the basis of a product. It has been created because the company has expertise or experience in a certain area – they have seen a better way of doing things and then they want to sell that idea i.e. a product.

In my experience new products are seldom the result of an in-depth analysis of customer needs. More typically, and particularly in the technology sector, they emerge from an individual or teams’ insight, imagination and passion. They suspect (and hope) that customers will like it enough to pay for it, but they don’t know, they just know they have made something better than they had before.

They then can spend a lot of time and effort developing the idea into something. Even then if their idea is brilliant it can be hard to explain. Just as people laughed at the early cars, telephones and computers, new innovations are often seen as ridiculous until proven and understood.

New Zealand has a proud history of innovators willing to ignore the naysayers (and government advisers) long enough to create something great. But often they created those initial ideas without any clear idea of the market opportunity.

Calling these initial ideas and inventions a product is a mistake. It is only a product when you can build a viable business around it. That is, when you have found a group of customers willing to pay for your offering - i.e. a market.

What defeats many an entrepreneur is that the market doesn’t always see your innovation as the complete answer to their need. Your ‘product’ is seen as only a partial solution. Many companies will continue to try and force their round peg of a product into the square hole of a market and become frustrated at the lack of progress.

An example is a New Zealand company who develops surgical instruments. They had developed a clever new instrument that promised to rapidly increase the productivity of a particular type of operation. It wasn’t selling as quickly as they hoped.

After talking to current and potential customers it became clear that to use this new surgical device a surgeon also had to adjust their surgical technique. It became apparent the company wasn’t simply selling a surgical device, but a revised surgical technique which used this new type of device. The ‘product’ was actually the revised surgical technique and the new device packaged together. This insight had significant implications for selling the product. It meant a different way of supporting it, promoting it, a different relationship with a channel partner and so on.

Unless you understand the ‘product’ from the customer’s perspective it is easy to miss these things and therefore get frustrated at a lack of consumer demand.

Another more famous example is the Apple iPod. The actual device was a beautifully designed and produced piece of equipment, but still just another solid state digital music player. What made it a great ‘product’ i.e. solution to a customer’s need, was the integration with iTunes. This gave users a powerful way to purchase and organise their digital music – it gave them a complete ‘solution’ to the ‘problem’ of finding and organising music.

Apple probably is a company capable of achieving the ideal – identifying a customer need and creating a new product to neatly fill it. But most of us are mere mortals and must do our best to succeed with the ideas or products we already have.

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