How Can a Product Growth Strategy be Anchored in True Customer Needs? A Strategy View on Outcome-Driven Innovation ®

When people hear from us for the first time, their reaction is sometimes like follows: “Wow, you seem to be a really creative bunch of guys, you’ve developed such great ideas and products!” or “Your market research methodology delivers amazing results!”. Whenever I receive comments like these, I have to clarify that we are neither a consultancy for product development nor market researchers. People very often misunderstand what we do, because they look at us through the lens of their field of activity. In that case, they only get to see one part of the whole puzzle. 

Actually, the delivery of the Outcome-Driven Innovation ® (ODI) process, developed by Tony Ulwick,  is more comprehensive and affects almost every department of an organization. What we are actually doing is building a bridge that leads from identifying real customer needs to concrete product and service features. This bridge is called “customer-centric growth strategy”. 

What do we understand by strategy?

There are as many definitions of strategy as misunderstandings. Maybe that’s the reason why less than one third of companies have clearly defined their innovation strategy in advance. Very often, the term “strategy” is confused with “planning”. But strategy is clearly one level above planning, as Roger L. Martin states in his excellent HBR article “The Big Lie of Strategic Planning“. Martin says:  “Two choices determine success: the where-to-play decision (which specific customers to target) and the how-to-win decision (how to create a compelling value proposition for those customers)”. 

This reflects our approach, since we define strategy as: “The process of determining which segments and unmet customer outcomes to target – and how.” Martin also states: “Focus your energy on the key choices that influence revenue decision makers – that is, customers.”  In a customer-centric organization, the growth strategy has to be anchored in true customer needs, because at the end of the day, it’s the customer that decides about success or failure on the market. 

Here lies the power of the strategy and innovation process Outcome-Driven Innovation ® (ODI):

In five steps, the process

1. identifies unmet customer needs,
2. recognizes need patterns that represent innovation opportunities and
3. develops a comprehensive product growth strategy.

This growth strategy answers questions like:

• What are our product strengths / weaknesses?
• How should we position our existing offers at the target market?
• How should we improve our existing offers on customer defined metrics?
• What new offers are needed to fill a portfolio gap?
• What is the optimal product roadmap?
• Is a new platform needed to address a segment?
• How should we improve the customer journey?
• What addintional customer service features should we offer?
•  How can we increase market penetration/market share?
• Are our existing and target customers willing to pay more? 
• What R&D and M&A investment opportunities exist?
• What actions will scale across the customer population?

Another great article about strategy is “What The Heck Is A Strategy Anyway?” by Ann Latham. She defines strategy as “a framework for making decisions (…) that allows everyone to make cohesive plans and truly work toward the same objectives”. We fully support this point of view. The results of the ODI process align decisions across the whole organization and enable a common language and understanding of customers and their needs. That’s why Outcome-Driven Innovation® has a success rate of 86% and is more than an innovation management, product development or market research process. It’s a unique methodology that incorporates all these aspects.  It bundles forces companywide to deliver real customer value for years to come.