Most companies ignore their markets – and they will struggle to survive. Some companies listen to their markets – and they have an opportunity to succeed. You have the opportunity to understand your market, and transform it into your market – but you can’t get there just by listening.
Don’t listen to your market, understand your market.
Zappos All-Hands Meeting
Chip Conley (@chipconley) spoke to the Zappos (and Bellagio) folks about several things, including being customer-driven. He was able to pull several ideas from his book, Peak: How Great Companies Get Their Mojo from Maslow, but one of them stuck out in particular as being critically important to product managers.
There’s a copy of this on slide 28 of this presentation on Slideshare, essentially an adaptation of Maslow’s hierarchy of needs, applied to customer relationships. It is not clear if this is an approved (by Mr. Conley) posting, so I’m not going to include a fair-rights copy of the image. You can find out more by reading his book, visiting his website, or dive right into an application of this model to Wall Street from Mr. Conley’s blog.
The basic idea (for focusing on your customers) boils down to this:
- At the base of the pyramid, you have companies that meet the expectations of their customers- they provide what customers expect (and no more). In his presentation today, Mr. Conley pointed out that these companies will struggle for survival. Good enough isn’t anymore.
- At the next level of enlightenment are companies who meet the desires of their customers. These are companies Mr. Conley points out as ones who will succeed.
- At the top of the pyramid are companies who meet the unrecognized needs of their customers. These companies, through understanding their customers, satisfy needs that people didn’t know they had.
In an earlier article on sustaining a market-driven competitive advantage, I wrote about listening to your customers (#2) and innovating in order to uncover the latent requirements.
You can argue that these problems were introduced because of innovative solutions, or that the problems were latent, and were only discovered because of the innovations. It doesn’t matter. What matters is that these problems were previously unaddressable, and now solutions to these problems have value.
That article was written with an inside-out perspective – essentially answering two questions -
- “Why should you innovate?”
- “Why Should You Innovate Repeatedly?”
As you repeatedly invest in understanding your customers, you gain insight into their latent requirements and needs – and get an opportunity to address them. When you do this repeatedly, you become a thought leader for your markets, which you can leverage as a distinct competitive advantage.
Mr. Conley is approaching innovation, with respect to customers, from an outside-in perspective – and reaching a similar conclusion.
When you understand your customers, well beyond meeting their must-have minimum expectations, and beyond addressing their explicitly stated desires, you have the opportunity to solve the problems they don’t realize that they had in the first place.
From my perspective, his insights make it even more important that you continually focus on what your customers really need, and let your market guide you. Not to be confused with “give your customers what they ask for” – they’ll only ask for a faster horse.