Innovation – Matching Needs and Solutions
While revisiting some collected innovation readings, I recognized that it might be important to briefly emphasize again one “fundamental”: the distinction between needs and solutions.
According to Christian Terwiesch, co-author of “Innovation Tournaments”, innovation is defined as “… a new match between a need and a solution so that value is created.” The novelty can be in the solution, in the need or in the match. In all cases, this new match results in a specific market, leading to a demand for the solution. Customers hire solutions they perceive to serve their particular needs best. Customer perception and buying decision are based on conscious as well as unconscious drivers.
It’s the innovator’s job to come up with solutions capable of meeting those needs. In order to increase likelihood of market success, customers become integrated in the innovation process. However, the meanings of needs and solutions are often blurred while talking about customer requirements. Example: Don Norman asks in an insightful talk which I definitely recommend watching: “Is there a fundamental need for indoor toilets?” Is he actually talking about a customer need or a demand for a specific solution?
Dev Patnaik highlights the distinction between both in a Business Week article named ‘Needs + Solutions = Innovation‘:
“Understanding this distinction can affect how you listen to your customers, how you conceptualize new products and services, even how you analyze existing markets to create new strategic platforms. (…) Without an attention to both needs and solutions, a company can find itself optimizing products for a set of needs that no longer exist.”
Lance A. Bettencourt has addressed some related assumptions in an article worth reading. I’d like to reference and comment on two of them here:
Assumption: ‘Customers Can’t Articulate Their Needs’
Bettencourt: “The myth that customers cannot articulate their needs is perpetuated by innovation success stories such as the microwave, the Sony Walkman and (more recently) the Apple iPod and iPhone. The story goes something like this: “If you had asked customers, they couldn’t have told you they needed the iPhone. Therefore, it must be true that customers cannot articulate what they need.” But there’s the rub: However brilliant it may be, the iPhone is not a customer need. The iPhone – like the microwave and Walkman before it – is a solution to a customer need. When companies get solutions and customer needs confused, it confuses the role of the customer and the company in the innovation process. Customers articulate their needs; it is up to the company to create a solution. It is not the role of the customer to provide technology ideas to the company, or even to evaluate the potential for a new technology to satisfy their unmet needs. How would they know? They are not technology experts. Confusing these roles leads to infamous stories, such as those recounted in the Fortune article, in which customers have rejected now-successful innovations. But the truth is that those customers were not guilty of being unable to articulate what they needed; they simply could not evaluate whether a proposed new technology would satisfy their needs – quite a different task. When customer needs are defined in a manner that distinguishes them from solutions, not only can customers articulate their needs, but those needs become the valued foundation of the innovation process requires.”
Point: If customers are involved in the front end to provide information on solutions instead of needs, they will likely tend to stick to solutions they already know and are familiar with – customers usually don’t leave existing regimes they are used to. Their valuation and beliefs are biased by these regimes. This restricts the innovator to come up with a novel solution that would even be better suited to meet the needs. The proper evaluation of needs by means of direct and indirect customer integration bears higher innovation potential than involving customers in the solution development. The more radical an innovation, the more it differs from existing offerings (if at all available). As existing solutions act as ‘benchmark’ for users, their input tends to be limited when it comes to the development of more radical innovation. However, research indicates that some customers are better than others at imaging how concepts address needs.
Assumption: ‘Customers Don’t Know What They Need’
Bettencourt: “Such misguided thinking is especially apparent when product managers speak about new-to-the-world innovations. “If the solution we’re going to propose does not yet exist,” the managers say, “then how can customers possibly know that they need it?” But again, the managers are confusing solutions with needs. (…)
The truth of the matter is that customers “hire” solutions to help them get jobs done. When we define customer needs around the jobs that customers are trying to get done, then we can see that new innovations – even the most radical or disruptive innovations – do not create a customer need. They simply satisfy a customer need in an innovative way. Furthermore, if a company can learn how customers evaluate how well they’re able to get jobs done using today’s solutions, then it can learn precisely where customers have needs that are currently unmet by any solutions – fertile ground for innovation.”
Point: Innovation doesn’t create a need. It creates a demand for the innovative solution, depending on how well the solution is able to satisfy functional or emotional needs. In case of radical innovation, the novel solution based on new technology and/or a meaning change, is entirely different to existing ones. This kind of innovation mostly disrupts current or creates new markets by leaving existing regimes. It matches needs of an innovative minority first, rather than being driven by the majority of existing markets, being bound to the existing regimes. An analytical understanding of innovation, such as the ‘jobs-to-be-done’ approach followed by Bettencourt, aims at finding solutions for defined needs and finding needs for defined solutions, respectively. This presumes that customer needs are basically accessible and can be predicted. In case of uncertainty, i.e. if needs are not (yet) well-defined, an interpretive approach seems to be more indicated for innovation. Needs evolve and change often unforeseeable with time due to cultural, technological, economical or environmental reasons. It’s a matter of ‘foresight’ to be able to envisage those evolutions, e.g. through participating in interpreting networks. By combining vision and empathy, anticipated needs can be addressed by innovative solutions. Ideally, a ‘proposal’ becomes adopted by the market, or as Roberto Verganti puts it in his book: “That was outside the spectrum of possibilities of what people knew and did. But it was not outside what they could dream of and love, if only someone could propose it to them.”
Takeaway: The distinction between needs and solutions turns out to be crucial. Innovation is a result of a novel match of need and solution – and requires proper consideration of their different contributions to the process. Offered products and services are being positioned and valued on the basis of the customer’s personal frame of reference. This is constituted by the variety of functional and emotional needs. Given that analysis and interpretation are complementary approaches to innovation, customer orientation comprises:
- Orientation towards the customer, i.e. translating defined customer needs into innovative solutions
- Orientation of the customer, i.e. coming up with innovative proposals to ‘mirror’ and shape emergent needs
One of my favorite articles, “The Innovator’s DNA” outlines required skills an innovative person should possess to be successful. I think there is another one to be added to this list: abstraction. For me, abstracting from solutions to needs seems to be a prerequisite for innovators as well. If innovators focus on solutions, it will limit how they perceive the customers’ actual needs. Appropriate approaches to separate needs and solutions, i.e. solution-neutral and truly empathic front ends of innovation, are indicated.
Dr. Ralph-Christian Ohr has extensive experience in product/innovation management for international technology-based companies. His particular interest is targeted at the intersection of organizational and human innovation capabilities. You can follow him on Twitter @Ralph_Ohr.
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