Building Growth Strategies by Starting with Critical Customer Problems
Years ago, I was in a client meeting for a growth strategy project in the specialty materials space and I asked the well-worn question, “What would make this project a success?” Without hesitation, one of our clients’ most brilliant and prolific inventors said: “Bring me big problems to solve.” I didn’t realize just how powerful this idea was at the time, but it has become a Newry mantra over the years.
Being tasked with the mission of finding the next frontier of growth and innovation for technology companies is both an exciting and daunting challenge. The world is infinitely vast and complex, and our knowledge, no matter how sophisticated our tools or our organization, is woefully miniscule. As Karl Popper once put it, “It might do us good to remember from time to time that, while differing widely in the various little bits we know, in our infinite ignorance we are all equal.”
The world is infinitely vast and complex, and our knowledge is woefully miniscule.
So where do you start looking? Most companies do what we call “chasing the money.” Given limited information and resources, companies go after the obvious: big, growing markets; profit pools; megatrends; and hyped technologies. The problem is that such approaches often merely create the illusion of rigor. Sophisticated analytical and screening processes for identifying areas to explore can feel systematic and thoughtful, but if the underlying data or premise is flawed, they won’t lead to anything actionable. Here are a few reasons why:
- They typically have nothing to do with your unique, differentiated capabilities
- They are often detached from direct customer insight; rather, they rely on generalization
- Everyone else knows about them: by the time something is a profit pool or a trend, it’s too late to make your way to the cutting edge
The one thing that unites nearly every company we have ever encountered is that their processes for finding new growth opportunities are falling far short of their needs. They are either finding too few solid opportunities, or their opportunities fall apart in execution. For this reason, innovators are looking for fundamentally new ways of approaching the issue.
In our experience, companies win and new businesses are created not because they analyzed their way to the right trend or market, but because they found a critical customer problem that they were uniquely positioned to solve. When they succeeded in providing a winning solution, they were then able to pivot and expand to solve that problem or similar problems for other customers. Their opportunities are based on specific, direct insight from customers who are invested in their success and they are immediately testable in the market.
The question then becomes – is it possible to systematically find more valuable customer problems to solve? After all, you can't just wait around for new customers to find you, and even current customers may not understand the breadth of your capabilities as well as they ought to. We believe that it is both necessary and possible to be more proactive in finding such problems to pursue and building those problems into bigger opportunities, or even new businesses.
We recommend beginning by building a deep understanding of your unique market and technical capabilities, which will serve as the launch point for identifying problems to solve. This understanding needs to be deep and unbiased, starting with concrete examples of where you have won or lost, and why. Companies often mistakenly assume they fully understand their technology, but I can’t tell you how many times I’ve heard a client say, “That’s a really good question. I haven’t ever considered that before.”
The next step is to get outside the building and be creative in using every tool you have for directly connecting with and observing customers. You are not looking for general domains or customer segments – you are looking for highly specific applications with important problems and interested customers. The key here is to avoid setting up a linear stage-gate-like process for screening opportunities, and instead iteratively identify opportunities that meet certain minimum criteria, and then immediately validate them with customers.
Finally, opportunities that are successfully validated can be reanalyzed and abstracted to create larger platforms for growth. For instance, on one recent project we found a niche opportunity for our client’s specialty polymer to replace a key component in surgical instruments. Once we knew it was a fit, we were able to find other related medical and manufacturing applications exhibiting similar operating conditions. At the end of the engagement, our client had a “bottom-up” growth strategy that provided a unique way of approaching the market that was specific to their capabilities, tested with customers, and unknown to their competitors.
We are constantly amazed by how effective this approach is for identifying real, revenue-generating opportunities; but, of course, the real challenge is applying this framework quickly and effectively across a broad set of industries and markets. Newry is currently developing some tools and processes to help overcome that obstacle, including one that leverages text analytics and machine learning to analyze customer activity for finding and validating unsolved problems. It doesn’t obviate the need for smart people and hard work, but it does enable them to be much faster and more focused in the process.
Ultimately, though, while tools and processes are undoubtedly important, half of the battle is just in recognizing the fundamental flaws of chasing money. If instead you focus all of your effort on finding critical customer problems to solve, then, in our experience, the money will come.Receive Content From Newry