Digital Disruption: Delivering the

Next Thing your customer wants

James L. McQuivey, Ph.D.

Vice President, Principal Analyst

@jmcquivey

October 2014 | forrester.com/disruption

› Before we begin, let’s learn two things

about the power of digital…

Which of these organizations is bigger than Facebook?

1. The Catholic Church

2. China

3. The United States

4. India

Answer:

Only China has more

“users” than Facebook,

at 1.357 billion

By 2015 Facebook will be the

biggest organization the world

has ever known

Approximately how much annual revenue has the global music industry lost since 2000?

1. $10 billion

2. $15 billion

3. $20 billion

4. $25 billion

Answer:

$22 billion

The global music industry

shipped $36.9 billion in recorded

music units in 2000, compared

to sell $15 billion in 2013,

according to the IFPI.

© 2013 Forrester Research, Inc. Reproduction Prohibited 5

Reminder: This is about economics, not technology, not even about design

Old disruption Digital disruption

10 xthe innovators

1/10ththe cost

100Xthe power

Source: October 27, 2011, “The Disruptor’s Handbook” Forrester report

These economics favor those who put the customer in the center of the innovation process

CBSP puts the customer in the center:

We’ll use CBSP to generate customer-first innovation

› Introduce the “adjacent possibilities” and the CBSP method

› Provide examples of how it works

› Conduct a CBSP brainstorming exercise

You’ll get the most out of CBSP if

you use it often

© 2013 Forrester Research, Inc. Reproduction Prohibited 7

What does your customer need next?

BY INNOVATING THE ADJACENT POSSIBLE

?

Don’t build the future; build the next thing

people really need and let the future find you.

Disney: a big company gone disruptive

Disney learned from Angry Birds

what people wanted next, creating

‘Where’s My Water?’

This tests the waters for Disney in

apps and YouTube – both critical

fronts in the digital media future

Importantly, it gave Disney the

chance to innovate adjacent

possibilities

Disney continues innovating the adjacent possible

Jawbone creates the future one adjacent step at a time

• Instead of seeing itself as a mobile accessory maker, Jawbone identifies as a mobile lifestyle company

• This led to the creation of a new category of mobile accessories: the high-end mobile speaker

• Then: UP, a wearable mobile health monitor

• In response to the Apple Watch announcement, Jawbone will release the software to work with any device

Forrester’s CBSP method guides you

CBSP

Consumer

Start by understanding who you want to reach

Benefits

Then decide what benefits you want to provide to

them

Strategy

Specify what this will do for you, what outcome you

want

Product

Then develop the product that strategically delivers

the right benefits to the right consumers

In CBSP, we care about four things, in a very specific order, they are:

• This goes beyond mere demographics and other traditional

research measures, though it should obviously include those things

• It eventually has to capture a sense of who these people really are:

• What they want from life

• How they use your products and services (or others’ products) to get

more of what they want

• This works for existing customers as well as new target customers

C Consumer

Start by understanding who you want to reach

Connection UniquenessConsciously

Serve long-term

motivation

Threats Opportunities

Needs optimized to prepare us for

Comfort

(oxytocin,

serotonin)

Variety

(dopamine,

epinephrine)

Subconsciously

Serve short-term

motivation

Ho

w n

eed

s a

re e

xp

res

sed

When you don’t understand your consumer, think of their core needs

B Benefits

Then decide what benefits you want to provide to

them

To benefit from CBSP, you should focus on one major benefit at a time, even if it means you will move to other benefits quickly

› If you understand your consumer properly, you will know what

benefits they derive from you

› However, you will be tempted to overload benefits: People have a

narrow ability to perceive and retain benefits

• No product experience is all the things its creators claim it is

• If you offer 10 benefits, users will not value them all, therefore it is best

to focus on one to begin with

› Then, as you expand, be sure to expand benefits in adjacent moves,

going in a direction that is consistent with the benefits they already

expect

S Strategy

Specify what this does for you

If you’re using CBSP for the first few times, focus most of your time and energy on C and B, graduate to S and P only as you get confident in the first steps

• What strategic outcome do you want?

• It’s not only okay to want to make money, it’s imperative – we give

you permission to improve the financial fortunes of your company

• Make sure these statements are simple and measurable and

provide direct value for the company, for example:

1. We want to sign up x,000 people for this service

2. We want to extend minutes of engagement by x per day/week

3. We want to collect more data about our customers (so that we

can…)

PProduct

Then propose products (and services) that strategically

deliver the right benefits to the right consumers

Resist the temptation to think in products and servicesuntil you have completed the CBS steps

Companies often give in to technology decisions that should be

recast as product decisions: “Everyone’s making apps, we should,

too,” or “How can we get people to like us on Facebook?”

At the CBSP stage, focus on innovations that help you reach

specific, measurable goals quickly and at low cost

– Example: Develop a single-purpose app as opposed to an all-

purpose app

Be prepared to give up on sexy initiatives if they don’t perform

Examples, then a brainstorm

› As you think through the examples and engage in your

own CBSP exercise:

• Discipline yourself to define C narrowly

• Prioritize among B options; pick the most important one first

• Fearlessly identify and insist on a productive S

• Resist the temptation to jump to P

› In our experience, CBSP becomes a mental checklist

that quickly diagnoses product problems and moves you

past them by clarifying the goal

Disney: a big company gone disruptive

Disney learned from Angry Birds

what people wanted next, creating

‘Where’s My Water?’

This tests the waters for Disney in

apps and YouTube – both critical

fronts in the digital media future

Importantly, it gave Disney the

chance to innovate adjacent

possibilities

C: Casual gamers invested in Angry BirdsB: Variety in intuitive mobile game experiencesS: Use Disney assets to cheaply enter marketP: Mobile games, YouTube, …

Jawbone creates the future one adjacent step at a time

• Instead of seeing itself as a mobile accessory maker, Jawbone identifies as a mobile lifestyle company

• This led to the creation of a new category of mobile accessories: the high-end mobile speaker

• Then: UP, a wearable mobile health monitor

• In response to the Apple Watch announcement, Jawbone will release the software to work with any device

C: Mobile lifestyle consumersB: Mobility integrated into their livesS: Expand product line to offer more mobilityP: Jambox, UP, and whatever’s next

An hypothetical outcome from a CBSP workshop

› Consumer: Educated, affluent parents with infants and toddlers; who also have an espresso machine

› Benefit: They want to be better parents than everyone else, they want to do it with style, and with a high degree of control

› Strategy: To create a digital customer relationship that connects us to parents for their child raising hopes but also allows cross-sell to other machines

› Product: Create a baby formula preparation machine that is a fashionable appliance, just like an espresso machine. Make it internet connected so that it collects data about the child’s feeding patterns and gives parents a digital feedback tool for seeing how good they are.

For an espresso machine maker

Welcome to BabyNes!

CBSP

Consumer

Start by understanding who you want to reach

Benefits

Then decide what benefits you want to provide to

them

Strategy

Specify what this will do for you, what outcome do you

want

Product

Then develop the product experience that strategically

delivers the right benefits to the right consumers

In CBSP, we care about four things, in this order:

© 2013 Forrester Research, Inc. Reproduction Prohibited 23

What you’ll do at your table

1) Pick a moment in your customer’s

product experience, preferably a troubling one

2) Describe that Customer: What does he or she want from life?

What do they really need?

3) What Benefit does my customer need next? How does your

customer meet those needs today?

4) What Strategic outcome will this provide for you?

5) Describe the Product experience you would build to deliver

those benefits

If you are stuck between options, prioritize benefits and product

experiences based on:

• What is most needed

• What you can do most rapidly

Discussion

CBSP

Consumer

Start by understanding who you want to reach

Benefits

Then decide what benefits you want to provide to

them

Strategy

Specify what this will do for you, what outcome do you

want

Product

Then develop the product experience that strategically

delivers the right benefits to the right consumers

What to do with this day-to-day

› See opportunities for rapid digital intervention around

you everywhere

› Consciously look for faster and cheaper ways to test

ways to improve your process and your product

› Think CBSP every day

• It doesn’t have to be a workshop

• Our happiest clients use it as a logjam-breaker

• When you adopt the language of CBSP you can

collaborate internally more quickly to generate innovation

Release the disruptor within yourself, your organization

Thank you

#digitaldisruption

forrester.com/disruption

James L. McQuivey, Ph.D.

VP, Principal Analyst

@jmcquivey