Embed Size (px)
Citation preview
The Application of Core Competencies to Growth ManagementCore Competencies form the essential foundation to grow beyond your core market and increase profits
Authors: Jose Campos
Jean-Claude Balland Ph.D.
Introduction
If you want to develop growth opportunities for your organization, an effective methodology is to first identify, then deploy, and continuously improve the firm’s Core Competencies.
Much like a virtuoso violinist who has developed her competency and technique by mastering one difficult piece after another, the virtuoso company develops its Core Competencies and leverages them by mastering markets in which these Core Competencies can deliver exceptional value to the customers.
Furthermore, the CEO’s of would-be virtuoso companies should put serious effort into understanding the source of their excellence — their Core Competencies — before venturing into other markets or growing the core.
The premise for the methodology is simple enough: if a company can define and validate its Core Competencies, then all the resources and passion
of the can be channeled toward excelling in these areas — which are the source of the unique value the company wants to create. In addition, once a company excels in a few selected competencies, this expertise can be used to grow beyond the current market.
Modern strategic analysis has focused on identifying and leveraging Core Competencies for two key reasons:
● By establishing Core Competencies as a basis for strategic selection, firms have a stable platform from which to choose high-speed, competitive moves in their core markets.
● When Core Competencies are identified — ones that are of value outside a firm’s core markets — they become the central element in economically viable growth strategies.
What is a Core Competency?
One definition states that a Core Competency is the collective learning of the organization, combined
2
What You Do is Not Your Core Competency
In our experience, one trap that companies fall into is confusing the activities associated with what they do with Core Competencies. Generally this is due to the lack of a robust process, one that forces the right conversations. When these conversations are hurried or not taken seriously, there is a risk that the list of competencies may be flawed
For example, let’s say that a company (Acme) manufactures air conditioners. It is tempting to conclude that the competency is air conditioning. The manufacture of air conditioners is what the company “does”. But, if you apply the criteria shown on page 3, it becomes obvious that the competency lies somewhere else. Perhaps is the ability to understand and design solutions to manage temperature in differing environments. Another possibility might be the ability to understand and manage environmentally friendly gases.
Note that in the example above, we phrase the Core Competency as “The Ability to......” This terminology helps separate a skill from a competency.
Finally, customers are the ultimate judges of your competencies. Part of the validation process includes interviewing your customers as to what they find particularly valuable in your offering.
The Application of Core Competencies to Growth Management
with clean execution (processes and projects), which enables delivering exceptional customer value.
Another, perhaps more practical, definition lists a set of criteria:
The few things you do that:
● Contribute to the high value of the company’s end product
● Your customers find exceptionally valuable
● You do better than your competitors
● Your competitors find difficult to imitate
● You would never “outsource” to anyone
● Are transferable to other industries
The above criteria should be used for illustrative purposes only. The actual criteria for your company will have different items in a different order of priority. Your criteria must be carefully defined to fit your company, culture and value-add and most importantly your business objectives.
An example: One company’s criteria to define its Core Competencies
One of our customers settled on their definition of Core Competency using five criteria. Usually we recommend that the list of competencies should be limited to three or four, but in their case it was appropriate.
Continue
3
The Application of Core Competencies to Growth Management
Here’s their list.
Our Core Competency must:
● Be applicable to other markets beyond “Our Widgets.”
● Provide [a source of ] differentiation that customers find exceptionally valuable.
● Allow “Acme” the opportunity to be the best in the world.
● Not be easy to imitate.
● Be sustainable within the culture of our organization.
The above example illustrates the critical criteria the executive team used to evaluate and prioritize all the possible core competencies they had identified.
Above all, Core Competencies are important only if they:
● Contribute significantly to the value of your end product1
● Are rare
● Are difficult to imitate
Notes on Core Competencies
Competencies should be expressed by a lead-in phrase: “the ability to...” or something similar. It is important to look at it this way, because an area your company may consider a strength (such as “high market share”) may not be supported by any Core Competency.
In our experience, the competencies that
1 Assuming that “value” is all in the mind of the target customers and beyond techni-cal specs to include your entire offering
Examples of Core Competencies
3M has expanded into multiple markets thanks to their competencies in the development of substrates, coatings, and adhesive; these competencies support, and remain at the center of, their competitive advantage.
One of Honda’s visible Core Competencies is the design and manufacture of efficient small engines. Combined with a less visible competency in “dealer management,” Honda has systematically diversified into markets where efficient engines can significantly contribute to the value delivered to customers, e.g., lawn mowers, outboard motors, motorcycles, all-terrain vehicles, etc.
Wal-Mart, voted in 2003 as Most Admired Company by Fortune Magazine, has continuously expanded from its humble origins into the $240 billion behemoth it is today. They did it by developing the few Core Competencies that contribute the most to delivering Wal-Mart’s value proposition: quality goods at everyday low prices with a smile. To deliver on this promise, Wal-Mart has made the management of inventory the centerpiece of its system. This has led them to pioneer and continuously improve several logistics techniques (part of their Core Competencies). One of these, called “cross-docking,” reduces significantly their cost of sales compared to the industry average and allows them to deliver on their promise.
Nike is not a manufacturer of apparel nor shoes. Their strengths lies in three areas. Design, supply chain management and promotion and they have used them to expand from manufacturing a single type of shoe to becoming a world leader in sports
4
The Application of Core Competencies to Growth Management
executives believed at the start of the process were not the same after the due diligence was conducted.
Competencies can be found in three key areas: Technology (innovation), Operations (process and projects) and Customer Relationships (customer centricity)
Your Core Competencies must always be defined from the perspective of your customers. Your perception of your competencies is just a starting point; as your analysis progresses, you must consider the view from your customer’s perspective — especially “future customers” i.e. those intended market segments where you will focus your growth.
The process for identifying and using Core Competencies
Identifying Core Competencies is a proven methodology to help manage profitable growth. Many studies have corroborated this methodology — specifically, that Core Competencies help a company leverage its expertise to identify and exploit growth opportunities.
The fundamental premise of the Core Competencies approach asserts that if a company knows what is truly excellent about itself, that knowledge can be leveraged to grow within existing markets — and beyond. However, there are risks to this approach. For example, what if the wrong competency is identified? What if the new customers do not value the identified competency?
Another risk is confusing “expertise” with core competency, whereby the expertise is in something you do well but is not valued by the customer — it is not related to customer value.
Mitigating this risk requires a more robust methodology. We embrace a “belt-and-suspenders” approach, which consists of a series of steps:
● Identify and capture potential competencies. This is a qualitative, facilitated process to elicit candidates.
● Prioritize the list of candidates competencies
● Validate through quantitative research.
● Further Validate through interviews with critical stakeholders, for example Wall Street analysts, major customers, industry experts, light house customers, your board of directors, etc.
● Manage risk through a robust Risk Management Plan.
● Finalize the list of competencies
Finally, once the competencies have been identified, validated and confirmed, the company can proceed to develop its growth strategies; e.g., identifying other markets that value those competencies.
(A related process involves identifying the competencies that are lacking — i.e., those the company does not currently have but needs in order to grow.)
The method is not the prize
Our suggestion is to not allow the methodology to become the focal point of your efforts. It is very tempting to place all your emphasis on the process and miss the value the effort must bring. Any process you employ exists only to enable a methodical approach to solving a problem. If the focus becomes the process, the output is likely to be compromised.
Identifying your company’s Core Competencies is not a trivial effort. Consider the risk of basing your growth strategies on a wrong understanding of your competencies. Rigor and tenacity are required in order to manage this risk. Agreeing on some Core Competencies after a two-hour session will change
5
The Application of Core Competencies to Growth Management
Continue
nothing, much as the virtuoso will not improve after just a short rehearsal.
Risks concerning Core Competencies efforts
There are a number of risks associated with Core Competencies, which must be managed for the methodology to yield positive results.
Risk is defined as items that can become a serious obstacle to successfully completing the effort and subsequent utilization of the competencies for managing profitable growth. Risks may include some of the following:
● Delegating the process down the organization may result in a set of tactics that are not competencies. Delegation may also send a message that the process is not important enough. While it is something many people in the organization should be involved in, it is not a process the management team can delegate; rather, it is a process the entire management team must participate. In our experience, this is the number one cause of defects or failure.
Ensure that the entire management team is committed to visibly support the process from start to end.
● Underestimating the discipline required to identify and validate your Core Competencies results in doubtful competencies. Lack of commitment to the rigor of the process may cause a complete stop or failure.
For example, a simple conversation about the topic is woefully insufficient, and we do not consider that a robust process. Formal and facilitated meetings must take place, ample time for discussion and dialog should be allowed.
● Not following the process to completion — e.g., not gathering enough data, missing part of the analysis, not doing the validation, or missing an important competency. Not applying the
How Important are Core Competencies?
Several best-selling books have been written that reflect the power of the Core Competency and attest to the criticality of the concept. While these books do not necessarily call attention to Core Competencies, the focus in on identifying what your company does best and then using it to create profitable growth and competitive stamina:
• Competing for the Future by Gary Hamel and C. K. Prahalad
• From Good to Great by Jim Collins,
• Discipline of Market Leaders by Michael Treacy and Fred Wiersema
• The Virtual Corporation by William H. Davidow.
• Blue Ocean Strategy by W. Chan Kim and Renee Mauborgne
The above list is not all-inclusive of all books published on the topic of Core Competencies. It is intended to show the attention that CC’s have received from noted authors.
6
The Application of Core Competencies to Growth Management
competencies for managing profitable growth is a frequent failure. Obtaining and validating the competencies is but the first step. The value comes from the rigorous application of the competencies to create the strategies and programs to ensure growth.
● Not allowing sufficient time to do a thorough job. As a rule-of-thumb, the process may take from three calendar months up to a full calendar year due to the need for both, qualitative and quantitative validation. We suggest that you plan well in advance to ensure ample time to do it right the first time, failure should not be an option.
Click here for additional risks — Appendix A
Transform your Core Competencies into growth opportunities
The use of Core Competencies to create profitable growth must be a deliberate decision — a clear strategic initiative2 that the executive team will support for several years. Generally, a strategic initiative spans several years before achievement, and has several programs with their own respective projects.
Opportunities
Once competencies have been prioritized and validated, your company can proceed to use them to your advantage. For example:
● Developing competitive moves to protect existing markets.
● Identifying adjacent markets (Product and market extensions)
2 Strategic initiatives are the documented programs and projects that — when brought to fruition — ensure the achievement of the company’s strategic imperatives.
● Identifying new markets beyond your existing one (Diversification).
● Using Core Competencies to grow within your current markets.
● Acquiring any competencies that, although needed for success, are not yet part of your company.
Conclusion
The use of Core Competencies is a well established and proven method to define growth opportunities, as it provides a clear framework to make business decisions. Further, utilizing Core Competencies goes a long ways toward reducing the impact of uncertainty on growth initiatives.
Next time someone in your team says “We must grow beyond the core” Think about applying the Core Competency methods.
Continue to additional [email protected]
Participate in the Dialog
Click here if you have questions, comments or suggestions. The author welcomes your participation in this important topic.
Critical Questions
Does your R&D team develop new technology based on your Core Competencies?
Do you know the Core Competencies of your competitors?
Do you create competitive strategies based on the competencies you possess that are the most difficult to imitate?
Do your know which of your competencies your customers value above all others?
7
The Application of Core Competencies to Growth Management
About RapidinnovationEight of the many critical questions we have helped answer for our customers:
1. How can we get closer to our customers in order to create more profitable products, beat our competitors and delight our customers?
2. How do we “price for value” to maximize profits and please our customers?
3. How can we optimize our R&D investments and execute the best roadmap to maximize profits?
4. How do we grow beyond our core and manage the risks?
5. How can we accelerate time-to-market and shorten time-to-profit?
6. How can we make Agile work for us?
7. How do we segment our markets to consistently optimize profits and ensure growth?
8. How do we improve the financial skills of the Engineering and Product Mangers to obtain better business cases and overall financial performance?
We have been serving the high-technology community around the world for the last 17 years. Our ability to concentrate on high technology has given us a unique insight into the dynamics of the fastest-moving market around. Every one of our Business Consultants is a seasoned veteran of corporate life in high-tech companies. All have engineering degrees with advanced degrees in business plus years of experience helping technology companies achieve their business goals — credentials that are brought to bear to solve our customers’ challenges.
We work with our customers by focusing on the high-leverage areas of the company: R&D and Marketing where we collaborate, train, coach and facilitate every aspect of product development,
innovation, and profitability. We also work with Senior Staff to develop measurable growth management
strategies and then help in the clear execution.
Our list of satisfied customers includes some of the leading global technology companies.
Continue
8
The Application of Core Competencies to Growth Management
Continue
Additional risks that may impede a fruitful process
● The likelihood of focusing on a limited area of the company obscures potential competencies in other areas of the company, thus resulting in missed opportunities for growth
Competencies may occur in three areas: Technology, Operations and Customer Relationships. They should be an intricate blend that is difficult for competitors to imitate, or perhaps to even understand. For example, 3M’s Core Competency in managing innovation is not easy to document; nevertheless, people in the company know what to do to keep it going.
Invite a cross section of representatives from across the company to be part of the discovery process
● The probability of being too internally focused by not involving other key external stakeholders in the process — results in limiting additional competencies that are obscured by internal dynamics
Obtaining the views of customers, the investment community and the employees at large, as well as other external sources, improves the quality and validity of the competencies. Widening the focus helps avoid identifying false or obsolete competencies. For example, your company might have had an expertise in something in the past, but others have caught up on this Core Competency and it is no longer unique.
Conduct a second round of discovery with representatives from outside your company
● The likelihood of focusing only on the technical Core Competencies keeps executives from other valuable categories of competencies
Technology organizations have a tendency to focus on the technical capabilities of the organization as the only dimension1 of “value.” It takes a considerable set of competencies to create and sustain new products, such as excellence in operations and customer relationships — both of which are potential sources of Core Competencies.
Open the discussion to other areas including intangibles. Keep in mind that there are at least ten
1 The authors have identified 10 critical dimensions of value for technology companies, only one of which are the technical aspects. The combined dimensions of value make up your “offering”; that is, the expectations that your customers believe they are purchasing from you
Continue
Click here to return to article
Appendix A: Risks
9
The Application of Core Competencies to Growth Management
dimensions of value — and performance (banner specs) is but on of them
● The probability of taking the early results and using them as if they were valid or final result in a flawed set which will may cause irreparable damage to your growth strategies
It is very tempting to assume that the early results of the process to identify Core Competencies are indeed final. Keep in mind that critical business decisions will be made based on the list of competencies; consequently, it is important to follow the process to its conclusion, including validation and risk management.
Ensure that the discovery process is thorough, allow ample time for discussion and dialog. Then conduct additional rounds with other stakeholders until your level of certainty is adequate
● Allowing financial pressures on the company to interfere with the Core Competency process results in a hurried process overlooking important competencies
The ebb and flow of the technology business plays havoc with longer-term initiatives; e.g., stopping the funding needed to complete the job due to lower-than-expected results, re-assigning personnel for urgent or emergency problems, etc.
Start the process with a long-term view; that is, allow sufficient calendar time to the process. Generally we suggest at least three calendar months, but additional time may be necessary.
Ensure that all participants understand that it takes time to identify and validate core competencies.
● Having the “immune system” of the organization set in imposing a negative perspective in the process resulting in total failure or flawed information
The denial factor tends to terminate initiatives that seem threatening to the status quo. We label it the “immune system” because it acts as having anti-bodies that threaten anything that is perceived as challenging the conventional thinking of the culture.
Retain an outside facilitator who can help you overcome internal resistance.
Include people who are eager to change in the discovery process to balance any negative perspectives.
Click here to return to the article
Continue to additional resources
10
Additional Resources
Additional ResourcesRapidinnovation has published a series of books on product development. They were written by experienced product developers for those who must implement critical business processes in product development environments.
The Voice of the Customer for Product Development
Your illustrated guide to obtaining, prioritizing and using customer requirements and creating winning products
Step 2: Organize Your Visits
85 For comments, questions or additional copies please e-mail the authors: [email protected]
CONTINUED
Detailed Process: Discussion Guide
SET THE FOUNDATION
Ensure that the objectives for the customer visits are documented and nal.Circulate the objectives and any other relevant material to the members of your team and any other relevant stakeholder.
1
CALL A BRAINSTORMING MEETING
Decide who needs to attend based on the objectives and each person’s ability to contribute.Schedule the meeting for at least three hours. This may reduce attendance, but quality is more important than quantity.Secure a conference room with ample space.
2
HintPRIORITIZE TOPICS FOR THE MEETING
In step #3 (Brainstorm), you are defi ning and prioritizing the topics of conversation. A good way to start the brainstorm is to ask your team members to write down all the questions they wish to ask their customers (use Yellow Sticky Notes).
BRAINSTORM
Use the Af nity Diagram method or any other formal framework for brainstorming.
Brainstorm all possible • topics.Organize the topics or • questions.Consolidate the topics.• Prioritize the topics.•
You should end up with no more than three to ve topics. Prioritize based on importance to the objectives and using a clear criteria for selection.
3
HintGenerally, you will need one hour to
cover three topics, or perhaps fewer. Remember that you need to allow the customer to talk, and this takes time. It is not a survey, it is a conversation where you need to probe and let the customer talk and think.
Step 2: Organize Your Visits
61 For comments, questions or additional copies please e-mail the authors: [email protected]
Types of Customers Subsegment A Subsegment B
Customers you have lost. 1. That is, customers who no longer buy from you for a negative reason.
Customers you never had. 2. That is, customers who ought to have bought from you, but never did.
Customers who have stopped buying from you.3. That is, you have not lost them, but they have not bought from you in some time. Different than Item 1 above.
Future customers.4. That is, customers in new markets, new companies, new applications, etc.
Customers who are buying much less from you.5. Those who, in the last six, 12 or 18 months have shown a drastic reduction in purchases.
Customers who are buying much more from 6. you.
Subsegments A and B are there to provide one additional level of segmentation. For example, you might make A the U.S. and B Europe or you can make A Managers and B Technicians. You need not use both A and B in your sample selection; it’s your choice.
Example: Customer Archetypes T
Detailed Process: Discussion Guide
OUNDATION
Ensure that the objectives for the customer visits are documented and Circulate the objectives and any other relevant material to the members of your team and any other relevant stakeholder.
Understand What Customers Value
20 For comments, questions or additional copies please e-mail the authors: [email protected]
RankCustomer Value Driversin Order of Importance Category
Competitor A
Competitor B
No.Rating (1-10)
Score Rating (1-10)
Score
1 29% Ability to address existing and anticipated technical Ben/Tech 8 2.32 10 2.90 You need to
be the BEST in satisfying the most important Customer Value Drivers (CVDs).
2 18% Positive experience with the product. Ben/Emo 9.5 1.71 8 1.44
3 15% Positive experience with the company. Ben/Emo 5 0.75 9.5 1.43
4 12% Ease of operating and maintaining the system Ben/Tech 7 0.84 8.5 1.02
You can be COMPARABLE to competitors in the second tier of CVDs.
5 8% Increased asset utilization. Ben/Eco 8 0.64 4 0.32
6 5% Ease of integration into company processes and Ben/Oper 9.5 0.48 4 0.20
7 5% Cost of ownership (CoO). Cost/Money 8.5 0.43 6 0.30
8 3% Impact on the organization if something goes wrong. Cost/Risk 9 0.27 7 0.21 You can be
INFERIOR in satisfying CVDs that are the least important, provided your performance is still
9 3% Increased revenue/throughput. Ben/Eco 7 0.21 4 0.12
10 2% Purchase price. Cost/Money 6 0.12 4 0.08
All 100% Product Value Index 7.77 8.02
Example: Product Value Index
1 2 3 4
The Product Value Index (PVI) is a numerical expression of value. By quantifying the value that a product represents to a target segment, you can determine how the offering of one company ranks compared to that of another company. The PVI is calculated by first multiplying the Importance percentage (item 2) by the Rating (item 5)—this generates the Score (item 6) for each CVD—and then totalling the Scores to create the PVI (item 7).
5 6
7
T Step 3: Interview Your Customers
101 For comments, questions or additional copies please e-mail the authors: [email protected]
INTERVIEWER: How do you feel about this software product?CUSTOMER: It is very dif cult to use.
INTERVIEWER: Tell me more?CUSTOMER: The menu system is not intuitive.
INTERVIEWER: Tell me why it’s not intuitive?CUSTOMER: I get lost all the time.
INTERVIEWER: Why do you think you get lost using the menu?CUSTOMER: Well, there are too many layers and no way to get back.
ROOT MESSAGE: The menu system has too many layers and no way to get back, which makes customers feel that the product is too dif cult to use.
Q1st Why
2nd Why
3rd Why
ANote the root message — i.e., actionable input from the customer.
Example 1: The 5 Why’s
INTERVIEWER: Tell me about your printing needs.CUSTOMER: I want a printer that prints at more than 20 pages per minute, and 30 would be better.
INTERVIEWER: Why is that important to you?CUSTOMER: The one we have now does 10 pages/min and it is too slow.
INTERVIEWER: In what circumstances is it too slow?CUSTOMER: In particular when we have a queue of documents with heavy graphics.
INTERVIEWER: Tell me more.CUSTOMER: We often have to print 60-100 page reports at the last minute before a presentation, and these reports contain lots of graphics. It is not atypical to have 3-5 users printing reports at the same time.
INTERVIEWER: What about documents with text only?CUSTOMER: No problem there. It is only when we have these heavy graphics reports and when 3-5 users are queueing.
Q1st Why
2nd Why
3rd Why
AFrom feature to problem — i.e., don’t stop probing until the customer voices the problem.
Example 2: The 5 Why’s
4th
Edit
ion
tools fully-illustra
ted
processes
examples
templates and
worksheets
The Voice of the Customer for Product Development
This guidebook addresses the pressure to obtain customer requirements rapidly — and shows you how to turn this knowledge into innovative products faster and better than your competitors.
It’s a step-by-step guide to every aspect of obtaining, processing and applying knowledge of your customers — so you can create a steady flow of winning products.
Flexible Project Management for Product Development
Your illustrated guide to making project management work in tumultuous development
Step 2: Organize Your Visits
85 For comments, questions or additional copies please e-mail the authors: [email protected]
CONTINUED
Detailed Process: Discussion Guide
SET THE FOUNDATION
Ensure that the objectives for the customer visits are documented and nal.Circulate the objectives and any other relevant material to the members of your team and any other relevant stakeholder.
1
CALL A BRAINSTORMING MEETING
Decide who needs to attend based on the objectives and each person’s ability to contribute.Schedule the meeting for at least three hours. This may reduce attendance, but quality is more important than quantity.Secure a conference room with ample space.
2
HintPRIORITIZE TOPICS FOR THE MEETING
In step #3 (Brainstorm), you are defi ning and prioritizing the topics of conversation. A good way to start the brainstorm is to ask your team members to write down all the questions they wish to ask their customers (use Yellow Sticky Notes).
BRAINSTORM
Use the Af nity Diagram method or any other formal framework for brainstorming.
Brainstorm all possible • topics.Organize the topics or • questions.Consolidate the topics.• Prioritize the topics.•
You should end up with no more than three to ve topics. Prioritize based on importance to the objectives and using a clear criteria for selection.
3
HintGenerally, you will need one hour to
cover three topics, or perhaps fewer. Remember that you need to allow the customer to talk, and this takes time. It is not a survey, it is a conversation where you need to probe and let the customer talk and think.
Step 2: Organize Your Visits
61 For comments, questions or additional copies please e-mail the authors: [email protected]
Types of Customers Subsegment A Subsegment B
Customers you have lost. 1. That is, customers who no longer buy from you for a negative reason.
Customers you never had. 2. That is, customers who ought to have bought from you, but never did.
Customers who have stopped buying from you.3. That is, you have not lost them, but they have not bought from you in some time. Different than Item 1 above.
Future customers.4. That is, customers in new markets, new companies, new applications, etc.
Customers who are buying much less from you.5. Those who, in the last six, 12 or 18 months have shown a drastic reduction in purchases.
Customers who are buying much more from 6. you.
Subsegments A and B are there to provide one additional level of segmentation. For example, you might make A the U.S. and B Europe or you can make A Managers and B Technicians. You need not use both A and B in your sample selection; it’s your choice.
Example: Customer Archetypes T
Understand What Customers Value
20 For comments, questions or additional copies please e-mail the authors: [email protected]
RankCustomer Value Driversin Order of Importance Category
Competitor A
Competitor B
No.Rating (1-10)
Score Rating (1-10)
Score
1 29% Ability to address existing and anticipated technical Ben/Tech 8 2.32 10 2.90 You need to
be the BEST in satisfying the most important Customer Value Drivers (CVDs).
2 18% Positive experience with the product. Ben/Emo 9.5 1.71 8 1.44
3 15% Positive experience with the company. Ben/Emo 5 0.75 9.5 1.43
4 12% Ease of operating and maintaining the system Ben/Tech 7 0.84 8.5 1.02
You can be COMPARABLE to competitors in the second tier of CVDs.
5 8% Increased asset utilization. Ben/Eco 8 0.64 4 0.32
6 5% Ease of integration into company processes and Ben/Oper 9.5 0.48 4 0.20
7 5% Cost of ownership (CoO). Cost/Money 8.5 0.43 6 0.30
8 3% Impact on the organization if something goes wrong. Cost/Risk 9 0.27 7 0.21 You can be
INFERIOR in satisfying CVDs that are the least important, provided your performance is still
9 3% Increased revenue/throughput. Ben/Eco 7 0.21 4 0.12
10 2% Purchase price. Cost/Money 6 0.12 4 0.08
All 100% Product Value Index 7.77 8.02
Example: Product Value Index
1 2 3 4
The Product Value Index (PVI) is a numerical expression of value. By quantifying the value that a product represents to a target segment, you can determine how the offering of one company ranks compared to that of another company. The PVI is calculated by first multiplying the Importance percentage (item 2) by the Rating (item 5)—this generates the Score (item 6) for each CVD—and then totalling the Scores to create the PVI (item 7).
5 6
7
T Step 3: Interview Your Customers
101 For comments, questions or additional copies please e-mail the authors: [email protected]
INTERVIEWER: How do you feel about this software product?CUSTOMER: It is very dif cult to use.
INTERVIEWER: Tell me more?CUSTOMER: The menu system is not intuitive.
INTERVIEWER: Tell me why it’s not intuitive?CUSTOMER: I get lost all the time.
INTERVIEWER: Why do you think you get lost using the menu?CUSTOMER: Well, there are too many layers and no way to get back.
ROOT MESSAGE: The menu system has too many layers and no way to get back, which makes customers feel that the product is too dif cult to use.
Q1st Why
2nd Why
3rd Why
ANote the root message — i.e., actionable input from the customer.
Example 1: The 5 Why’s
INTERVIEWER: Tell me about your printing needs.CUSTOMER: I want a printer that prints at more than 20 pages per minute, and 30 would be better.
INTERVIEWER: Why is that important to you?CUSTOMER: The one we have now does 10 pages/min and it is too slow.
INTERVIEWER: In what circumstances is it too slow?CUSTOMER: In particular when we have a queue of documents with heavy graphics.
INTERVIEWER: Tell me more.CUSTOMER: We often have to print 60-100 page reports at the last minute before a presentation, and these reports contain lots of graphics. It is not atypical to have 3-5 users printing reports at the same time.
INTERVIEWER: What about documents with text only?CUSTOMER: No problem there. It is only when we have these heavy graphics reports and when 3-5 users are queueing.
Q1st Why
2nd Why
3rd Why
AFrom feature to problem — i.e., don’t stop probing until the customer voices the problem.
Example 2: The 5 Why’s
4th
Edit
ion
tools fully-illustra
ted
processes
examples
templates and
worksheets
Flexible Project Management for Product Development
Designed for product developers who are tired of traditional project management approaches that don’t account for the real-world intricacies and challenges of product development.
The step-by-step design of this guidebook makes it a valuable reference for you and your development team
Risk Management and FMEAfor Product Development
Your illustrated guide to reducing time-to-market through risk management and FMEA
Step 2: Organize Your Visits
85 For comments, questions or additional copies please e-mail the authors: [email protected]
CONTINUED
Detailed Process: Discussion Guide
SET THE FOUNDATION
Ensure that the objectives for the customer visits are documented and nal.Circulate the objectives and any other relevant material to the members of your team and any other relevant stakeholder.
1
CALL A BRAINSTORMING MEETING
Decide who needs to attend based on the objectives and each person’s ability to contribute.Schedule the meeting for at least three hours. This may reduce attendance, but quality is more important than quantity.Secure a conference room with ample space.
2
HintPRIORITIZE TOPICS FOR THE MEETING
In step #3 (Brainstorm), you are defi ning and prioritizing the topics of conversation. A good way to start the brainstorm is to ask your team members to write down all the questions they wish to ask their customers (use Yellow Sticky Notes).
BRAINSTORM
Use the Af nity Diagram method or any other formal framework for brainstorming.
Brainstorm all possible • topics.Organize the topics or • questions.Consolidate the topics.• Prioritize the topics.•
You should end up with no more than three to ve topics. Prioritize based on importance to the objectives and using a clear criteria for selection.
3
HintGenerally, you will need one hour to
cover three topics, or perhaps fewer. Remember that you need to allow the customer to talk, and this takes time. It is not a survey, it is a conversation where you need to probe and let the customer talk and think.
Step 2: Organize Your Visits
61 For comments, questions or additional copies please e-mail the authors: [email protected]
Types of Customers Subsegment A Subsegment B
Customers you have lost. 1. That is, customers who no longer buy from you for a negative reason.
Customers you never had. 2. That is, customers who ought to have bought from you, but never did.
Customers who have stopped buying from you.3. That is, you have not lost them, but they have not bought from you in some time. Different than Item 1 above.
Future customers.4. That is, customers in new markets, new companies, new applications, etc.
Customers who are buying much less from you.5. Those who, in the last six, 12 or 18 months have shown a drastic reduction in purchases.
Customers who are buying much more from 6. you.
Subsegments A and B are there to provide one additional level of segmentation. For example, you might make A the U.S. and B Europe or you can make A Managers and B Technicians. You need not use both A and B in your sample selection; it’s your choice.
Example: Customer Archetypes T
Detailed Process: Discussion Guide
OUNDATION
Ensure that the objectives for the customer visits are documented and Circulate the objectives and any other relevant material to the members of your team and any other relevant stakeholder.
Understand What Customers Value
20 For comments, questions or additional copies please e-mail the authors: [email protected]
RankCustomer Value Driversin Order of Importance Category
Competitor A
Competitor B
No.Rating (1-10)
Score Rating (1-10)
Score
1 29% Ability to address existing and anticipated technical Ben/Tech 8 2.32 10 2.90 You need to
be the BEST in satisfying the most important Customer Value Drivers (CVDs).
2 18% Positive experience with the product. Ben/Emo 9.5 1.71 8 1.44
3 15% Positive experience with the company. Ben/Emo 5 0.75 9.5 1.43
4 12% Ease of operating and maintaining the system Ben/Tech 7 0.84 8.5 1.02
You can be COMPARABLE to competitors in the second tier of CVDs.
5 8% Increased asset utilization. Ben/Eco 8 0.64 4 0.32
6 5% Ease of integration into company processes and Ben/Oper 9.5 0.48 4 0.20
7 5% Cost of ownership (CoO). Cost/Money 8.5 0.43 6 0.30
8 3% Impact on the organization if something goes wrong. Cost/Risk 9 0.27 7 0.21 You can be
INFERIOR in satisfying CVDs that are the least important, provided your performance is still
9 3% Increased revenue/throughput. Ben/Eco 7 0.21 4 0.12
10 2% Purchase price. Cost/Money 6 0.12 4 0.08
All 100% Product Value Index 7.77 8.02
Example: Product Value Index
1 2 3 4
The Product Value Index (PVI) is a numerical expression of value. By quantifying the value that a product represents to a target segment, you can determine how the offering of one company ranks compared to that of another company. The PVI is calculated by first multiplying the Importance percentage (item 2) by the Rating (item 5)—this generates the Score (item 6) for each CVD—and then totalling the Scores to create the PVI (item 7).
5 6
7
T Step 3: Interview Your Customers
101 For comments, questions or additional copies please e-mail the authors: [email protected]
INTERVIEWER: How do you feel about this software product?CUSTOMER: It is very dif cult to use.
INTERVIEWER: Tell me more?CUSTOMER: The menu system is not intuitive.
INTERVIEWER: Tell me why it’s not intuitive?CUSTOMER: I get lost all the time.
INTERVIEWER: Why do you think you get lost using the menu?CUSTOMER: Well, there are too many layers and no way to get back.
ROOT MESSAGE: The menu system has too many layers and no way to get back, which makes customers feel that the product is too dif cult to use.
Q1st Why
2nd Why
3rd Why
ANote the root message — i.e., actionable input from the customer.
Example 1: The 5 Why’s
INTERVIEWER: Tell me about your printing needs.CUSTOMER: I want a printer that prints at more than 20 pages per minute, and 30 would be better.
INTERVIEWER: Why is that important to you?CUSTOMER: The one we have now does 10 pages/min and it is too slow.
INTERVIEWER: In what circumstances is it too slow?CUSTOMER: In particular when we have a queue of documents with heavy graphics.
INTERVIEWER: Tell me more.CUSTOMER: We often have to print 60-100 page reports at the last minute before a presentation, and these reports contain lots of graphics. It is not atypical to have 3-5 users printing reports at the same time.
INTERVIEWER: What about documents with text only?CUSTOMER: No problem there. It is only when we have these heavy graphics reports and when 3-5 users are queueing.
Q1st Why
2nd Why
3rd Why
AFrom feature to problem — i.e., don’t stop probing until the customer voices the problem.
Example 2: The 5 Why’s
4th
Edit
ion
tools fully-illustra
ted
processes
examples
templates and
worksheets
Risk Management and FMEA for Product Development
In product development, the imperative to reduce time-to-market is always present — and risks can cause catastrophic delays. What if you could predict and manage risks, so they don’t interfere with your time-to-market goals?
This step-by-step guide addresses every aspect of identifying, prioritizing and mitigating product development risks. It’s written by veteran product developers who understand the pressures of creating innovative products faster than your competitors.
Debriefs and Postmortems for Product Development
Your illustrated guide to improving performance through lessons learned
Step 2: Organize Your Visits
85 For comments, questions or additional copies please e-mail the authors: [email protected]
CONTINUED
Detailed Process: Discussion Guide
SET THE FOUNDATION
Ensure that the objectives for the customer visits are documented and nal.Circulate the objectives and any other relevant material to the members of your team and any other relevant stakeholder.
1
CALL A BRAINSTORMING MEETING
Decide who needs to attend based on the objectives and each person’s ability to contribute.Schedule the meeting for at least three hours. This may reduce attendance, but quality is more important than quantity.Secure a conference room with ample space.
2
HintPRIORITIZE TOPICS FOR THE MEETING
In step #3 (Brainstorm), you are defi ning and prioritizing the topics of conversation. A good way to start the brainstorm is to ask your team members to write down all the questions they wish to ask their customers (use Yellow Sticky Notes).
BRAINSTORM
Use the Af nity Diagram method or any other formal framework for brainstorming.
Brainstorm all possible • topics.Organize the topics or • questions.Consolidate the topics.• Prioritize the topics.•
You should end up with no more than three to ve topics. Prioritize based on importance to the objectives and using a clear criteria for selection.
3
HintGenerally, you will need one hour to
cover three topics, or perhaps fewer. Remember that you need to allow the customer to talk, and this takes time. It is not a survey, it is a conversation where you need to probe and let the customer talk and think.
Step 2: Organize Your Visits
61 For comments, questions or additional copies please e-mail the authors: [email protected]
Types of Customers Subsegment A Subsegment B
Customers you have lost. 1. That is, customers who no longer buy from you for a negative reason.
Customers you never had. 2. That is, customers who ought to have bought from you, but never did.
Customers who have stopped buying from you.3. That is, you have not lost them, but they have not bought from you in some time. Different than Item 1 above.
Future customers.4. That is, customers in new markets, new companies, new applications, etc.
Customers who are buying much less from you.5. Those who, in the last six, 12 or 18 months have shown a drastic reduction in purchases.
Customers who are buying much more from 6. you.
Subsegments A and B are there to provide one additional level of segmentation. For example, you might make A the U.S. and B Europe or you can make A Managers and B Technicians. You need not use both A and B in your sample selection; it’s your choice.
Example: Customer Archetypes T
Detailed Process: Discussion Guide
OUNDATION
Ensure that the objectives for the customer visits are documented and Circulate the objectives and any other relevant material to the members of your team and any other relevant stakeholder.
Understand What Customers Value
20 For comments, questions or additional copies please e-mail the authors: [email protected]
RankCustomer Value Driversin Order of Importance Category
Competitor A
Competitor B
No.Rating (1-10)
Score Rating (1-10)
Score
1 29% Ability to address existing and anticipated technical Ben/Tech 8 2.32 10 2.90 You need to
be the BEST in satisfying the most important Customer Value Drivers (CVDs).
2 18% Positive experience with the product. Ben/Emo 9.5 1.71 8 1.44
3 15% Positive experience with the company. Ben/Emo 5 0.75 9.5 1.43
4 12% Ease of operating and maintaining the system Ben/Tech 7 0.84 8.5 1.02
You can be COMPARABLE to competitors in the second tier of CVDs.
5 8% Increased asset utilization. Ben/Eco 8 0.64 4 0.32
6 5% Ease of integration into company processes and Ben/Oper 9.5 0.48 4 0.20
7 5% Cost of ownership (CoO). Cost/Money 8.5 0.43 6 0.30
8 3% Impact on the organization if something goes wrong. Cost/Risk 9 0.27 7 0.21 You can be
INFERIOR in satisfying CVDs that are the least important, provided your performance is still
9 3% Increased revenue/throughput. Ben/Eco 7 0.21 4 0.12
10 2% Purchase price. Cost/Money 6 0.12 4 0.08
All 100% Product Value Index 7.77 8.02
Example: Product Value Index
1 2 3 4
The Product Value Index (PVI) is a numerical expression of value. By quantifying the value that a product represents to a target segment, you can determine how the offering of one company ranks compared to that of another company. The PVI is calculated by first multiplying the Importance percentage (item 2) by the Rating (item 5)—this generates the Score (item 6) for each CVD—and then totalling the Scores to create the PVI (item 7).
5 6
7
T Step 3: Interview Your Customers
101 For comments, questions or additional copies please e-mail the authors: [email protected]
INTERVIEWER: How do you feel about this software product?CUSTOMER: It is very dif cult to use.
INTERVIEWER: Tell me more?CUSTOMER: The menu system is not intuitive.
INTERVIEWER: Tell me why it’s not intuitive?CUSTOMER: I get lost all the time.
INTERVIEWER: Why do you think you get lost using the menu?CUSTOMER: Well, there are too many layers and no way to get back.
ROOT MESSAGE: The menu system has too many layers and no way to get back, which makes customers feel that the product is too dif cult to use.
Q1st Why
2nd Why
3rd Why
ANote the root message — i.e., actionable input from the customer.
Example 1: The 5 Why’s
INTERVIEWER: Tell me about your printing needs.CUSTOMER: I want a printer that prints at more than 20 pages per minute, and 30 would be better.
INTERVIEWER: Why is that important to you?CUSTOMER: The one we have now does 10 pages/min and it is too slow.
INTERVIEWER: In what circumstances is it too slow?CUSTOMER: In particular when we have a queue of documents with heavy graphics.
INTERVIEWER: Tell me more.CUSTOMER: We often have to print 60-100 page reports at the last minute before a presentation, and these reports contain lots of graphics. It is not atypical to have 3-5 users printing reports at the same time.
INTERVIEWER: What about documents with text only?CUSTOMER: No problem there. It is only when we have these heavy graphics reports and when 3-5 users are queueing.
Q1st Why
2nd Why
3rd Why
AFrom feature to problem — i.e., don’t stop probing until the customer voices the problem.
Example 2: The 5 Why’s
4th
Edit
ion
tools fully-illustra
ted
processes
examples
templates and
worksheets
Debriefs and Postmortems for Product Development
Debriefs are the most effective way to improve development-team performance — and that translates to shorter time-to-market and more rewarding innovation development.
This step-by-step guide covers every aspect of postmortems, identifying what to do-more-of and what to do-less-of to improve future product-development performance. It’s written by veteran product developers
Actionable Metrics for Product Development
Your illustrated guide to developing and using metrics to improve product margins and reduce time-to-market
Step 2: Organize Your Visits
85 For comments, questions or additional copies please e-mail the authors: [email protected]
CONTINUED
Detailed Process: Discussion Guide
SET THE FOUNDATION
Ensure that the objectives for the customer visits are documented and nal.Circulate the objectives and any other relevant material to the members of your team and any other relevant stakeholder.
1
CALL A BRAINSTORMING MEETING
Decide who needs to attend based on the objectives and each person’s ability to contribute.Schedule the meeting for at least three hours. This may reduce attendance, but quality is more important than quantity.Secure a conference room with ample space.
2
HintPRIORITIZE TOPICS FOR THE MEETING
In step #3 (Brainstorm), you are defi ning and prioritizing the topics of conversation. A good way to start the brainstorm is to ask your team members to write down all the questions they wish to ask their customers (use Yellow Sticky Notes).
BRAINSTORM
Use the Af nity Diagram method or any other formal framework for brainstorming.
Brainstorm all possible • topics.Organize the topics or • questions.Consolidate the topics.• Prioritize the topics.•
You should end up with no more than three to ve topics. Prioritize based on importance to the objectives and using a clear criteria for selection.
3
HintGenerally, you will need one hour to
cover three topics, or perhaps fewer. Remember that you need to allow the customer to talk, and this takes time. It is not a survey, it is a conversation where you need to probe and let the customer talk and think.
Step 2: Organize Your Visits
61 For comments, questions or additional copies please e-mail the authors: [email protected]
Types of Customers Subsegment A Subsegment B
Customers you have lost. 1. That is, customers who no longer buy from you for a negative reason.
Customers you never had. 2. That is, customers who ought to have bought from you, but never did.
Customers who have stopped buying from you.3. That is, you have not lost them, but they have not bought from you in some time. Different than Item 1 above.
Future customers.4. That is, customers in new markets, new companies, new applications, etc.
Customers who are buying much less from you.5. Those who, in the last six, 12 or 18 months have shown a drastic reduction in purchases.
Customers who are buying much more from 6. you.
Subsegments A and B are there to provide one additional level of segmentation. For example, you might make A the U.S. and B Europe or you can make A Managers and B Technicians. You need not use both A and B in your sample selection; it’s your choice.
Example: Customer Archetypes T
Detailed Process: Discussion Guide
OUNDATION
Ensure that the objectives for the customer visits are documented and Circulate the objectives and any other relevant material to the members of your team and any other relevant stakeholder.
Understand What Customers Value
20 For comments, questions or additional copies please e-mail the authors: [email protected]
RankCustomer Value Driversin Order of Importance Category
Competitor A
Competitor B
No.Rating (1-10)
Score Rating (1-10)
Score
1 29% Ability to address existing and anticipated technical Ben/Tech 8 2.32 10 2.90 You need to
be the BEST in satisfying the most important Customer Value Drivers (CVDs).
2 18% Positive experience with the product. Ben/Emo 9.5 1.71 8 1.44
3 15% Positive experience with the company. Ben/Emo 5 0.75 9.5 1.43
4 12% Ease of operating and maintaining the system Ben/Tech 7 0.84 8.5 1.02
You can be COMPARABLE to competitors in the second tier of CVDs.
5 8% Increased asset utilization. Ben/Eco 8 0.64 4 0.32
6 5% Ease of integration into company processes and Ben/Oper 9.5 0.48 4 0.20
7 5% Cost of ownership (CoO). Cost/Money 8.5 0.43 6 0.30
8 3% Impact on the organization if something goes wrong. Cost/Risk 9 0.27 7 0.21 You can be
INFERIOR in satisfying CVDs that are the least important, provided your performance is still
9 3% Increased revenue/throughput. Ben/Eco 7 0.21 4 0.12
10 2% Purchase price. Cost/Money 6 0.12 4 0.08
All 100% Product Value Index 7.77 8.02
Example: Product Value Index
1 2 3 4
The Product Value Index (PVI) is a numerical expression of value. By quantifying the value that a product represents to a target segment, you can determine how the offering of one company ranks compared to that of another company. The PVI is calculated by first multiplying the Importance percentage (item 2) by the Rating (item 5)—this generates the Score (item 6) for each CVD—and then totalling the Scores to create the PVI (item 7).
5 6
7
T Step 3: Interview Your Customers
101 For comments, questions or additional copies please e-mail the authors: [email protected]
INTERVIEWER: How do you feel about this software product?CUSTOMER: It is very dif cult to use.
INTERVIEWER: Tell me more?CUSTOMER: The menu system is not intuitive.
INTERVIEWER: Tell me why it’s not intuitive?CUSTOMER: I get lost all the time.
INTERVIEWER: Why do you think you get lost using the menu?CUSTOMER: Well, there are too many layers and no way to get back.
ROOT MESSAGE: The menu system has too many layers and no way to get back, which makes customers feel that the product is too dif cult to use.
Q1st Why
2nd Why
3rd Why
ANote the root message — i.e., actionable input from the customer.
Example 1: The 5 Why’s
INTERVIEWER: Tell me about your printing needs.CUSTOMER: I want a printer that prints at more than 20 pages per minute, and 30 would be better.
INTERVIEWER: Why is that important to you?CUSTOMER: The one we have now does 10 pages/min and it is too slow.
INTERVIEWER: In what circumstances is it too slow?CUSTOMER: In particular when we have a queue of documents with heavy graphics.
INTERVIEWER: Tell me more.CUSTOMER: We often have to print 60-100 page reports at the last minute before a presentation, and these reports contain lots of graphics. It is not atypical to have 3-5 users printing reports at the same time.
INTERVIEWER: What about documents with text only?CUSTOMER: No problem there. It is only when we have these heavy graphics reports and when 3-5 users are queueing.
Q1st Why
2nd Why
3rd Why
AFrom feature to problem — i.e., don’t stop probing until the customer voices the problem.
Example 2: The 5 Why’s
4th
Edit
ion
tools fully-illustra
ted
processes
examples
templates and
worksheets
Actionable Metrics for Product Development
“What gets measured gets done” says the refrain. This is particularly true in product development due to the many competing priorities, from time-to-market, to time-to-profit and many more.
This book will guide you through an assessment of your current metrics and their impact on the bottom line to describing the critical metrics used by product development organizations
For questions and comments: [email protected]
Coming soon
