a presentation about tools and techniques to help companies be more market driven

1. Define Your Requirements Not The Product Features: Effective Skills To Improve Co-Innovation By: Miki Tokola, MICOM Consulting Roger Hicks, RHC LLC

4. What’s Happening? Customer Expectations have Expanded Evaluating the whole solution not just the product features Market Relationship Structures are Complex Supply chains being replaced by ecosystems High Need for Agility High uncertainty about future and less control of outcomes Co-Innovation is an Imperative More situations where customers don’t know and vendors don’t know “The future ain’t what it used to be” - Yogi Berra

5. Customer Expectations Have Expanded Ideal Product A unique Service that extends Value in Quality, Price, Delivery and defers / minimizes customer costs Best Price / Cost Better Expected Product Base Price, Delivery and Quality Levels Good Generic Product The right components and related design support Features / Capability Changing Definition of the “Product”

6. Relationship Structures Are More Complex Supply Chain Value Delivery Network The Market Relationship Model Has Changed

7. High Need for Agility Adaptive Market Navigation (agility - move fast to stay aligned with constant changes) Many Transformative Collaboration (co-create goals and work together on a possible future) Future Conditions That Are Hard to Predict Envision the Future (define and invest in a clear set of objectives) Contingency Planning (extra efforts to analyze & position accurately) Few Few Many Number of Success Factors That Are Not Easy to Control

8. Co-Innovation is an Imperative Customer Requirements Supplier Driven -Sales, Proposal & Promotion Processes Customer & Supplier Co-Innovation and Value Discovery Processes Incipient wants Unknown Latent wants Customer Driven – Operational Efficient Purchasing & RFQ Processes Supplier Driven - Needs & Product Requirements Definition Processes Existing wants Known Supplier Offerings Un-known Solutions Known Products Changing Emphasis in the Customer/Supplier Interaction Processes

9. Is There a Better Solution Creation Process? A Co-innovation approach that is market driven High A new approach is needed to achieve better results with less effort A needs discovery approach that is product driven Impact on Results Optimal Solution Requirements Based Solution Requested Features Challenge of collecting and integrating useful input for better solutions Low Low High Effort Needed to Get Results

10. Market-Driven Strategy and culture superior business performance enabling on chosen markets focusing to deliver superior value operating working collaboratively current and future problems solving

12. A Cautionary Tale

13. Benefits of Market-Driven 31% more profitable 2X faster to bring products to market 20% higher satisfaction rates Command higher prices Gain higher market share

15. Product Driven

16. Market Driven

18. Value is situational

19. Value implies tradeoffs

21. The 5 Dimensions of Cost Troubles “How troublesome will the installation be?”” Resources “What additional resources will I need” Risks “What are the risks if it does not work as planned”” Monetary “How much is it going to cost?” Lost Opportunities “What are the risks if it does not work as planned””

22. Co-Innovation New style of market-oriented engagement Improved relationship with supply chain Clearly define problems Requirements, not features Suppliers discover latent needs

23. Innovation Perspectives Innovation is the profitable implementation of ideas and is used by suppliers to bring “new value” to their customers. Co-innovation is the ability of a company to improve productivity by collaborating with their value network to identify, characterize and address specific problems; thus, creating innovative solutions, which would otherwise not be possible.

24. [Veneer lathe video]

25. Kano Model delighted Delighters Satisfiers done poorly or not at all done well Dissatisfiers disgusted

26. Market Research

27. Primary Research Tools Ethnographic Studies Customer Panels Usability Testing In-person Interviews Focus Groups Telephone Interviews Print Surveys Web surveys

28. Primary Research Tools Qualitative Deep knowledge about a few Insights below the surface Discover unknown needs Implicit info Early stages of product process Tip of the iceberg Thin knowledge about many Quantitative Later stages of product process Explicit info Info about know needs

29. 5 WHYS Help customers reflect their true needs Root message – most fundamental message Get to actionable input

30. Finding Unstated Requirements How do you feel about this software product? It is very difficult to use. The menu system is not intuitive Tell me more. Tell me why it’s not intuitive. I get lost all the time.

31. Finding Unstated Requirements Well, there are too many layers and no way to get back. Why do you think you get lost using the menu? Root Message: The menu system has too many layers and no way to get back which makes customers feel that the product is too difficult to use.

32. Outcome to Feature Desired outcome The fundamental measures of performance inherent to the execution of a specific job Product requirement What the product shall be able to do/have to satisfy customer needs Product feature A functional attribute of a product that is included in the design specification

33. Desired Outcome Unit of Measure Minimize the time it takes to change a blade Desired Outcome Direction

34. Outcome Analysis

35. Types of Requirements Product Business Non-functional Constraints

36. Voice to Req’s to Specs 1 Customer voices, images and outcomes 2 Requirements 3 Features and attributes 4 Concepts 5 Engineering specification

37. Voice of Customer Research - An Overview Plan it out Why is the VOC necessary? What questions need to be answered? Who are the participants? Where will you go? How will you document? Investigate Discussion guide Interviews prep Probe and listen Observe & capture Supplemental surveys Interpret Extract key points Analyze and organize Note key statements Record useful images Extract insights Translate into requirements Stages of a VOC Research Project

38. What to Look For with VOC in Market Driven Process

39. A VOC Story Question – what do wine makers need to help them process grapes? The VOC Project - 2009 Talk to over 30 wine makers. Listen and learn to understand how the wine making process works. Understand the business challenges. Gain insight into what the value drivers are for wine makers. Size the potential market segments. Pick an area of focus. Result - November 30, 2010 – Key Technology introduces its family of Crush Pad Equipment Solutions for wineries. The sorting table is the critical link between the vineyard and the winery. Key developed the Grape Receiving and Inspection Platform along with other modular equipment to help small and medium sized wineries produce the highest quality product possible in a highly efficient and operator friendly process.

40. Closing Remarks and Recommendations for Action

41. How Do Companies Create Value? Successful companies do not just add value, they reinvent it! To achieve superior results companies should strive to be more market oriented and focus on how they can co-produce value with other stakeholders in their eco-system.

42. Understand the Business Problems You Want to Solve Late to the market Low market share Weak brand position Insufficient product and service capabilities Costly relationship management Low Customer Satisfaction Poor financial results (growth and profits) Damage from un-managed risks High cost marketing and selling channels Poor win-loss statistics ??

43. What Should We Be Working On? A Rethinking of the Approaches Used to Create and Develop Solutions Gaining Deep Insight into Customer/Market Needs Know enough to appreciate the unspoken wants Know enough to anticipate market trends and new requirements Real Understanding of Markets and Segments Align with and serve target groups that desire common benefits Profiling of customer clusters based on the benefits they value Competencies to Rapidly Discover and Implement Ideas Coordinated actions to profitably deliver whole solutions with superior value Supplier partnerships to quickly bring new innovations to market

44. Recommendations for Action Identify one supplier and start focusing how you can help them to understand your problems and co-innovate with you. Forget about features, it’s all about value creation. Build a Outcomes Table to help you explain your problems and objectives. Practice the 5-why’s on anyone you can.

45. Thank You For Your Attention For More Information or to Continue the Discussion Please Contact Us Roger Hicks – roger.hicks@comcast.net Miki Tokola – miki@micomconsulting.com Jose Campos - Jose@rapidinnovation.com Or Visit: www.beMarketDriven.com