Focus On: New product development

Finding out what the customer wants can be a difficult task, very often customers do not realize or cannot express what they are looking for. And if they can, that still might not lead to the creation of a successful new product. Research by Professor Clayton Christensen from the Harvard Business School finds that leading companies who have followed what their customers say have lost out to new innovations from other companies. This he has called "The Innovators Dilemma". Andy Grove, Chairman and former chief executive officer of Intel Corporation endorses this view:"It's trivial technology that disrupts the business model of the leading company, and that's what makes it so hard".

If this is true then maybe the traditional way of conducting market research is not adequate in the quest for discovering unmet customer needs and creating new disruptive product opportunities. What people say they want (and do) should not be the only deciding factor in creating new products. So what are the alternatives?

A new approach that is becoming more widespread is to carry out in-depth customer research and to treat potential customers as participants in the new product development process. In simple terms the approach is to 'listen' to what potential customers have to say, 'observe' what they currently do and what they currently use.

In formal terms, this customer research approach is known as ethnographic research and is defined as "the description and study of human culture". It originates from anthropology where anthropologists spend significant periods of time with people from a specific cultural group, making detailed observations of their practices. Cultural groups can vary from tribes in the Amazon rainforest, teenagers, drug dealers, mobile phone users and corporations. For the purposes of new product development, customer research is conducted in a much shorter time scale to fit the needs of industry.

The power of taking such an approach is that it provides real life accounts of customers' everyday activities, needs, desires, beliefs and values; it highlights the differences between what people do and what they say they do, and as a result find needs that have not been directly expressed; and it describes what meanings people place on products and how products are used. It is also cheap as it is purely about observing and listening.

Large multinational companies, including Microsoft, Nokia, Ericsson, IBM, Hewlett Packard, Kimberley Clark, General Mills and Motorola, are using this approach to discover new product opportunities and also to evaluate products that are in the development stage. This approach has also been used (knowingly or not) by many small companies and individuals for a long time.

Once you have identified unmet needs of potential customers you can make sure your new product or service solutions satisfy those needs.

Conducting ethnographic research can be used in conjunction with market research. Knowledge about competitor activity and market direction will help identify whether a new product idea is ready for launch and what the current competition if any is.