The Application of Core Competencies to Growth Management
Core Competencies form the essential foundation to grow beyond your core market
and increase profits
Authors: Jose Campos
[email protected]
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
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
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.
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.
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2
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.
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
In our experience, the competencies that
1 Assuming that “value” is all in the mind of
the target customers and beyond technical specs to include your entire offering
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3
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
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The Application of Core Competencies to Growth Management
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.
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.
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
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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.
●● 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.
Participate in the Dialog
Click here if you have questions, comments
or suggestions. The author welcomes your
participation in this important topic.
Opportunities
Critical Questions
Once competencies have been prioritized and
validated, your company can proceed to use them
to your advantage. For example:
Does your R&D team develop new technology
based on your Core Competencies?
●● 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.
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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?
Continue to additional resources
6
The Application of Core Competencies to Growth Management
About Rapidinnovation
Eight 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.
7
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The Application of Core Competencies to Growth Management
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Appendix A: Risks
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
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8
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
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Additional Resources
Additional Resources
Rapidinnovation 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.
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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.
From feature to problem — i.e., don’t stop probing until the customer voices the
problem.
For comments, questions or additional copies please e-mail the authors: [email protected]
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.
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.
Note the root message — i.e., actionable input from the customer.
INTERVIEWER: Why is that important to you?
CUSTOMER: The one we have now does 10 pages/min and it is too slow.
2nd Why
INTERVIEWER: In what circumstances is it too slow?
CUSTOMER: In particular when we have a queue of documents with heavy graphics.
3rd Why
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.
A
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.
From feature to problem — i.e., don’t stop probing until the customer voices the
problem.
CALL A BRAINSTORMING
MEETING
18%
15%
Positive experience with the Ben/Emo at least5 three0.75
hours. This
9.5
may reduce attendance,
company.
You need to
4. be the BEST
Hint
in satisfying
RIORITIZE TOPICS
thePmost
1.44 5. important
FOR THE MEETING
In stepCustomer
#3 (Brainstorm), you
are defi
ning and
prioritizing
Value
Drivers
6.
the topics
of conversation.
1.43
(CVDs).
4
12%
Ease of operating and
maintaining the system
Ben/Tech Secure7 a conference
0.84
8.5
room
1.02
61
all the questions they wish
5
8%
Increased asset utilization.
Ben/Eco
6
5%
Ease of integration into
company processes and
7
5%
Cost of ownership (CoO).
8
3%
3
Impact on the organization
Cost/Risk
if something goes wrong.
BRAINSTORM
8
2.32
10
8
Decide who needs to
attend based on the
objectives and each
2.90
Future customers.
That is, customers in new markets, new
companies, new applications, etc.
but quality is more
important than quantity.
with ample space.
A
For comments, questions or additional copies please e-mail the authors: [email protected]
to ask their customers (use
Yellow Sticky Notes).
4
0.32
Ben/Oper
9.5
0.48
4
0.20
Cost/
Money
8.5
0.43
6
0.30
9
You can be
to
competitors in
the second tier
of CVDs.
COMPARABLE
7
0.21
4th Edition
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.
Note the root message — i.e., actionable input from the customer.
Example 2: The 5 Why’s
Q
You can be
in
satisfying
CVDs that
0.21
4
0.12 are the least
Hint
important,
Generally, you will provided your
0.12 need4one hour
0.08to performance
cover three topics, or perhapsis still
0.27
INTERVIEWER: Tell me why it’s not intuitive?
CUSTOMER: I get lost all the time.
3rd Why
Customers who are buying much more from
you.
0.64
Step 3: Interview Your Customers
INTERVIEWER: Tell me more?
CUSTOMER: The menu system is not intuitive.
2nd Why
Customers who are buying much less from you.
Those who, in the last six, 12 or 18 months
have shown a drastic reduction in purchases.
A good way to start the
brainstorm is to ask your
team members to write down
8
les
INTERVIEWER: How do you feel about this software product?
CUSTOMER: It is very difcult to use.
1st Why
Customers who have stopped buying from you.
That is, you have not lost them, but they have
not bought from you in some time. Different
than Item 1 above.
29%
3
Positive experience with the Ben/Emo person’s
9.5 ability
1.71to
product.
contribute.
Q
Customers you never had.
That is, customers who ought to have bought
from you, but never did.
2
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.
1st Why
INFERIOR
Use the Afnity Diagram
method Ben/Eco
or any other
7
formal framework for
brainstorming.
• Brainstorm
Cost/all possible 6
topics.Money
fewer. Remember that you
• Organize the topics or
need to allow the customer
questions.
7.77
8.02
to talk, and this takes time.
• Consolidate the topics.
It is not a survey, it is a
• Prioritize the topics.
conversation where you need
to 7
probe and let the customer
You should end up with
talk and think.
no more than three to ve
topics. Prioritize based
on importance to the
objectives and using a
clear criteria
selection.
The Product Value Index (PVI) is a numerical expression
offor
value.
By quantifying the value that a product represents
3%
Increased revenue/
throughput.
10
2%
Purchase price.
All
100%
9
INTERVIEWER: Why is that important to you?
CUSTOMER: The one we have now does 10 pages/min and it is too slow.
2nd Why
3rd Why
Product Value Index
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.
From feature to problem — i.e., don’t stop probing until the customer voices the
problem.
CONTINUED Î
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).
20
85
For comments,
or additional
copies
please e-mail the authors: [email protected]
For comments, questions or additional
copies questions
please e-mail
the authors:
[email protected]
101
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.
For comments, questions or additional copies please e-mail the authors: [email protected]
The step-by-step design of this
guidebook makes it a valuable
reference for you and your
development team
Actionable Metrics
for Product Development
Your illustrated guide to developing and using metrics to improve product margins
and reduce time-to-market
C
Step 3: Interview Your Customers
INTERVIEWER: Why do you think you get lost using the menu?
CUSTOMER: Well, there are too many layers and no way to get back.
Rating
Score Rating Score
2
(1-10)
(1-10)
3.
mp
Example 1: The 5 Why’s
Subsegment B
Flexible Project Management for
A
Product Development
For comments,
or additional
copies
please e-mail the authors: [email protected]
For comments, questions or additional
copies questions
please e-mail
the authors:
[email protected]
101
Ensure that the objectives
for the customer visits are
documented and nal.
Circulate the objectives
Ability to address
existing
and any
other relevant
Ben/Tech
and anticipated
technical
material
to the members of
your team and any other
relevant stakeholder.
Subsegment A
Customers you have lost.
That is, customers who no longer buy from you
for a negative reason.
1
Note the root message — i.e., actionable input from the customer.
INTERVIEWER: Why is that important to you?
CUSTOMER: The one we have now does 10 pages/min and it is too slow.
T
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.
Types of Customers
1.
Schedule the meeting for
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.
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.
1st Why
3
5
6
Detailed
Process:4Discussion
Guide
Customer Value Drivers
Competitor Competitor
SET THE FOUNDATION
in Order of Importance Category
A
B
2.
Rank
a
ex
Step 2: Organize Your Visits
Example: Customer Archetypes
2
1
Example 2: The 5 Why’s
Product Value Index
85
1
INTERVIEWER: Tell me why it’s not intuitive?
CUSTOMER: I get lost all the time.
3rd Why
Customers who are buying much more from
you.
d
d
ate
an
str s
es eets
h
y ce
rks
full pro Step 2: Organize
temT
woYour Visits
t
Understand What
Value
sse
-illu Customers
pla
ls
Example: Product Value Index
INTERVIEWER: Tell me more?
CUSTOMER: The menu system is not intuitive.
2nd Why
Customers who are buying much less from you.
Those who, in the last six, 12 or 18 months
have shown a drastic reduction in purchases.
A good way to start the
brainstorm is to ask your
team members to write down
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?
Debriefs and Postmortems for Product Development
CONTINUED Î
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).
You need to
4. be the BEST
Hint
in satisfying
RIORITIZE TOPICS
thePmost
1.44 5. important
FOR THE MEETING
In stepCustomer
#3 (Brainstorm), you
are defi
ning and
prioritizing
Value
Drivers
6.
the topics
of conversation.
1.43
(CVDs).
Ease of operating and
maintaining the system
20
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.
1st Why
Use the Afnity Diagram
method Ben/Eco
or any other
9
3%
7
formal framework for
brainstorming.
• Brainstorm
Cost/all possible 6
10
2%
Purchase price.
topics.Money
fewer. Remember that you
• Organize the topics or
need to allow the customer
questions.
All
100%
Product Value Index
7.77
8.02
to talk, and this takes time.
• Consolidate the topics.
It is not a survey, it is a
• Prioritize the topics.
conversation where you need
to 7
probe and let the customer
You should end up with
talk and think.
no more than three to ve
topics. Prioritize based
on importance to the
objectives and using a
clear criteria
selection.
The Product Value Index (PVI) is a numerical expression
offor
value.
By quantifying the value that a product represents
Increased revenue/
throughput.
Positive experience with the Ben/Emo at least5 three0.75
hours. This
9.5
may reduce attendance,
company.
12%
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).
Example 2: The 5 Why’s
0.30
15%
too
Step 3: Interview Your Customers
INTERVIEWER: How do you feel about this software product?
CUSTOMER: It is very difcult to use.
1st Why
Customers who have stopped buying from you.
That is, you have not lost them, but they have
not bought from you in some time. Different
than Item 1 above.
18%
CONTINUED Î
to a target segment, you can determine how the offering of one company ranks compared to that of another
INTERVIEWER: Tell me why it’s not intuitive?
CUSTOMER: I get lost all the time.
2nd Why
A good way to start the
brainstorm is to ask your
team members to write down
4
4
CALL A BRAINSTORMING
MEETING
29%
4
Positive experience with the Ben/Emo person’s
9.5 ability
1.71to
product.
contribute.
Q
Customers you never had.
That is, customers who ought to have bought
from you, but never did.
3
les
too
ls
ng
omi
1
2
Rank
n
d
d
ate
an
str s
es eets
h
y ce
rks
full pro Step 2: Organize
temT
woYour Visits
T
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.
Types of Customers
1.
Customer Value Drivers
Competitor Competitor
SET THE FOUNDATION
in Order of Importance Category
A
B
2.
Ensure that the objectives
for the customer visits are
documented and nal.
Rating
Score Rating Score
2
(1-10)
(1-10)
3.
CALL A BRAINSTORMING
Subsegment A
Customers who have stopped buying from you.
That is, you have not lost them, but they have
not bought from you in some time. Different
than Item 1 above.
Circulate the objectives
MEETING
Ability to address
existing
and any
other relevant
Ben/Tech
8
2.32
10
and anticipated
technical
Decide who needs to
material
to the members of
2
18%
relevant stakeholder.
Positive experience
with the Ben/Emo person’s
9.5 ability
1.71to
product.
contribute.
3
15%
Positive experience with the Ben/Emo at least5 three0.75
hours. This
9.5
may reduce attendance,
company.
You need to
4. be the BEST
Hint
in satisfying
RIORITIZE TOPICS
thePmost
1.44 5. important
FOR THE MEETING
In stepCustomer
#3 (Brainstorm), you
are defi
ning and
prioritizing
Value
Drivers
6.
the topics
of conversation.
1.43
(CVDs).
4
12%
Ease of operating and
maintaining the system
Ben/Tech Secure7 a conference
0.84
8.5
room
1.02
61
all the questions they wish
5
8%
Increased asset utilization.
Ben/Eco
6
5%
Ease of integration into
company processes and
7
5%
Cost of ownership (CoO).
8
3%
3
Impact on the organization
Cost/Risk
if something goes wrong.
BRAINSTORM
attend based on the
objectives and each
8
Schedule the meeting for
but quality is more
important than quantity.
with ample space.
2.90
Future customers.
That is, customers in new markets, new
companies, new applications, etc.
Ben/Oper
9.5
0.48
4
0.20
Cost/
Money
8.5
0.43
6
0.30
You can be
to
competitors in
the second tier
of CVDs.
COMPARABLE
You can be
in
satisfying
CVDs that
0.21
4
0.12 are the least
Hint
important,
Generally, you will provided your
0.12 need4one hour
0.08to performance
cover three topics, or perhapsis still
7
3rd Why
A
For comments, questions or additional copies please e-mail the authors: [email protected]
0.32
0.27
0.21
INFERIOR
Q
Increased revenue/
throughput.
2%
Purchase price.
100%
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.
Note the root message — i.e., actionable input from the customer.
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.
1st Why
Actionable Metrics for Product Development
9
INTERVIEWER: Why do you think you get lost using the menu?
CUSTOMER: Well, there are too many layers and no way to get back.
Example 2: The 5 Why’s
Use the Afnity Diagram
method Ben/Eco
or any other
7
formal framework for
brainstorming.
• Brainstorm
Cost/all possible 6
topics.Money
fewer. Remember that you
• Organize the topics or
need to allow the customer
questions.
7.77
8.02
to talk, and this takes time.
• Consolidate the topics.
It is not a survey, it is a
• Prioritize the topics.
conversation where you need
to 7
probe and let the customer
You should end up with
talk and think.
no more than three to ve
topics. Prioritize based
on importance to the
objectives and using a
clear criteria
selection.
The Product Value Index (PVI) is a numerical expression
offor
value.
By quantifying the value that a product represents
3%
10
All
INTERVIEWER: Tell me why it’s not intuitive?
CUSTOMER: I get lost all the time.
2nd Why
Customers who are buying much more from
you.
4
Step 3: Interview Your Customers
INTERVIEWER: Tell me more?
CUSTOMER: The menu system is not intuitive.
Customers who are buying much less from you.
Those who, in the last six, 12 or 18 months
have shown a drastic reduction in purchases.
to ask their customers (use
Yellow Sticky Notes).
0.64
les
INTERVIEWER: How do you feel about this software product?
CUSTOMER: It is very difcult to use.
1st Why
A good way to start the
brainstorm is to ask your
team members to write down
8
9
Q
Customers you never had.
That is, customers who ought to have bought
from you, but never did.
29%
mp
Example 1: The 5 Why’s
Subsegment B
Customers you have lost.
That is, customers who no longer buy from you
for a negative reason.
1
your team and any other
a
ex
Step 2: Organize Your Visits
Example: Customer Archetypes
3
5
6
Detailed
Process:4Discussion
Guide
1
No.
soo
t
Understand What
Value
sse
-illu Customers
pla
Example: Product Value Index
INTERVIEWER: Tell me more?
CUSTOMER: The menu system is not intuitive.
1st Why
1.02
61
all the questions they wish
0.64
0.48
les
Rating
Score Rating Score
2
(1-10)
(1-10)
3.
for Product Development
Your illustrated guide to making project management work in tumultuous development
Example 1: The 5 Why’s
Subsegment B
Use the Afnity Diagram
method Ben/Eco
or any other
7
formal framework for
brainstorming.
• Brainstorm
Cost/all possible 6
topics.Money
fewer. Remember that you
• Organize the topics or
need to allow the customer
questions.
7.77
8.02
to talk, and this takes time.
• Consolidate the topics.
It is not a survey, it is a
• Prioritize the topics.
conversation where you need
to 7
probe and let the customer
You should end up with
talk and think.
no more than three to ve
topics. Prioritize based
on importance to the
objectives and using a
clear criteria
selection.
The Product Value Index (PVI) is a numerical expression
offor
value.
By quantifying the value that a product represents
INTERVIEWER: How do you feel about this software product?
CUSTOMER: It is very difcult to use.
Customers who are buying much less from you.
Those who, in the last six, 12 or 18 months
have shown a drastic reduction in purchases.
8
0.43
Q
Customers you never had.
That is, customers who ought to have bought
from you, but never did.
Customers who have stopped buying from you.
That is, you have not lost them, but they have
not bought from you in some time. Different
than Item 1 above.
mp
Customer Value Drivers
Competitor Competitor
SET THE FOUNDATION
in Order of Importance Category
A
B
2.
Subsegment A
Customers you have lost.
That is, customers who no longer buy from you
for a negative reason.
2
9
Example 1: The 5 Why’s
Subsegment B
2.90 You need to
4. be the BEST
Hint
in satisfying
RIORITIZE TOPICS
thePmost
1.44 5. important
FOR THE MEETING
In stepCustomer
#3 (Brainstorm), you
are defi
ning and
prioritizing
Value
Drivers
6.
the topics
of conversation.
1.43
(CVDs).
9.5
8.5
Subsegment A
Customers you have lost.
That is, customers who no longer buy from you
for a negative reason.
Future customers.
That is, customers in new markets, new
companies, new applications, etc.
Ben/Tech Secure7 a conference
0.84
8.5
room
5
7
T
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.
Types of Customers
1
Rank
a
ex
Step 2: Organize Your Visits
Example: Customer Archetypes
3
5
6
Detailed
Process:4Discussion
Guide
Types of Customers
mp
Risk Management and FMEA for
A
Product Development
For comments,
or additional
copies
please e-mail the authors: [email protected]
For comments, questions or additional
copies questions
please e-mail
the authors:
[email protected]
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.
T
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.
1.
Ensure that the objectives
for the customer visits are
documented and nal.
Circulate the objectives
Ability to address
existing
and any
other relevant
Ben/Tech
and anticipated
technical
material
to the members of
your team and any other
relevant stakeholder.
a
ex
Step 2: Organize Your Visits
Example: Customer Archetypes
3
5
6
Detailed
Process:4Discussion
Guide
1
Note the root message — i.e., actionable input from the customer.
INTERVIEWER: In what circumstances is it too slow?
CUSTOMER: In particular when we have a queue of documents with heavy graphics.
3rd Why
d
d
ate
an
str s
es eets
h
y ce
rks
full pro Step 2: Organize
temT
woYour Visits
t
Understand What
Value
sse
-illu Customers
pla
Schedule the meeting for
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.
INTERVIEWER: Why is that important to you?
CUSTOMER: The one we have now does 10 pages/min and it is too slow.
2nd Why
Product Value Index
20
Rank
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.
1st Why
INFERIOR
2
1
INTERVIEWER: Why do you think you get lost using the menu?
CUSTOMER: Well, there are too many layers and no way to get back.
The Voice of the Customer for Product
A
Development
All
1
Example 2: The 5 Why’s
Q
ls
Example: Product Value Index
INTERVIEWER: Tell me why it’s not intuitive?
CUSTOMER: I get lost all the time.
3rd Why
Customers who are buying much more from
you.
0.64
too
Step 3: Interview Your Customers
INTERVIEWER: Tell me more?
CUSTOMER: The menu system is not intuitive.
2nd Why
Customers who are buying much less from you.
Those who, in the last six, 12 or 18 months
have shown a drastic reduction in purchases.
A good way to start the
brainstorm is to ask your
team members to write down
8
les
INTERVIEWER: How do you feel about this software product?
CUSTOMER: It is very difcult to use.
1st Why
Customers who have stopped buying from you.
That is, you have not lost them, but they have
not bought from you in some time. Different
than Item 1 above.
29%
3
Decide who needs to
attend based on the
objectives and each
Q
Customers you never had.
That is, customers who ought to have bought
from you, but never did.
2
Positive experience with the Ben/Emo person’s
9.5 ability
1.71to
product.
contribute.
Subsegment B
Customers you have lost.
That is, customers who no longer buy from you
for a negative reason.
1
mp
Example 1: The 5 Why’s
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.
1
Rank
a
ex
Step 2: Organize Your Visits
Example: Customer Archetypes
2
for Product Development
Your illustrated guide to reducing time-to-market through risk management and FMEA
4th Edition
too
1
Flexible Project Management
4th Edition
for Product Development
Your illustrated guide to obtaining, prioritizing and using customer requirements
and creating winning products
Example: Product Value Index
Risk Management and FMEA
4th Edition
The Voice of the Customer
Product Value Index
INTERVIEWER: Why is that important to you?
CUSTOMER: The one we have now does 10 pages/min and it is too slow.
2nd Why
3rd Why
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.
85 most effective way to improve
Debriefs are20the
101
85
20
“What gets measured gets done”
says
the refrain.
This is
101
development-team performance — and that translates
particularly true in product development due to the many
to shorter time-to-market and more rewarding
competing priorities, from time-to-market, to time-to-profit and
innovation development.
many more.
This step-by-step guide covers every aspect of
This book will guide you through an assessment of your current
postmortems, identifying what to do-more-of
metrics and their impact on the bottom line to describing the
and what to do-less-of to improve future productcritical metrics used by product development organizations
development performance. It’s written by veteran
product developers
For comments,
or additional
copies
please e-mail the authors: [email protected]
For comments, questions or additional
copies questions
please e-mail
the authors:
[email protected]
CONTINUED Î
to a target segment, you can determine how the offering of one company ranks compared to that of another
A
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.
From feature to problem — i.e., don’t stop probing until the customer voices the
problem.
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).
For comments, questions or additional copies please e-mail the authors: [email protected]
For comments,
or additional
copies
please e-mail the authors: [email protected]
For comments, questions or additional
copies questions
please e-mail
the authors:
[email protected]
For comments, questions or additional copies please e-mail the authors: [email protected]
For questions and comments: [email protected]
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