Wednesday, September 09, 2009

Breakthrough Thinking from Inside the Box
HBR, December 2007 Reprint: R0712E

Whenever we teach or consult on growth, one key aspect is expanding the addressable marketspace of your business to afford room to grow. The classic example is Coke defining their addressable marketspace as all consumed liquids vs. just carbonated beverages. One requirement we place on our clients is that you must stretch yourself sufficiently out of your current box such that you will need new capabilities to compete in the expanded space. The following is the visual we use to depict the logic of capturing a greater share of the consumer dollar,wallet (The Profit Zone, Slywotzky) in the space you want to participate in:

We try to encourage businesses to go from the “brown box” to the “green” one.

However, a key larning fo me afte reding his article is that there maybe sufficient growth potential in the "brown box". There was a great article in HBR on that issue, entitled “Breakthrough Thinking from Inside the Box”. The type of questions asked are:

“De-average” buyers and users
Which customers use or purchase our product in the most unusual way?
Do any customers need vastly more or less sales and service attention than most?
For which customers are the support costs (order entry, tracking, customer-specific design) either unusually high or unusually low?
Could we still meet the needs of a significant subset of customers if we stripped 25% of the hard or soft costs out of our product?
Who spends at least 50% of what our product costs to adapt it to their specific needs?
Explore unexpected successes
Who uses our product in ways we never expected or intended?
Who uses our product in surprisingly large quantities?

Look beyond the boundaries of our business
Who else is dealing with the same generic problem as we are but for an entirely different reason? How have they addressed it?
What major breakthroughs in efficiency or effectiveness have we made in our business that could be applied in another industry?
What information about customers and product use is created as a by-product of our business that could be the key to radically improving the economics of another business?

Examine binding constraints
What is the biggest hassle of purchasing or using our product?
What are some examples of ad hoc modifications that customers have made to our product?
For which current customers is our product least suited?
For what particular usage occasions is our product least suited?
Which customers does the industry prefer not to serve, and why?
Which customers could be major users, if only we could remove one specific barrier we’ve never previously considered?

Revisit the premises underlying our products and processes
Which technologies embedded in our product have changed the most since the product was last redesigned?
Which technologies underlying our production processes have changed the most since we last rebuilt our manufacturing and distribution systems?
Which customers’ needs are shifting most rapidly? What will they be in five years?"

I strongly suggest ordering the reprint for some great insights!

1 comment:

Scott Whitaker said...

Kellogg School marketing professor Julie Hennessey recently explained “de-averaging” your customer to students using diaper products as an example.

According to the professor, the average customer age for diapers is …. 7 years old. Except, 7-year olds do not wear diapers. Lots of 0-4 year olds and lots of 45+ year olds (33% in fact=frightening) wear some sort of protection from wetting. Using averages is a poor method in this product, as it is with many products.

Scott T. Whitaker
@kelloggentr on Twitter