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Innovation Catalyst

Growth Strategies for Tech Companies

Customer Discovery – A Path for Finding Adjacent Market Opportunities

Consider the Allegory of the Cave written by Plato. It tells the story of people chained inside a cave who only saw shadows on the wall projected by puppeteers. The cave people believed that these shadows were reality and violently resisted anyone who challenged their view of the world. As a philosopher, Plato used this story to explain the power of knowledge and education, as well as people’s resistance to new evidence that was counter to their own experiences. Businesses often have the same distorted view of their customers and their market. They don’t know what they don’t know; looking at their business from their customer’s eyes is uncomfortable.

Breaking your chains and stepping outside your cave to really discover your customers’ world is how to uncover new growth opportunities.

Where do we start? We can talk to our existing customers, but they have an established view of what we can and cannot do. For those happy with our offering, additional improvements may increase customer satisfaction but may not provide a path to revenue growth. For those that are unhappy with us, it is certainly worthwhile finding out why. You may discover that addressing their dissatisfaction will increase your share but again, this expansion is probably incremental and not the path to real growth.

Discovering the Growth Customers

There are two primary paths to discover customer needs outside your current solution and market. These are bottoms-up approaches that depend on deep listening to your current customers. They require engaging empathetically to understand a different point of view – that of your customer.

1. Explore your customers’ ecosystem.

Your customers are using your solution to complete a task, a job-to-be-done.  What other tools or services are they using?  What workarounds are required to get the job done? These pain points are opportunities for you to grow your solution set.  Think about growing the value you bring to these customers by adding new solutions.  Are there others in the ecosystem that you could partner with to build a more cohesive experience?  Can you disintermediate any ecosystem players?

2. Explore markets where your current solution doesn’t play.

Ask your customers about their task and the value you bring to them in completing that task. Separate out the functional value – my customers use our banking app to login to their account from their mobile device – from the emotional value – my customers contribute money to things like their child’s school activities, making them heroes in the social moment. Then look for customers in other markets that have similar emotional needs. These are new customers who will find value from your solutions.

Get out of the Cave

To discover these customer unknowns, you are going to have to get out and talk to people. Interviews and observations that create heartfelt connections are the best tools of the trade. This is not quantitative research, where you have to complete 100 interviews before the results are statistically relevant. This is qualitative research, where once you’ve talked to about 10 customers, you will start hearing the same things. Which is what you want – to hear a consistent expression of need. And as you go, be sure to take note of outliers. Meeting their needs may actually allow you to disrupt the market.

Note this is an on-going process, not a one-and-done task. Every month, talk to a few more customers, go deeper into their needs, and engage with them to co-create solutions. They key is to continue to explore and deepen your understanding of your customers and how you can provide value to them, discarding the things that will distract you from delivering that value.

Building a Growth Business

You’ve found some new compelling customer problems to solve; needs that your competitors can’t easily meet. Great – welcome to the great “unknown unknown” and congratulations for moving past Plato’s cave. The next challenges are to design solutions that your customers will pay for and design a sustainable, profitable business. Successfully completing these next steps is equally fraught. In subsequent posts, we will explore how you can use ICG’s adjacent business framework to develop these into investment grade options that achieve a good return on both your time and money.

Read more about the work Kristann does in Design Thinking and Human Centered Design at http://www.inceodia.com