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"Because the purpose of business is to create a customer, the business enterprise has two—and only these two—basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs," pronounced management guru Peter Drucker in Management: Task, Responsibilities, Practices. He continued, "Marketing is the distinguishing, unique function of the business." Recently, marketing has recognized the importance of the customer experience and relationship in the value proposition. However, the need for establishing and enhancing the relationships with customers has typically not been recognized by those involved with technological innovation—or asked of them by marketing. That's about to change as a new generation of technological innovation is linked to strategy and differentiation based on customer relationships. By definition, product development engineers are product-centric and product development has become a well-honed process for delivering a widget with the latest technology. But in most cases the product per se is no longer a sufficient differentiator. When the customer relationship is a key component of the value proposition, innovative technology is insufficient for a solution. By working together, marketing and engineering can define a Product Relationship Roadmap—a roadmap that engineers positive, reoccurring relationship experiences into the use of products to continue to build customer relationships after purchase.
The need for speed of innovation and the emphasis on "time-to-market" are indicators of the tremendous competitive pressures in the area of product development. As companies are responding to the pressures, the differentiator of speed is actually decreasing. Today, most world-class companies have to have short product development cycles and incorporate the latest technology just to have a viable product offering. Because of this competitive pressure, aggressive R&D and innovation are no longer a competitive advantage; they are just the ante into the game. This phenomenon is not isolated to just a few industries or countries but rather has become global in nature for many reasons. First, technology knows no geographical boundaries and many firms are now outsourcing their innovation. Second, the growth of the World Wide Web has made most markets global, limiting a company's ability to create a profit haven through regulatory or geographic boundaries. Finally, the tremendous advance in the power of integrated circuits, combined with their shrinking size and cost, has resulted in significant technical advancement in almost every product category. The universally available and ubiquitous nature of technology has turned it into a commodity. In this environment it is unreasonable to think that a sustainable competitive advantage can be developed merely from innovation—as it has been practiced.
Added to this, the product development processes are honed to quickly deliver the next widget. The processes often drive the development into extensions of existing technology or systems so as to minimize risk during development. The focus of the development engineer is to adopt the latest technology into the current product line as fast as possible. As soon as they have completed that development, there is another new technology knocking at the door and they must innovate again. This leads to a product-centric focus on the part of the engineer who is constantly asking, "Which new technology should I incorporate into our current products and processes to create their next generation?" The engineer is further locked into the mold of extending the current product technology by the product specification. Often the product specifications provided by marketing, which are supposed to drive the development process to deliver truly market-enhancing products, are propagators of this next-generation mentality. The specifications are written to extend the existing product line rather than transform the existing line. And as a practitioner of product development, I know that many times the product specification does not drive the development process. Instead, the engineers often write the specification after they determine the features and performance of the new product. In all of this the Voice of the Customer desire for specialized service and a relationship often are missing.
The design of the product will dictate the frequency of interaction between the customer and the product or service provider. Does the product require some form of regular maintenance or service in order to operate at peak efficiency? For instance, most computer virus protection programs require a regular update of virus definitions. The virus protection programs have incorporated this update into the design of their system. The consumer receives a weekly reminder that the virus protection company is protecting their computer. This is an ongoing stream of positive interactions. As
previously mentioned, the design of the product will influence whether
the interaction is a positive interaction or a negative interaction.
For example, most automobiles have a "Check Engine" light
on their dashboard. If the automobile develops a problem, breaks
down and strands the motorist, it is often viewed as a potential
negative interaction for the automobile manufacturer. But if the
automobile indicates to the driver that there is a problem developing,
allowing the driver ample time to schedule an appointment for preventive
maintenance, the problem may be turned into a positive interaction. The
Impact of Product Technology on the Customer Relationship. Let me highlight this point with several personal examples from both the consumer perspective and the business-to-business environment. A.
Product technology can harm the relationship with consumers. I recently
considered upgrading my cell phone. My current cell phone has over
one hundred selectable options and when I am traveling I will occasionally
turn one on or off accidentally. I don't use my phone for gaming
or watching videos, or even taking pictures. I use my phone to conduct
business conversations and stay connected with my family when on
the road. I went to the storefront of the cell phone company to
try out the different models. As I investigated the cell phone options
I was overwhelmed. They appeared to do everything except improve
my cellular connectivity. I frankly found most of the options irrelevant
and somewhat confusing. I know from experience that when I am on
the road, I won't be able to pull out the 150-page User's Guide
to try to understand why the cell phone is suddenly in the conference-call
mode. I didn't upgrade my phone. The current product technology
is creating a stream of negative interactions for me. The new product
technology is not creating the opportunity for a set of positive
interactions; it is creating the potential for even more negative
interactions. What I need is a cell phone that is either less complex
or that allows me to permanently turn off chosen selectable options. C. Just as in the consumer environment, the business-to-business environment is full of opportunities to create positive or negative relationship interactions through the application of product technology. As an Engineering Manager within GE, I experienced an incident where our product technology reduced the opportunity for positive interactions with the customers. A team was chartered to develop a new industrial circuit breaker. One of the target markets for this circuit breaker was the utility market. The existing product in that market was an older model that required regular maintenance and adjustment by either a GE or customer service technician. The new product incorporated improved technology that created a maintenance-free circuit breaker. GE found resistance to the acceptance of this new circuit breaker by the managers of utility substations, in part due to the relationship that the GE service technicians had with the utility customers. The utility managers knew their GE service technician by name. Often the service technician would come in on short notice and work long hours to resolve a problem at the utility substation. The utility managers were uncomfortable with the idea that this service technician—whom they knew and trusted—would no longer be on-site on a regular basis. For many of the utility managers the relationship with GE was actually with the service technician—not the salesperson—and the new product technology destroyed that relationship. D.
In another case, the product technology enabled an ongoing stream
of positive interactions between organizations. Several years ago
the General Electric Healthcare business incorporated basic modem
technology into several models of its medical imaging equipment.
Previous to this, medical imaging equipment such as MRIs and CAT-Scanners
did not have any type of communication technology. There was no
perceived need by the customer for this feature. Through the use
of the modem installed in the equipment, GE created a new service
for its hospital customers. GE would automatically receive a daily
data file, transmitted by the imaging equipment, which provided
performance and diagnostic information. GE would process that information
at its central service center and provide advice to the hospital
concerning the need for routine and preventive maintenance. This
increased the uptime availability of the equipment. GE strengthened
their relationship with their customers by using product technology
to provide an ongoing stream of positive interactions with the hospital. The
Product Relationship Roadmap. Many companies use Product Technology Roadmaps to guide their Research and Development initiatives. In addition, the Product Technology Roadmap is used by their marketing organization to specify the next-generation product and position it in the marketplace. The Product Relationship Roadmap serves a similar purpose. The Product Relationship Roadmap describes for the engineer how each new generation of products must strengthen the relationship bonds between customers and suppliers. The Product Relationship Roadmap should identify the types of interactions that are desired between the customer and the product or service provider, both at the time of sale and throughout the lifecycle of the product. This includes, but is not limited to, the frequency of interaction, the communication mode of interaction, the reason for the interaction, and the desired result of the interaction from both the customer and product or service provider perspective. The Roadmap would of course consider other market forces and competitive pressures when developing the relationship requirements. Customer
Relationships Replace Technology as Competitive Advantage. A
major component of customer satisfaction that has increased in importance
with the commoditization of technology is the ability to create
and sustain a positive customer relationship. This relationship
is far more sustainable than technical gimmickry. The role of the
product technology in enabling the development of a positive customer
relationship has often been overlooked. From the examples cited
in this paper it can be seen that the product technology can either
be the key enabling element for improving a customer relationship
or the primary barrier to the development of a customer relationship.
Understanding customer relationships better than the competition understands theirs and acting on that inside intelligence is a sustainable competitive advantage and a continuing source for innovation. Relationships are unique to a company and are directly related to its success. To get started now engineering positive customer experiences into
product use to link strategy to innovation, we invite you to contact
us. Our team of senior people is ready to help you listen to your
customers, deliver more value, and identify the customers you should
cultivate—who the most profitable customers are and why and what
their potential is for profitable growth. _________ For More Information: Take a look at our papers Next-Generation Value Creation, Next-Generation Voice of the Customer Research, Traditional Customer Research with VoC, and Next-Generation Operational Control. You may also be interested in our other Thought Leadership Papers in our Next-Generation series. For more on Voice of the Customer research, value creation, and operational control, see our extensive Religence Framework CRI Reference Section for these topics:
Another excellent resource is our CEO's new book Customer Relationship Intelligence: A Breakthrough Way to Measure and Manage Sales and Marketing, which explains how to build Voice of the Customer research into our operational CRI tracking system and how to track the positive interactions engineered into next-generation products. __________ Ray Sheen is a Senior Consultant with Religence, a customer-focused performance management consulting firm, where he specializes in retention-focused product development. For Ray building customer retention processes into products isn't just innovative, but critical to business success. He has over 25 years of experience developing new products ranging from large complex aerospace weapon systems to small consumer products. He has designed products and processes, led product development teams, managed a product development program office, and today teaches and consults with companies around the world concerning the incorporation of best practices within their product development process. However, Ray is not only an R&D engineer, he is a business leader. He has managed operations and quality organizations on the receiving end of the development process and knows what it takes for a new product success in the laboratory to translate into a success for the business. Ray led the Management Development Course at General Electric's storied Crotonville Management Development Center. (BS in Mechanical Engineering, MS in Astronautical Engineering, Project Management Professional (PMP).) Religence is a customer-focused performance management consulting firm specializing in Customer Relationship Intelligence. The Religence Framework links strategic planning to operational execution and customer relationship metrics to profitability for breakthrough business-to-business sales and marketing performance.
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