How to organise your customer intelligence team for new-product development

Using the right team model in the right situations can have a dramatic effect on new-product development projects, doubling the rate of their success. To achieve this, companies need to understand the nature of their customers’ needs and decide which type of team approach to employ.

We conducted in-depth interviews with over 30 product development leaders in 15 companies across multiple sectors to identify effective approaches to gathering, understanding and synthesising information related to customer needs. In this article, we review the highlights from the analysis and offer some guidance to help companies organise their customer-needs intelligence teams.

Understanding customer and technology needs

First, it is helpful to consider what sort of typical organisational approaches companies choose when their R&D and commercial functions interact with customers. Four are commonly used, as shown in Table 1.

[Click to enlarge]

To decide which might work best in each situation, we identify the different types of customer needs in B2B industries, and therefore the skill combinations that may be required within the team. These can be categorised into two dimensions: customer needs and technology needs, and whether each is expressed (clear) or latent (unclear).

Mapping needs to a “matrix” to decide the best approach

We recommend handling customer and technology needs and their possible dimensions with one of the approaches mapped to the four quadrants of a “Customer Needs/Technology Needs” matrix, as shown in Table 2.

Different situations call for different solution-design skills, and the availability of the right solution-design skills is of critical importance for effective needs recognition. Because latent needs are highly dependent on context and difficult to tease out of data sets, product development practitioners must be familiar with effective approaches to identifying latent needs and know when to apply a given approach.

Expressed customer and technology needs – an indirect, single-channel approach

The simplest situation, in which both sets of needs are clear and applicable to a broad range of customers.

Case example: The management team for a global leader in electronics for B2B and B2C markets pursued an entirely new B2B product in response to market signals. A project leader was selected for her solution-design skills. The B2B product was developed for a broad range of customers based on clear market demand; customer and technical needs were largely explicit.

The results included extensive customer engagement, short development iterations and frequent testing of prototypes, which enabled engineers to quickly receive feedback on features and functionality. This was enhanced by the project leader’s ability to communicate effectively in facts and numbers.

Expressed customer needs, latent technology needs – a direct R&D approach

The customer needs are clear, but the technology needs are not, so R&D has direct contact with the customer.

Case example: Together with a university contact, the marketing department of a global supplier of wastewater treatment solutions came up with a new-product idea for a specific customer. The customer’s needs were relatively straightforward, and further clarification through market research was not required. However, the technical needs were less evident. Marketing passed the project on to R&D, which formally initiated the new-product development project. The project was successful, enhanced by effective engagement with the specific customer’s technical staff. In this case R&D exhibited the most appropriate solution-design skills for the nature of the engagement.

Latent customer needs, expressed technology needs – an indirect, multichannel approach

Customer needs are not clear at the outset, although the technology requirements are known, and a heavier approach led by commercial functions is the most suitable.

Case example: A leading supplier of imaging technology for diverse B2B customers decided to develop a new version of a product that had been on the market for more than 10 years. The primary focus of the new version was a cost reduction that would enable the product to be marketed to more cost-sensitive segments.

Prior customer feedback meant that the company was aware of key technical needs. During the new-product development process, both service and marketing gathered market intelligence from customers as input for R&D, generating a detailed market-requirements document. During development, R&D asked the service department to validate the conceptual design with customers and provide feedback. Thereafter, service tested the prototype with an individual customer.

The service function had the most market-specific knowledge, and sales also gathered commercial information and fed this back to marketing. Much of the dissemination was informal (and thus quick). Project meetings were highly technical, and sales and marketing were not always present. In the end, the new product was sold to multiple customers.

Latent customer needs, latent technology needs – a hybrid approach

A customer need has been identified, but the solution is unclear in terms of both commercial and technical aspects. The solution-design skill set for this situation is often varied, and a truly cross-functional team approach is most suitable.

Case example: A sales representative of a leading supplier of mechanical components identified an unmet need through frequent and in-depth communication with a key-account customer. The product would be developed for the key customer, then rolled out to a broader range of customers. The sales representative formalised the customer need in a structured document, which was communicated to R&D. The structured write-up enabled sales to pulse demand for a similar innovation with other existing customers. A decision was made to develop the product. During the development process, R&D engaged in direct contact with the original customer on technical issues, while sales maintained contact on commercial issues. Business development (BD) also played an active role.

In the end, a new-product platform was launched, and custom products were developed and sold to several large customers. The individuals in sales, R&D and BD had been working together for a long time, and were very familiar with the product portfolio and had strong solution-design skills. As a result, they could effectively establish their respective roles and focus on the commercial and technical issues that were essential to the customer.

Conclusion: benefits from using an optimal approach

The approaches detailed above and their applications may seem relatively straightforward. However, the study showed that in practice few of the sample companies followed these optimal approaches, and most were unsatisfied with their current efforts.

Analysis of the most common shortcomings revealed five key success factors: avoiding “one-size-fits-all” approaches; ensuring good knowledge sharing, being responsive and adopting regular customer interaction; deploying the right resources; and understanding internal competency needs.

We also asked companies to categorise recent new-product development projects in terms of whether they used the “optimal” or “non-optimal” organisational approach (as described above), and whether these projects were “successful” in terms of reaching their objectives.

The results showed that the project success rate was doubled by using the optimal approach (Table 3). In addition, the companies benefited from the increased likelihood that potential blockbusters would become true market successes. 

About the authors:

Chandler Hatton is a manager in Arthur D. Little’s Amsterdam office and a member of the Technology & Innovation Management and Strategy & Organization Practices.

Michael Kolk is a partner in Arthur D. Little’s Amsterdam office and a member of the Technology & Innovation Management Practice.

Martijn Eikelenboom is a partner in Arthur D. Little’s Amsterdam office, and a member of the Strategy & Organization Practice.

Mitch Beaumont is a partner in Arthur D. Little’s San Francisco office and a member of the Technology & Innovation Management Practice.