Applying Outcome Driven Innovation (ODI) Techniques to Quantify Voice of Customer and Translate it into Customer Value
Outcome Driven Innovation (ODI) is a methodology for harvesting customer insights in a way that distills what matters most to customers. Its original purpose was to provide basis of evidence to drive product innovation but I’d argue it has the potential for broader application. In this article I share how ODI is invaluable as a mechanism for Organizational Designers to find new Customer Value by quantifying what the Voice of the Customer MEANS to the enterprise.
Are you familiar with Outcome Driven Innovation (ODI)? I won't blab on about the detail of how ODI came about, the people behind it - or the low-down on how the method works in this article because you can always google it - but I did want to explain why it matters to every organization.
If you've read any of the volumes of work authored by Peter Drucker then you’ll know we share a similar instinct when it comes to customer value. Simply put, most businesses are about finding a source of customer value and then translating that value into a repeatable source of return for stakeholders. It makes sense therefore that businesses should be good at identifying and qualifying customer value and turning it into cashable returns - right?
If you follow this logic then it will probably surprise you how many organizations are 'poor' if not truly terrible at understanding and valuing what matters to customers. It's not that organizations don't invest good money into listening to and understanding customers: Few would claim not to. The problem is HOW they listen and HOW they apply this knowledge.
I’d also say it’s not the case that organizations that are poor at listening to customers automatically fail. Far from it. There are many operationally poor enterprises that continue to make money for shareholders and grow in size and scale even though the do ignore their customers. Take British Telecom’s Openreach business for example. The company has a monopoly in the UK on telecoms infrastructure – so if you’re not happy as a consumer customer, tough! Of course, not every company has the advantage of a monopoly, so if you want to grow and be successful IN MOST CASES listening to customers and sourcing customer value is important, if not essential.
Here's a summary of the challenges of gathering and applying the voice of the customer to organizational design and performance improvement:
1. Not listening to customers
Some organizations spend very little time listening to customers. It could be they are operating as a monopoly and don't care, or they have a pretty solid economic engine and very little competition, so they don't care. Other organizations lose contact with their customers as the enterprise grows and key managers and relationship holders leave, never to be replaced. But this still represents the minority of companies in my experience.
2. Listening, but not well
Organizations will often rely on information gathering mechanisms like customer surveys, forums, complaints and suggestion systems (etc.) to source their feedback. Often, these mechanisms distort the voice of the customer by their design or in the way they are implemented. Other times they employ closed questions (i.e. 'Are you happy or not?') and this doesn't provide the opportunity for customers to 'vent' and really say what they WANT to say. Poorly formalized listening mechanisms can deliver a shallow, hugely inaccurate perspective of the customer voice. I would say something like 80% of companies fall into this category.
3. Failing to route customer insights to the right parts of the enterprise
Attempts to listen to customers generally happen in small silos around the enterprise. While front-line customer service staff, sales people, line managers and others will interact with customers frequently, rarely are these insights harvested and shared. I often see first-hand organizations investing thousands of dollars in listening to customers and then the resulting outputs end up in a file somewhere and never get used. Sometimes surveys and research projects funded by one department can have more value to other parts of the organization but because they’re funded by one silo, other silos fail to access the insight (sad but true and surprisingly common).
4. Interpreting Voice of Customer Poorly
As organizations grow they develop their own culture and ‘biosphere’. They start to apply vocabulary, understanding, norms of behavior and ways of making sense of their market that start to skew HOW managers interpret feedback from customers and markets. Unless care is taken a management team can cocooned itself from customers by assuming it knows what customers care about because the feedback they get only seems to reinforce the assumptions they’ve already built up about their customers and markets. This can result in poor interpretation of the voice of the customer – mostly driven by opinions and false perspectives rather than evidence and meaningful quantitative measures.
5. Ignoring the learning lessons
Organizations that pass through all of these hoops sometimes fall at the last hurdle. When focused on ‘the day job’ and departmental priorities it can be difficult to break out of the cycle and look up for a moment to consider something new. Very often the inflexibility of budgets, organizational designs, norms-of-behavior (etc.) can build up a huge barrier of resistance against considering new ideas and fresh perspectives – the sort of things that come from listening to customers.
Where ODI Comes In
Let’s face it, the picture painted by customer feedback can look unclear. There’s no silver-bullet solution to gathering insights or weighing their importance. For this reason, organizational priorities and interpretations of voice of customer tend to be driven by management opinions. Outcome Driven Innovation (‘ODI’) helps this process by translating the voice of the customer in a more meaningful, measurable way.
The underpinning common sense behind ODI is that people ‘hire’ products and services to get a job done better. Appreciating ‘what the job is’ and then assessing ‘what unmet needs exist’ helps to frame customer feedback into manageable chunks. Of course, when assessing what unmet needs exist, organizations must also qualify ‘how much pain’ does the unmet need create and ‘what’s in it for them?’ so it’s important to understand to what extent is the unmet need to hire something being served by another vehicle, mechanism, supplier etc.
The ODI methodology serves to construct a formalized process to churn the voice of the customer into a measurable list of wants that enables organizations to appreciate what they can do to bring more or so far untapped customer value.
The Relevance of ODI in Organizational Design
My philosophy behind OD is that it should create better organizations by design – better meaning able to produce more stakeholder value, higher levels of workforce productivity, improved customer journeys and a generally more efficient and effective economic engine for churning out customer value and producing the wonderful bi-product that is profitability.
For me, ODI is the essential ingredient to that mix: No strategy should be formed or fashioned into a balanced scorecard until leadership teams KNOW what the voice of the customer is and how their enterprise can translate it into value.
So let me ask you, what matters most to your customers?