Thriving in Times of Change with Lean Insights

As the unquestioned champion of the rental video business, Blockbuster was once as ubiquitous a sight in American cities and suburbs as Starbucks or McDonald’s — more than 9,000 stores at its peak in 2004. The reason was simple: people like watching movies, and Blockbuster was an affordable, convenient way to pick up a few rentals for the family.

Then Netflix introduced its video streaming service in February 2007. After years of keeping up with Internet competitors, Blockbuster went out of business in 2010, just two years removed from its last profitable year. As of Jan. 2014, all but 50 stores were shut down; the name Blockbuster survives only as a streaming video service and a movie channel package for Dish Network. It vanished faster than anyone could have imagined.

We’re living in a new era of business, one in which even the best-run companies are not immune to sudden changes in consumer behavior and desires. What can companies do in such an environment to not merely survive, but thrive? Connect deeply with their customers. A recent Havas Media study revealed that companies that foster meaningful relationships with their customers outperform the stock market by 120%. Such relationships do not stem just from creating new products and services, but from making experiences that have real meaning in the lives of your customers.

What’s needed to create these experiences are Lean Insights — consumer knowledge that takes less time, iterates based on learning, and repeatedly tests hypotheses to find a final answer. Over the past few years, we’ve defined six principles for developing Lean Insights. 

  1. Spend time with your customers.
  2. Use friends and family.
  3. Ask multiple whys.
  4. Prototype quickly and often.
  5. Embrace extreme users.
  6. Don’t wait for approval. Go!

 

1. Spend time with your customers.

It seems obvious that the best way to understand how to connect with your customers is to spend time with them, but it’s often forgotten, particularly at senior levels of corporations. For a Lean Insights organization, everyone needs to make it their job to spend time with customers and consumers, just to hear what they want to say and understand what they value.

When David Gilboa, CEO of eyewear retailer Warby Parker, was starting the company, he often took customer service calls. One time, he didn’t understand a customer’s question about glasses, so he invited him to visit the company’s showroom — even though it was just the living room of Gilboa’s apartment in Philadelphia! The customer walked away happy, and Gilboa learned a lot about what people want. He realized that when it was time to build out the first Warby Parker showroom in New York, it should just be one corner of the office — that way, their customers would always be close by.

2. Use friends and family.

In conventional studies, the worst thing you can possibly do is to ask your friends and family what they think about your products, services, and brand. It’s biased. To be sure, it’s no direct substitute for a well-designed study to talk about work over a meal with your partner. That said, done at the right time, it can save you a lot of time and money.

Unilever provides a great case study. Shortly after the birth of his first child, Brandon Gutman, a marketing director in hair care, noticed that his wife seemed frustrated with her hair, which made him wonder if other women felt similarly. Talking to scientists at Dove, he learned that there are issues with women’s hair during and following pregnancy. As a result, Dove approached pediatrician offices to provide samples and information about hair care products that could make a difference. By paying close attention to his wife’s frustrations, Gutman opened a powerful new marketing channel that the industry had ignored.

3. Ask multiple whys.

When seeking to act quickly on new information, it can be easy to take an observation at face value. But meaningful relationships and experiences come from understanding what’s going on at a deeper level. And the best way to do that is to ask multiple whys: keep questioning until you discover the underlying reasons.

Years ago, Target studied students going to college for the first time to understand how to differentiate in back to school sales. Why wasn’t Target dominant in the season, despite superior design? After asking why again and again, the team realized it was because it mainly targeted students who view college as the end of childhood, with teddy bears and brightly colored products. Another group of students view college as the beginning of adulthood. If Target sold products like kitchen tools or sophisticated chrome housewares, it could reach students prototyping adult life — and hold them once they got there.

4. Prototype quickly and often.

Prototyping has become a trendy idea in design and business. Rather than reason in abstractions, build something concrete to garner a real response — and launch faster in the process. Prototyping can apply to insight, too. The goal is to be just refined enough to get useful feedback. It’s less expensive, less time-consuming, and more reliable, too.

Kimberly-Clark has a unique approach for testing marketing campaigns and messages. Rather than commission large studies reaching a few thousand people, the company buys time on the TV channel QVC. As you might expect, QVC is not Kimberly-Clark’s primary sales channel. Instead, they use it as a way to figure out which campaigns and messages work. Because QVC reaches millions each day, all of whom are capable of placing orders in real time, Kimberly-Clark can quickly see what’s likely to be successful if launched more broadly.

5. Embrace extreme users.

Most consumer research seeks to study the people who resemble the average. But major threats tend to start small, with people outside the mainstream: extreme users. While outliers, these folks tend to live in ways ahead of their time, some traits of which will make it to the mainstream — there were people on the Internet in the 1970s! By understanding extremes, it’s more possible to get a sense of what the future might hold.

In the early 2000s, Swingline developed an automatic stapler, designed to remove the need to smack or squeeze the product to attach pieces of paper. They knew that the performance of this product would be critical to its success, as it was aimed at offices. So the company put prototypes in high-pressure situations: at airport checkout counters, law firms, medical offices. It’s a good thing they did: the prototypes performed disastrously. The team saw the need to both offer ordinary staples and high capacity speed, areas where previous attempts failed. The resulting stapler, the Speed Pro 7, launched a significant product line that persists to this day.

6. Don’t wait for approval. Go!

What makes Lean Insights powerful are that they don’t require large budgets or lots of stakeholders. The entire idea is that no matter what your job, how big your team, or how tight your budget, you can learn something that can contribute to the success of your business. As a result, it’s critical to just get started.

A designer at HP embodies this mentality. He created a design for a new printer that was rejected as too expensive to bring to market.

Not taking no for an answer, he started working with an engineer and was able to prove that the printer could be made and sold for the same price as the existing product. Armed with this knowledge, he put the prototype on display in an area he knew executives passed regularly. Within a week, a senior executive in the business noticed the printer and asked, “Can we make this?” The designer was ready with the specifications proving the model was viable. It was immediately ordered into production.

The impact of lean insights.

Lean Insights are not the making of a new corporate function. They’re simple ideas that everyone in the business can embrace. Crucially, they can be tried out quickly and show benefits rapidly. It’s an approach designed for a world that is changing faster than ever.

If you want to thrive, not just survive, don’t just look to the business model. Focus on what customers need and want to experience. To create meaningful experiences, the principles of Lean Insights are an invaluable tool. Blockbuster’s fate was not inevitable. It had all the customers it needed in its stores before its demise. It just didn’t learn enough from them.

As a leader, it’s important to understand that there are people in your company who are trying to develop lean insights for you that could save you. Make it possible. Encourage and champion their efforts. Take information from all directions. Build the experiences that can sustain your company’s success.

Check out the slide deck used in presentations of this material below.