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Chandler Hatton, Michael Kolk, Martijn Eikelenboom, Mitch Beaumont

In our Global Innovation Excellence survey, “Identifying customers’ unmet needs” was identified as one of the most important factors for innovation success, with the best practitioners outperforming others by over 20%. However, finding the best way to organize and manage customer interaction is anything but simple, especially when the product is technically complex. For example, often the marketing or sales functions “own” the customer relationship, but are they the best people to uncover highly technical customer needs?

In this article, we review the highlights from the analysis and offer some guidance to help companies organize their customer-needs intelligence teams. Our research shows that most companies tend to either use a one-size-fits-all approach, or else approach the situation with ad hoc arrangements. However, it also shows that “getting it right” can lead to doubling of innovation success rates and have significant impact on R&D effectiveness. This is something B2B companies cannot afford to ignore.

Identifying customer needs and characterizing a team skill set

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

In order to decide which organizational approaches might work best in each situation, it is helpful to consider the different types of customer needs that have to be identified in B2B industries, and therefore the skill combinations that may be required within the team. Two dimensions are important in this respect:

  • Expressed or latent customer needs: Latent customer needs are those which are implicit, unclear, undefined or unconscious.
  • Expressed or latent technology needs: One of the features of B2B industries is that business customers may themselves possess significant technical competencies and be intimately familiar with the products they are buying. It is therefore quite possible that B2B customers express specific technology needs in addition to more general customer needs.

By identifying the degree to which B2B customer needs are clear (expressed) or unclear (latent), and the degree to which technology needs are known (expressed) or unclear (latent), we can start to characterize the most appropriate skill set that a multifunctional product development team will need in order to develop a winning product.The ability to identify latent needs and translate them into concrete product requirements can be referred to as “solution design skills”. 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.

Organizing teams according to a needs “matrix”

Companies can use the analysis above to help make informed decisions about how best to organize their teams. The four approaches described above can be mapped to the four quadrants of a “Customer Needs/Technology Needs” matrix, as shown in Table 2. Having the right solution design skills on the team to suit customer or technology needs is critically important. With this in mind we can consider each quadrant of the matrix in turn:

  • 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.
  • 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.
  • 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.
  • 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.

Five key success factors

The approaches detailed above and their applications may seem relatively straightforward. However, the study showed that in practice few of the sample companies actually followed these optimal approaches, and most were unsatisfied with their current efforts. Analysis of the most common shortcomings revealed five key success factors:

  • Avoid “one-size-fits-all” approaches: This means that often the wrong solution design skills and expertise are being applied.
  • Ensure good knowledge sharing: Organizational silos, dispersed physical locations and inadequate knowledge management infrastructure may cause valuable intelligence to be lost or poorly disseminated.
  • Be responsive and adopt regular customer interaction: The most successful companies have processes that ensure customer interaction along the whole development cycle, with R&D functions that actively use intelligence stimulated by the availability of a fact base, rather than just “opinion”.
  • Deploy the right resources: Not just those who “happen to be available” or who “own” a customer relationship.
  • Understand internal competency needs: Companies need to be aware of competencies they need to develop and deploy, especially in the light of rapid technology development and digital convergence.

As part of our research we asked companies to categorize recent new-product development projects in terms of whether they used the “optimal” or “non-optimal” organizational 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 actually doubled by using the optimal approach (Table 3).


Obtaining a deep understanding of B2B customer needs is central to any new-product development process. In a complex customer relationship, finding the best way to organize and manage customer interaction is anything but simple, especially when the product is technically complex. Rather than adopting a “one-size-fits-all”approach, companies need to choose the best organizational method for their particular needs.

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