Why Every Smart Decision Comes Only After an Evaluation of Customer Needs
A Note From The Editor
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Contrary to what many believe about the most famous leaders and entrepreneurs in the world, they aren’t fortune tellers. They don't have to be, and you don’t either.
Companies are likely doomed if they commit to creating products they think their customers need, without actually stopping to verify if that's true. However, if, when they listen to those customers, empathy, creativity and innovation intersect, those companies can establish trusted relationships with customers.
And that trust can be based on a mutual transmission of value: The customers get their problems solved and the companies find out exactly what they need.
The folly of inventing customers’ pain points
There’s a romantic notion surrounding the concept of “ideas” in business that has become entrenched in modern culture. Characters in various types of stories proclaim, “I’m an ideas person!” and wear that supposed status as a badge of honor, as if their ability to conjure ideas puts them on a higher plane than those they surround themselves with.
In many respects, such a supremacy of ideas makes sense. Ideas are the lifeblood of innovation, and the entire conception of Western capitalism -- especially American capitalism -- is largely based around forward-thinkers blazing their own trails to change the world.
Far too often, however, people become convinced of the efficacy of their own idea, and are unable to discard it and move on in the face of contrary evidence. They believe wholeheartedly that their idea is uniquely suited to solve a specific problem, even when said problem isn’t what really needs to be solved. This gap between fulfillment and need has severed the connection between company and customer in countless situations.
Why the Apple myth is so pervasive
When people try to push the notion that innovation should be freed from the needs of the customer, they generally point to Apple co-founder Steve Jobs. They note how Jobs famously evoked the ethos of Henry Ford when he stated, “Customers don’t know what they want until we show them.”
This isn’t meant to diminish Jobs’s accomplishments, as his resume and legacy with Apple speaks for itself. But the idea that Jobs conjured up concepts such as the iPod, iPhone or App Store from thin air and bestowed them on a grateful public is a critical misinterpretation of history.
Jobs may have resisted being a slave to focus groups, but he still took basic market needs and used his and his employees' creativity to solve real problems. Consider the iPod's mega-successful start, even though it was hardly the first digital music player.
The issue was that loading data and managing libraries on most of those competing devices was difficult and required some moderate technical acumen. Enter the iPod: an absurdly well-made product that beautified the interface and made it simple for users from age 5 to 90.
Still, the "idea" myth persists because it is just so enticing. Budding entrepreneurs continue to believe that if they just have that one great idea the market hasn’t anticipated, they too can forever change business and pop culture history.
Using empathy to connect with customers
Listening to your customers empathetically and building solutions based on their real pain points may not sound as appealing as the Steve Jobs story, but it is a proven method for long-term success. Practicing empathy is a smart strategy, from an ethical perspective. It helps you see other people’s experiences and challenges through the lens of your own. And it can also have a significant impact on your bottom line.
According to the Harvard Business Review’s 2015 Empathy Index, the average earnings of the ten companies the review rated the most empathetic rose by 6 percent over the previous year, compared to a 9 percent drop for the ten companies on the bottom of the list.
Being empathetic,then, guides you to consider the needs of your customers in detail, rather than just dismiss them immediately because they don’t align with your previous ideas.
How entrepreneurs can use effectual reasoning to creatively solve problems
The most successful leaders and entrepreneurs respond to market needs through a process of effectual reasoning. Causal reasoning starts with a goal and makes a plan to solve it. Effectual reasoning, on the other hand, necessitates beginning the problem-solving process without any preconceived notion of what the problem is.
The result is adaptable solutions that are rooted in the desire to add true value to the customer’s life. The problems are manifest, and the customer is more than willing to tell you about them in detail. The creativity in being an entrepreneur comes from learning how to listen to these pain points and utilize resources in innovative ways to alleviate them.
Companies that thrive by listening
Airbnb skyrocketed to prominence by promising travelers unique experiences and hassle-free arrangements in destinations around the world. The company knew it would face regulatory battles with city governments and pushback from powerful, entrenched hotel corporations; such issues are par for the course for a tech startup aiming for market disruption.
What they didn’t anticipate immediately was 1) the far-too-frequent damage left by guests, and 2) scenarios of homeowners being on the hook for repairs. The company knew that without its hosts it had no business model; so it instituted a no-cost, $1 million insurance policy for hosts in the event of damages.
An example from Tesla CEO Elon Musk provides another, and very literal, interpretation of listening to customers’ concerns. When a Tesla-owning couple bought a full-page newspaper ad to suggest design changes for the burgeoning electric mainstay, Musk tweeted a photo of the ad and indicated a desire to implement some of the changes specified.
This is the kind of empathy and response that has garnered Tesla some of the most impressive loyalty ratings in the automobile industry. It illustrates something your company can do, too: listen.