In 1954, behavioral academic Gregory Stone published his seminal research identifying 4 types of consumers, including Personalizing, Convenience, Ethical and Economizing. Think about some of your recent service experiences as a consumer, and try to identify which ‘type’ you are. For most of us, the answer is, it depends. For clothing or electronics, you likely choose items that identify with who you are, and personalize the experience. When looking for something simple like shampoo or toothpaste, it might be about convenience (which store is closest?) or cost (what else do I need at Wal-Mart?).
It is interesting that even 60 years later, Stone’s customer categorizations for the most part still stand. More importantly, organizations that ignore or fail to recognize who their customers really are do so at their peril. When working with students or executives on strategy or innovation, I look at two fundamental questions – Who is your customer, and what does that customer really want? Knowing who your customer is today enables service operations and drives a successful customer experience. Understanding tomorrow’s customers sets the table for effective innovation.
Let’s look at a couple of recent examples.
The first is McDonald’s, who have struggled in recent years with an expanding menu, slower service and numerous failed product launches. In 2013, McDonald’s launched ‘Mighty Wings’ at 14,000 of their locations across the U.S. Eight weeks later, they were left with 10 million pounds of undigested wings in inventory as the product had flopped (flapped?) with customers. The problem wasn’t the wing itself – customers actually loved the big, meaty wing. At a buck a piece, however, they were too expensive for a McDonald’s patron.
Some of us eat at McDonald’s, some don’t, but over the years, most of us have dined under the golden arches at one time or another. With over 7% of the U.S. market by number of restaurants, McDonald’s is still almost three times the size of its nearest competitor, Subway. Innovation blunders like Mighty Wings don’t help the cause, so let’s drill down a bit. In Stone’s language, who really are the typical McDonald’s customers? Convenience, sure. With so many locations, long hours and generally fast service, we can get in and out in a hurry when we are hungry. Some might also say Economizing, in that ‘dinner out’ runs about $10/person, less than most sit-down type establishments. Personalizing and Ethical don’t really enter the discussion when we talk about McDonald’s, and it could even be argued that some of McDonald’s recent struggles are a result of being less convenient (larger menus slow down service) and less economizing, to the point where traditional McDonald’s customers are growing weary.
What concerns me the most is that McDonald’s doesn’t seem to be learning from their mistakes. Now on their third CEO in three years, they are innovating again, and once again forgetting who their customers are and what they really want. This week, the House of Ronald launched the ‘Your Taste’ menu as a trial in one of their New York locations . In a nice bit of process innovation, the restaurant installed touch screens where patrons place their own orders, giving the customers control over the process. Customers select their bun or bread, meat, toppings and sauces. Sounds great, right? Perhaps not, with the price of this new burger at 12 bucks. So, two BIG problems with this – The first is that the customer-driven order process will likely slow down the ordering process on a menu that includes over 100 items, especially in groups or families who crowd around the screen asking each other, ‘What are you having?’. Second, and more importantly, McDonald’s won’t attract customers willing to pay $12 for a burger. There are lots of people (myself included) who will pay $12 for a hamburger or chicken sandwich, but only at a roadhouse or gourmet burger shop. A premium burger like that is a personalizing experience, and McD’s doesn’t draw those customers. For me, this means back to the drawing board.
Another example comes from Elon Musk’s garage at Tesla, and on the surface, seems very exciting. Musk recently announced the introduction of a new Tesla SUV, the Model X. http://www.teslamotors.com/en_CA/modelx This is a good looking, small SUV typical of Tesla’s styling and features, and set to launch in 2016 (you can reserve one on-line!). So what’s the problem? Think back to those shaping questions for our strategy and innovation – who is the customer, and what do they want? Who are SUV customers? They are just about any age, but are active, and generally haul a lot of ‘stuff’, from golf clubs, to baby and toddler gear (aka the luggage club), to skies, bikes and paddle boards. What do those SUV customers want? The storage space, performance and utility to get them and their gear where they are going.
Here is the rub. Tesla’s new Model X introduced a sexy set of ‘falcon-wing’ doors on the back of the vehicle. Credit first to the designers for not using the term ‘gull-wing’ doors from the 1980s – gulls are not a sexy beast. The falcon-wing doors look great, but how do I put a roof-rack on the truck? How do I put stuff on my roof rack with the doors open? Any of you who have done this appreciate that you need to open the front and rear doors to install the racks, ski boxes or other gear on the roof. You stand on the door liner and load up. You could, in theory, keep the rear doors closed and use a step ladder to install and load the roof system in the comfort of your garage, but the fancy doors pretty much mean you need to bring that step ladder with you to unload at the ski hill. Worse yet, with a roof rack installed, you have to leave the kids at home – the back doors won’t open with the ski box on top.
Most of us give full credit to Musk and his minions for their creativity and innovation. From Paypal to Tesla to his Giga-factory battery plant to Space X and others, Musk continues to push the envelope and drive products and services in new directions. In this case, however, what we might refer to as a rare miss, the team forgot about the customer. SUV customers want a roof, and the Model X’s isn’t accessible. An important tenant of innovation is that it is OK to fail – time for Tesla to learn from this failure, cancel the fancy rear doors go to a traditional design in time for launch.
Think about your innovation process. Is the team thinking about your customers? Who are those customers, and what do they want? Most importantly, what will they want next year? Then, how will you deliver? Failure to takes these questions into account lead to failed innovations like Mighty Wings and falcon-wings, and others that are likely to underperform through a misalignment to customer needs and tastes.
Barry Cross - Helping Organizations be their Best 
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