Ask any first-time entrepreneur “Who’s your ideal customer?” and the answer you’ll most likely hear is an enthusiastic “Everyone!” The enterprise version of this enthusiasm is the presumption that new products must satisfy all existing customers. Traditional market research methods depend on measuring customer input from thousands or even millions of people. But breakthrough innovation doesn’t happen that way. Such practices work only in existing, well-understood markets.
Those who are a bit more savvy might tackle segments of the market, but unfortunately, they often do so in the old-school way, categorizing customers by product type, demographics, or vertical industry, like financial services. The problem with this research is that it doesn’t get to the needs of the customer. It’s a way to classify, but not to learn.
We want to group customers based on need. For instance, Clayton Christensen, in his jobs-to-be-done model, describes a market of people dressed in business attire who buy milkshakes at fast-food restaurants between 7:00 and 9:00 in the morning (http://hbswk.hbs.edu/item/6496.html).
Now, that’s a market segment!
“But wait,” you say. “Everybody buys milkshakes!” And true, there are products that are purchased across broad age categories, and by both genders. But the question is not who buy, but why they buy.
People buy products for ...