Hi tech features and functions

    Michel van Hove

    The LCD panel business has been going the way of many companies that rely heavily on technology for their product development. While the demand for LCD screens is still there prices are falling fast (80% between 2004 and 2008) and the industry lost $ 13 billion between 2004 and 2010.

    There are numerous examples of innovations that are based on improved functions or providing consumers with additional features that in an ideation session sound terrific but don’t make an impact once they are launched.

    The story of LCD panel manufacturers is one that can be observed over and over again in other industries. Often (hi-tech) companies are puzzled why their customers are not prepared to pay for the additional value they feel they are providing by upgrading their technology. An important issue to address is the lack of a systemic approach that includes real high quality customer insights deep into the innovation process. A direct result of this omission is the gap between what a company feels it has to provide and what their customers really need.

    A client in the B2B space we worked with some years ago was facing the same issue. They didn’t understand why their customers weren’t prepared to pay the premium for all the wonderful features and improvements they had added to their products over the years. A simple exercise, asking the customer to identify areas where they felt they needed the most help from their supplier showed something remarkable. In their view the quality of the offered product was meeting their expectations, no added functionality was really needed and because of that they weren’t prepared to pay the higher price asked by the supplier (our client). The improvements weren’t therefor included in comparing them with other suppliers. But they expected the supplier would collaborate with them and think about how to develop new offerings for their customers based on the technologies the supplier was providing. It wasn’t so much about the product as it was about strengthening the relationship, combining knowledge and collaborating to come up with new ideas.

    This newly acquired awareness proved to our client that embedding a systemic way of approaching customer insight could lead to new opportunities that could go beyond products. This is just a very simple example where the customer clearly articulated what he/she wanted. In many cases the needs we identify in our work with clients are of the unarticulated type and we have to derive them from interviews and observations.

    For the LCD panel manufacturers a similar story could unfold. More features and higher image quality might not be what consumers will pay more for. The focus should be on solving the issues that make interacting with the product much easier than it is today. That means studying people’s behaviors and understanding how consumers have developed all sorts of workarounds in making the products do what we want them to do. Unless that happens it will be very hard for LCD manufacturers to come up with compelling new ideas that differentiate their offerings from one another.