Don’t Listen to Your Customers?

One of the more common refrains I hear from time to time concerning why software company A is successful and software company B is not is that company A somehow does a better job of listening to their customers. At some level of course the entire exercise is academic, given that attempting to attribute success to a singular factor – even amongst competing enterprises – is bound to fail. It can be instructive, however, to try and find out how they make decisions and why, and what makes those decisions successul.

In that vein, one of the more intriguing recent trends I’ve seen highlighted contradicts this conventional wisdom very neatly. There is, in fact, a growing body of evidence that suggests that successful companies are not those that are slaves to customer needs, but those that can be creative and present customers with something they didn’t even know they wanted.

Malcolm Gladwell, not too surprisingly, has collected some of the more compelling case studies around. He talks about two of them – the New Coke fiasco and the Hermann Miller chair focus group experience – in a talk at PopTech! here. While the stories highlight different organizational failures, the common theme is simple: our inability to properly understand and deliver what customers want. Or, if you prefer, their inability to communicate said desires. Either way, it amounts to the same.

A recent piece in HBS Working Knowledge has the following to say on the subject>:

“Listen carefully to what your customers want and then respond with new products that meet or exceed their needs.” That mantra has dominated many a business, and it has undoubtedly led to great products and has even shaped entire industries. But slavishly obeying that conventional wisdom can also threaten a company’s ability to compete.

The difficulty is that fully understanding customers’ needs is often a costly and inexact process. Even when customers know precisely what they want, they often cannot transfer that information to manufacturers clearly or completely. Today, as the pace of change in many markets accelerates and as some industries move toward serving “markets of one,” the cost of understanding and responding to customers’ needs can easily spiral out of control.

In this context, I’d take exception to Microsoft’s Robert Scoble when he talks here about the success of Google as a function of providing customers what they want. Certainly any consumer oriented institution needs to design to its customers’ needs, but I think the success of Google – and throw Apple in here as well – is far more attributable to design values core to their respective firms rather than any extraordinary understanding of customers’ wants and needs.

Google’s mission from day one has been about simplicity in presentation, and while this resonates with customers it seems clear that the algorithms that drive its results are what have driven their brand into verb territory.

Likewise, Apple has always prized form and precise, elegant design, so it’s no surprise that the iPod is the portable music embodiment of those values. Did Apple uniquely perceive an untapped customer need for this in the MP3 player space? I don’t believe so.

The point of all of this – and apologies if it comes across as b-schoolish, it’s just been bugging me for a while – is not that good software companies listen to their customers or don’t listen to their customers. Generally speaking, companies that pay no attention to their customers aren’t around very long. The lesson I glean from these anecdotes is how successful companies translate their core values – the principles they believe in most strongly – into products that embody those beliefs, and in turn how commonly held those core values are in the general public. It may seem oversimplistic, attributing the success of an Apple or Google to ‘cool’ design or Spartan simplicity – but I think those are the simplest, and therefore most likely to be accurate, rules that can be distilled out.

Either way, I certainly don’t believe either organization is unusually adept at perceiving customer needs. It’s also important, however, to realize that the problem facing the software industry is somewhat unique. Most people, for example, would it find it far easier to tell an airline what they’d like than a software company. So if you’re a software company, by all means listen to your customers. I just wouldn’t listen to them too closely, if you know what I mean.