Hidden Potential
Discover Your Products’ Hidden Potential by Ian C. MacMillan and Rita Gunther McGrath
A simple matrix helps you identify the attributes that will make your goods and services most competitive. Why did a minor math error that would occur only once every 27,000 years so enrage customers that it briefly threatened to derail Intel’s Pentium chip? And how could a feature as trivial as an inexpensive cup holder swing millions of customers to purchase a $17,000 automobile—particularly when only three years later, the same cup holder had become almost invisible to buyers? Is it possible to develop rational product strategies in the face of apparently irrational customer behavior?
The fact is that every product has more attributes than meet the eye. Profitable product strategies are built around giving customers the exact mix of attributes they want but no more. Companies that underinvest in attributes that customers value will lose customers; companies that overinvest in attributes that customers don’t value will lose money.
Managers must find the best fit between a product’s bundle of attributes and their customers’ needs—and doing so is an endlessly iterative process because competitors innovate and customers’ needs change. To help managers track and evaluate this dynamic fit between the needs of their customer segments and the attributes of their products, we have developed a simple analytic tool. We begin with a discovery-driven process for uncovering salient product attributes—those that, all other things being equal, will swing a purchase decision. Then, we map salient attributes onto what we call the ACE Matrix (Attribute Categorization and Evaluation), a grid that highlights the competitive imperatives for each attribute. The matrix shows what action a company must take in response to each attribute.
Step One: Uncover Salient Attributes
In any population of customers, there are concentrations of people whose behavior sets—patterns of why and how
A simple matrix helps you identify the attributes that will make your goods and services most competitive. Why did a minor math error that would occur only once every 27,000 years so enrage customers that it briefly threatened to derail Intel’s Pentium chip? And how could a feature as trivial as an inexpensive cup holder swing millions of customers to purchase a $17,000 automobile—particularly when only three years later, the same cup holder had become almost invisible to buyers? Is it possible to develop rational product strategies in the face of apparently irrational customer behavior?
The fact is that every product has more attributes than meet the eye. Profitable product strategies are built around giving customers the exact mix of attributes they want but no more. Companies that underinvest in attributes that customers value will lose customers; companies that overinvest in attributes that customers don’t value will lose money.
Managers must find the best fit between a product’s bundle of attributes and their customers’ needs—and doing so is an endlessly iterative process because competitors innovate and customers’ needs change. To help managers track and evaluate this dynamic fit between the needs of their customer segments and the attributes of their products, we have developed a simple analytic tool. We begin with a discovery-driven process for uncovering salient product attributes—those that, all other things being equal, will swing a purchase decision. Then, we map salient attributes onto what we call the ACE Matrix (Attribute Categorization and Evaluation), a grid that highlights the competitive imperatives for each attribute. The matrix shows what action a company must take in response to each attribute.
Step One: Uncover Salient Attributes
In any population of customers, there are concentrations of people whose behavior sets—patterns of why and how