The Tight Rope over the Valley of Death – Do entrepreneurs listen or not listen to their customers?

tight ropeMost entrepreneurs never speak about it. Some don’t even know it was happening to them. It’s the clash of two very powerful entrepreneurial axioms. On the one hand it is drummed into us that we must do our research, listen to the client’s needs and wants. On the other hand we are told the famous stories of Ford and Jobs who created products despite what the market wanted or even perceived they would ever need.

You SHOULD NOT listen to the Customer

The famous saying “If I had asked people what they wanted, they would have said faster horses.” is widely attributed to Henry Ford  (but there is no evidence that it was indeed him that uttered those words). Steve Jobs said in an interview with Inc Magazine “You can’t just ask customers what they want and then try to give that to them. By the time you get it built, they’ll want something new.” And then there is Mario D’Amico, the senior VP of marketing at Cirque du Soleil is quoted as saying “How can people tell you what they want if they haven’t seen it before? If we ask them what they want, we’ll end up doing Swan Lake every year!”.  And what about the quote from the technology guru Alan Kay who said “The best way to predict the future is to invent it.

What these famous quotes (and there are many more) communicate to us entrepreneurs, is that the customer does not know what they want. It is us, the entrepreneurs, that know better. The archetype is semi-patronizing, semi-arrogant and  most often labeled as a visionary. He is the one that saw it all before we did.

And you cannot argue with their success. Jobs, D’Amico, Musk, Ford and many other visionaries gave little or no credence to the customer’s needs and thoughts. They created what they thought was what the market needed, and they were right. Are they exceptions, or are they the rule?

You SHOULD listen to your Customers

The bookshelves are filled with books about listening to your customer. The internet is filled with millions of articles, blogs and research papers on the importance of speaking with your customer and understanding what they want. There are industries built on listening and understanding; from the survey industry to the market research industry. Big corporates beta test their products, do customer focus groups and even film customers secretly to better understand what they want.

In a previous blog post I spoke about the 5 conditions that are required before an entrepreneur moves from a state of nascence to a state of trading. The final of the 5 conditions was “The ability to learn and iterate”. This talks to the entrepreneur’s ability to read the feedback from the market and make appropriate changes to the product in order to be more acceptable and thus salable to the market.

This makes sense, it sounds logical. There is tons of evidence that it’s the right thing to do.

The Tight Rope over the Valley of Death

So which is it? To listen or not to listen? (I know how you ended the last sentence in your mind). Well it is the question I am trying to answer for myself. The first few months or even years of your business journey are scary and tenuous. Going out to market as a new challenger is tough. You have a fraction of the resources the incumbents have (even if they are not direct competition there are always incumbents vying for share of wallet). The incumbents have established relationships and distribution channels. They are not going to lie down and ask you to tickle their tummy. They are going to fight you, and to be frank, they are going to try and kill your business before it can get a grip in the marketplace.

Almost every interaction I have had as a new challenger in a market, no matter how different my product was from the competitors, went something like this; “What makes your product so special? Why should I buy from you?”

It is this context that drives you to “listen”. It is this competitive context that drives you to adapt to the needs of your potential customer, because if you do not please them then they will make the choice to buy from your competitor.

CAMELACTUS – The all new desert smoothy

So lets test that in the opposite. Lets say you were the only kiosk in the middle of a desert. You were selling your new chilled camel urine and cactus juice smoothy, CAMELACTUS. It has tremendous health benefits which outweigh the acrid taste many of your clients have been complaining about. But there is nothing else to drink, and no one else selling. CAMELACTUS is a big hit. Some might call you a visionary for coming up with this concoction. You don’t do market research, and in an interview on CNN (wearing a black pullover) you said “If I asked my clients what they wanted, they would have said water. But we don’t have water, we have Camels and Cactus. There were travelers, there were camels, there were cactus plants. All the travelers in the past had run out of water by now. It was my vision to solve the problem by creating CAMELACTUS.”

Size Counts

So maybe the place for listening to your clients is correlated to products and services that have a large amount of direct or indirect competition. Maybe the place for not listening to your customers is correlated to products or services that have little or no competition.

In other words if your differentiator is tiny then listen, if it’s huge then don’t. 

My Awkward Conclusion

I’ve been in both types of businesses in my career as an entrepreneur. In my one business where we were selling, for intents and purposes, a commodity, the only way we kept ahead was through minor iterations that we sourced from listening to the market needs, our brand and our relationships. In the second business, I spent my days and nights trying to educate my market about what I was selling.

Let’s think about that. What is a commodity? A commodity is a product where price has been predictably allocated by buyers (and the market) to quality and value. There is no need to ask clients what they want. They have told you, and so you and everyone else is producing it for them. You are a price taker. That lives on the extreme of the continuum next to the “tiny differentiator” side.

On the other end of the continuum is the space where you have produced something that is so foreign to what the market wants that it take years and millions of dollars to educate them. This is the space of the deathly pioneer. Like Jeff Hawkins, the person who invented the first tablet must have found out in 1989. Pioneers seldom survive, it is the settlers who come in after the pioneers that normally mop up an adequately virgin market. There is still huge risk ,  but the risk-reward ratio has been tweaked in the right direction by the pioneer. The Pioneer lives on the extreme of the continuum next to the “huge differentiator”.

So the answer to how much you should listen depends on where your business is on the continuum. As competition increases so you will find yourself listening more and more as your business tends toward a commodity. It is important to try an honestly reflect where you are on the continuum and listen accordingly.

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One thought on “The Tight Rope over the Valley of Death – Do entrepreneurs listen or not listen to their customers?

  1. Maybe have a slightly different perspective … (And it might be what you are touching on re distribution channels)

    1. I am a firm believer that two of your best sources of business as an entrepreneur are your customers and your competitors (Caveat – thinking FinTech / financial services)

    2. Everybody wants to build products that are “disruptive” or “The Uber of industry x” etc. When you point out that Uber isn’t even a profitable business yet, then the argument to be “The Uber of X” seems to ring a bit hollow.

    I try to reference the example of Discovery when trying to work out new products. Platitudes aside, Discovery wasn’t founded because it could revolutionise the insurance industry and then introduce a globally successful rewards programme (that came later). Discovery was founded on a client need – RMB. Subsequent iterations have moved it into different places.

    I’m (VERY SLOWLY!!) realising that “the big idea” is not necessarily the best idea and it is easier to empower smaller ideas (e.g. with our marketing channels) and then iterate on top of what works. I think there is also an obsession with “My” product from too early on.

    It hasn’t been a pretty journey at all (because we have had to look hard at our core business but)
    – Our step 1 was that we were brought a video business last year – it was a step outside of our core area but we saw the opportunity to move up the value chain and integrate it into our business. 4 months in, it is our most profitable business

    – Using those learnings we were then able to use our video team to move into education. Now suddenly I have product (not page impressions) and they have a marketing channel

    – Step 3 – how does a product get to market? Well we have an audience of 500 000+, we know some insights about them (buying habits etc.), let’s plug it in and get feedback.

    Unless you have technology which is highly specialised and has patents around it, you’re going to need a channel to get you into the market. Very few entrepreneurs have that and the more they obsess about “Mine” / “My”, the harder they are going to find it to get into the market and get real feedback.

    Like

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