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How do we know what matters most to customers
This episode of “Better Innovation,” Global Tax Innovation Leader and host Jeff Saviano interviews Dave Duncan, author of The Secret Lives of Customers: A Detective Story About Solving the Mystery of Customer Behaviour.
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Dave Duncan, author of The Secret Lives of Customers: A Detective Story About Solving the Mystery of Customer Behaviour, investigates what customers truly care about most. Through a very engaging parable, Dave dives into what motivates customers across the functional, social, and emotional spectrum, with an emphasis on the important questions you're asking about your customers. Whether your customer is a coffee shop or large enterprise, Dave’s principles will help you better align your product or service to what matters most to your customers. In this fascinating two-part discussion, Jeff and Dave dive into the key messages from The Secret Lives of Customers to help you discover new ways to meet rapidly changing customer needs.
For your convenience, full text transcript of this podcast is also available.
Jeff Saviano
Hello to my Better Innovation friends. I'm Jeff Saviano, the host of the show, where we bring to you the leading innovators in the world. I feel so fortunate to have my friend Dave Duncan with us in the studio today. Dave is a Senior Partner at Inner Sight. He's an advisor and written extensively on how organization fans can build their innovation muscle.His latest book, The Secret Lives of Customers, just hit the shelves. It is such a great addition to the innovation genre. I think it fills an important gap with this heavy emphasis on what every organization needs customers. This interview was particularly special for me I was so humbled to work with Dave for a couple of years at the very outset of my shift to an innovation career. This has happened to me quite a few times with Dave over the years. He'll express such a unique and thoughtful point of view on something to do with growth and innovation. I'll come away from the conversation feeling like he just told me some really important innovation secret. You may have that experience today, too. Dave is really one of the best in the innovation field. I'm so happy to bring to you today Dave Duncan.
Dave, welcome to the show.
Dave Duncan
Thanks, Jeff. Appreciate you having me.Saviano
Well, Dave, I have to say I feel so fortunate to have you on the show. And you should know that you've already made such a heavy contribution to Better Innovation, as you've influenced so much of my innovation thinking over the years through your work. So just wanted to start by thanking you for that. I feel like our audience has already received so much of your wisdom, although it's been indirect through me. And today, they're going to hear right from you. I'm so excited about that.Duncan
Well, that is really nice of you to say. And I've been listening to your podcast for a while now. I think you do a fantastic job. It's a great one. So happy to be on.
Saviano
Thanks so much. We've got a great team, and we love our Better Innovation audience. And I know that's something you and I share, is our love for innovation. We have so much that we're going to talk about today. And I do feel as though our audience will be so fortunate that you just wrote a book. And by the time that this episode airs, it would've just hit the stands. So, there's some drama ensuing from this great book that's going to be out there soon. The book is called The Secret Lives of Customers. It's a detective story about solving the mystery of customer behavior, how to think like a detective to understand your customers. Tell us about what the book is about, Dave.Duncan
Sure. The book is about how anyone, you know, working at any level really in any organization, any kind of organization can learn how to understand the customers that they are serving currently or that they want to serve. And I have a pretty broad yet specific definition of what a customer is. I think about it as any person or group or organization whose problems or goals you want to understand so you can figure out ways to help them. And you know, from that perspective, everybody in any organization has customers. They both are a customer and they have customers.So, there's the obvious people who interact with external customers or serve them in some way, whether they're in sales, or marketing, or product development, or customer service, and so on. But then everybody internal who is in an internal function also has customers. You know, if you work in the finance department or the HR department, you're serving the needs of other parts of the organization, your employees and trying to help them solve their problems and achieve their goals. And even at the level of individual managers, if you have a team that's working with you your team members are your customers, right?
They're people whose problems and goals you want to help them with and vice versa. Your manager is in a sense your customer. You want to help that person solve their problem and goal. So, it's really got quite a broad audience. And that's what it's about.
Saviano
I'm so glad that we started there, Dave, because I do think there's a much narrower definition of who your customer is. Maybe it's the lawyer in me, but that you could define it narrowly to mean that somebody actually has to be paying for something (the notion of consideration and, you know, contractual relationship). But it's it really is much broader than that. It could be just to give other examples, it could be a non-profit, right? Nonprofits have—Duncan
Sure.Saviano
Customers. For-profit enterprises. It could be there's money exchanging hands but perhaps not always either. Do I have that right?Duncan
Yep. That's exactly right. You know you could look at your patients if you're a health care provider as in a sense your customer. Or if you're an educator, you could look at your students as your customers. And I agree with you. The word "customer" has kind of a contractual, you know, transactional connotation to it probably in the in the way it's commonly used, but I'm using it in this broader sense. And also, in in in a positive sense, right? You the definition I'm using, you’re the reason you want to understand your customers is so you can help them, right? It's not about figuring out how you can exploit them but, like, what could you do that would really help them. And in order to know what that is, you have to understand how they would like to be helped, right? And that's the that's what I'm trying to teach in this book.Saviano
And, Dave, the book has such a really interesting format. You chose to write it as a parable. It's written like a mystery novel. Why did you choose to write it in that format?Duncan
Well, there are a few reasons. And I have to say it was inspired by a book I read by an author named Patrick Lencioni who wrote a book called The Five Dysfunctions of a Team. I think you've read that, too. He's written a bunch of books that have a format where there is a fictional story (he calls them leadership fables) that typically there's some organization or group of people that are having a problem and they work out the story describes how they work out the solution to that problem by applying whatever frameworks, or tools, or methods he's trying to teach.And that's, you know, 80/90% of the book. And then at the end, there's a short, you know, nonfiction session where he steps out of the story and explains the ideas directly. So that's the format of my book. It's primarily a story. And it's actually a detective story. And it's kind of a mystery which I'll describe a little bit. And the reason I wanted to do it that way is firstly I wanted it to have, maybe a broader accessibility than, you know, a typical business book would. Cause to our earlier exchange, really everybody can benefit from learning how to do this.
And maybe not everybody is interested in reading kind of a dry business book. That was one reason. Second reason has to do with the subject matter itself. So, if you are teaching somebody how to have a useful conversation with another person in the sense of them being a customer a potential customer it's hard to just give people a set of steps and rules for doing that and say, "Go try it." It's most helpful if they can watch it take place, kind of observe it, and then you can talk about what happened afterwards. And I thought the format of a fictional story was perfectly suited to that because in the story there are many conversations that are happening with customers.
And so, it enables you to see how they unfold. And then you can step back and analyze what you learned from it. And I'm sure you've seen this, but a lot of times the most useful insights you get out of conversations like that are from unexpected directions the conversation takes.
And sometimes the outside observer watching that will perceive that it's a little bit random and a little bit chaotic. And I wanted to depict that, how it feels, and then show that if you go into it with the right method and approach, you can get a lot of insight out of those conversations. The last reason: it was just a lot more fun to write. I started writing a nonfiction book about the set of ideas, and I was really boring myself. And so, I figured if I was boring myself, I would bore everybody else. So, it was just more fun to write.
Saviano
That's probably a good litmus test, is if you're interested in your own work, I suppose, has to be the baseline. And I find that it's actually an interesting point that you raise, Dave, that as I read nonfiction books and I for others are like this, that that you're constantly learning new frameworks and concepts and thinking about ideas in your head in real examples. And oftentimes, the author may come in and in and out of certain fact patterns and examples and may use real business stories to show us examples. And you have to you have to come out of understanding of the concepts. Take your mind out of the concepts and then think about the example that they're given. And sometimes that's just and perhaps it's a bit of a left brain/right brain activity. What I love about your book and I love about this format (also loved Five Dysfunctions of a Team) is that by investing so much and so long in understanding one story and really learning that well (and also, it's nice to be interested in the characters and there's a bit of drama of what may happen next) that if you can hook the reader that way, then when you get to the principles, they have that baseline.They have that built-in example that they don't need to keep coming in and out of the concepts. They've got it. You've already hooked them on it. And I just wonder if that's if that was part of your rationale for choosing this format, is to help the reader when you get to the principles, and the frameworks, and how to apply to their own facts.
Duncan
Yeah. In a few different ways, I think the answer is yes. So, you know, I agree with you about you know, nonfiction. And there there's a lot of fantastic, you know, nonfiction business books obviously. But I felt for this topic you know, picking cases from the world is sort of limiting, right?You have a lot of artistic license if it's a fictional story. And of course, it's intended to be a story that represents reality, right? Like real world situations, and problems, and solutions. But you're able to you know, unpack and really elaborate on the ideas in a way that is challenging unless you're, you know, say, writing a book about just one company, right, and really going deep on it. But it also to your point about, you know, people engaging in the story different characters in the story represent different ideas in some ways or different perspectives that I see in the real world. And one thing that has kind of surprised me in a positive way is people, they see those connections and they talk about, "Oh, well, I see a Rob in my company," or "Yeah, we've got a Jordan in my company." And they sort of anchor or they connect the fictional characters to people around them and as well as the ideas that they are intended to convey which has been kind of fun to see.
Saviano
Yeah. That was not was not lost on me. I really loved that particular aspect of the book. And as you mentioned, a few of the characters, Jordan and Alex perhaps, approach their jobs a bit differently. But to see how they interacted and the principles that they represented and how they could actually align in this customer discovery story.I think it would be fun, Dave, to for the audience if you could provide a bit of a synopsis of the story. And then we can turn to the principles and some of the key elements of it. So, what is the story that we're talking about?
Duncan
The story's about a fictitious company that's a chain of coffee shops, cafés. And (NOISE) the setup in the beginning is that you know, they've been very successful and grown rapidly. And then they hit a plateau where their growth stalled out and started going down again. And, you know, the question they have is, "What's going on? What can we do about that?" And I chose to write it as a kind of mystery detective story 'cause I've always thought of you know; I've done a lot of primary customer research in my career. I've, you know, probably done thousands of hours of interviews with people in in all kinds of situations and done other types of market research as well. And I've always liked to think of it as kind of detective work because you are it it's an exercise in going out, you know, talking to people, interviewing them, maybe making observations, trying to gather clues and piece together pictures of a puzzle to or pieces of a puzzle to solve some sort of mystery in the market, you know, for your client or whoever you happen to be working with. So, I took that parallel and analogy to an extreme a little bit in the book in that the firm that the company hires to help solve this what I call a market mystery (like the mystery of why they're plateauing and their customers are disappearing) bills itself as a market detective agency. And they go in and they do market investigations. And in this case, it just involves them going in and getting out in the market, trying to understand why different people frequent the café, and buy from them, and are loyal and why some left who the real competition is that they're competing with. And they try to piece it together and come up with a solution that cracks the case.Saviano
I have to say it was it was a lot of fun for me to read. It was it's based in Boston, and it's based in the North End. I lived for some time in the North End. It brought me right back to live around the corner from my favorite coffee shop, Café Vittoria (PH) in the North End in Boston, this incredible old school Italian coffee shop. So, you created this this rich scene of here it is, this this coffee shop in Boston that grew into a chain and the opportunity to go public as a chain of coffee shops and really trying to discover what is it about the customers.They had perhaps fallen on a bit of hard times as of late and felt like there was there was a real need to hire a detective agency like the characters that they brought into the story. And how important was it that the details of that particular part of the story and the characters? And talk a bit about the people in the story and what they represented.
Duncan
The main characters in the story or at least a couple of the main characters are Alex, who is a self-described market detective who has been brought in to help the company; and then a young person who works for the company named Jordan, who is a kind of computer genius. And they represent in some ways two different ways of approaching this this type of market investigation, right? So, Alex brings in what he calls small data techniques, which are driven primarily by having conversations with real human beings and trying to understand directly from them what their priorities are, problems, goals, and so on.Whereas Jordan, who is the young data scientist represents the perspective of big data. So, she is expert at applying big data techniques to try to understand customers. And they kind of work through this market investigation together, and they each bring that perspective. And so, part of the story is showing how you can how both of those are useful and critical and how they interact.
Saviano
I love it, Dave. And I've been dying to ask you the question: Was it purposeful as you were writing the story that that the company had invested in somebody like Jordan? So, they had a big data expert on their staff and perhaps that's a personification of the flurry in the business community and the business world for investing in in big data and analytics, but perhaps not spending as much time on the capabilities that you associate with small data and what Alex brought to the table. Was that part of the story purposeful, that Jordan was working for the company and Alex was an outsider?Duncan
It was, yes, because I what I was trying to capture in in the and I don't want to give too much of the plot away. So, but what I was trying to describe is you know, why is it that companies that are full of, you know, brilliant people they have a lotta resources and even very sophisticated, you know, data gathering, data analytics techniques still can sometimes miss the key to cracking, you know, whatever mystery they’re experiencing in the market even with all of those resources and those data analytics techniques. And you know, the answer in in the story is that they were missing or they'd lost sight of what mattered most to their customers and needed to kind of get back to basics in terms of listening to them, and asking the right questions, and getting the right information about them.Saviano
That's so interesting. And I think, Dave the element of any good story is to really care about the characters. And there was one instance, and we'll shift over to the second part in a minute. There was an instance when you were describing a part of the framework that came together in the way that you depicted, is has it looks like a magnifying glass, which is of course so applicable here, in any detective story.And you were describing that with the author's voice in part, too. And in the story, it's something actually Jordan sort of came to that realization. I had this knee-jerk reaction when you describe it, saying, "Well, that was really Jordan's idea." And I was almost defending her.
And so that's when I knew that I cared about the characters and there was a great story that you really were sort of hanging' on the edge of your seat to see where it went. So, it's always it's always fun as a reader when you can when you can absorb yourself into it. And that's when I knew that you had me, was when I had that reaction to that principle.
Duncan
Oh, well, that that that's great to hear. This was my first attempt to write a fictional story. And it's fun to hear how people reacted to the story as a story and, you know, the characters as characters.Saviano
So, let's come out of the story a bit, Dave, and talk about some of the key principles from the book and in the part two, but also, you know, finding ways to sprinkle those ideas throughout the parable itself. There's one framework and aspect that that I really enjoyed and see so much utility from, is what you call "language, method, and mindset." Can you talk about that?Duncan
Sure. So, you know, in the story Alex is explaining what it is you need to learn to be a market detective. And he summarizes it as a language, a method, and a mindset. So and think about this as, you know one of the central I'd say lessons of the book, is: What do you, the reader, need to learn to be able to go have a conversation with another person that is authentic, and honest, and transparent, and, you know, mutually satisfying but that also gives you insight into that person the right types of insight, the right level of detail that enable you to figure out ways that you might help them? And so, you need a language, and a method, and a mindset for doing that. The language is a vocabulary that enables you to describe and know what it is you're looking for about that person. What is it you're trying to learn about that person, right? You know, every craft out there has its own kind of specialized language and vocabulary. If you're a doctor, you know, you think about inpatients and outpatients and all kinds of medical conditions. I'm sure tax experts like yourself have a whole vocabulary around debits, and credits, and cash flows, and balance sheets. And, you know, lawyers have their own vocabulary.But there isn't really a standard language for the craft of understanding customers, right? I mean, there are except in the you know, in the halls of very specialized market research departments, there isn't a common lexicon that focuses you on learning the right things, right? So, you need a language first and foremost. Then you need a method for how you apply that language to get those insights, organize them, interpret you know, go surface that information, organize, it, interpret it, and draw insights out of it, right? And then you need to go into those conversations with the right mindset so that you maximize your chances of learning what it is you want to learn, right? And we can get into any of those in in detail if you like, but that's what that refers to.
Saviano
I find myself thinking about, as I was reading the story, Dave, that of this dichotomy between having a product focus and having a customer focus. And then also thinking about the other frameworks and other innovation frameworks that exist in the world to help organizations and entrepreneurs go from idea to actually getting something in production and serving real customers. And would love to would love to hear your point of view. I'm just so curious about this this difference and distinction between having a product focus and having a customer focus.Duncan
So, the question is what how I contrast the product perspective versus the customer perspective. Well, most companies in fact, all companies when they start out, right when they're small, in order to get any t kind of traction in the marketplace, they have to be they have to have found a way to solve some customer's problem, right? Or what we call their jobs to be done. They have to solve some job that the customer's trying to get done with a solution that some group of customers finds compelling. And then once they do that and they get a kind of beachhead in some market, they want to set them up selves up to scale and sell more and more of that thing to more and more of those customers.And as they grow, it becomes very natural for them to lose sight of the fact that what's really driving their success in the first place is they're solving a customer problem and instead start to think of themselves as being defined by the product they sell, right?
And they even will talk about themselves that way. They'll say, "Well, we're in the car business in the car industry," or "We're in the insurance business in the insurance industry." And, you know, we frame the comp competition that way. You know, "We compete with other car companies or insurance companies."
We think about the size of our market that way, right? The market size is total sales of cars, and we want to get some share in the market for cars. And they even get evaluated that way internally and externally, right? So, analysts externally will look at how you're growing in the car market. They define the industry through these product categories as well.
And that's not a crazy thing to do. I mean, that that obviously makes sense in a lot of ways. But it all is framed in a way that disconnects you from ultimately the engine of why anybody's buying your car in the first place, which is that they have problems they're trying to solve; your car is the solution.
And so, you're in the market for solving those types of customer problems. There are all kinds of pitfalls if you have a product-centered perspective. You know, you can be disrupted. You cannot understand who your real competition is. You can get blindsided by some completely new competitor coming along. All of those things can happen if you're if you're not looking at the world from a customer-centric lens and from a product lens.
Saviano
You made me think of somebody who we've had on the show a few times, Steve Blank and his Lean theory. And, you know, Steve will talk about getting out of the building and go talk to your customers. And he'll look across other frameworks. But there really hasn't been a framework and assistance for all of us innovators to explain the how.So how do you do that? And what are the methods? Back to your language, and methods, and mindset, what are the methods to do that? You introduced, Dave, one of the key tenets of the book and frankly of some of your other work and your approach to innovation through the jobs to be done theory. Explain what you mean by jobs to be done.
Duncan
Yeah, so jobs to be done is an idea that's been around for at least 20 years. I learned about it first from Clayton Christensen, who I worked with for many years and who was a big evangelist of this idea and talked about it a lot, but there were other people involved as well in in the early days of jobs to be done.And it's a very powerful framework, lens, way of thinking. And back to the language, method, mindset construct, jobs to be done is a foundational part of the language that is laid out in the book. And so, the basic idea is that the reason people buy things, right, or they pull some sort of solution into their life, is not because that solution in and of itself is driving them to do that.
But rather, as we go about our days and weeks and years, we have jobs that we need to get done based on, you know, things happening to us or events that that might trigger those jobs. And when they pop up, we look around for the best products, or services, or solutions, or experiences to hire to get those jobs done, right?
So, we use a kind of jobs, jobs as a metaphor. Just like you might hire somebody to babysit your kids or you know, fix a leaky pipe in your home we're taking that as a metaphor for why we pull solutions into our lives, new products and services. And put more simply, I think of a job as either a problem you're trying to solve or a goal that you're trying to achieve. But we use this umbrella term "jobs" as a sharp way to describe those things.