The Potential Product

Everything-products or services-can be enhanced to perform better than it does today. Rather than thinking about what the service currently looks like, envision what it can be in the future. The secret is to approach it from the user’s viewpoint–by thinking like a customer.

Harvard professor Ted Levitt defined this development process 40 years ago in his article “Differentiation-of Anything” (The Marketing Imagination). He described four categories of a product:
• Generic-the “table stake” to get into the game
• Expected-the customer’s minimal expectation for the product
• Augmented-voluntary or unprompted improvements
• Potential-what is possible; what remains to be done

“Augmentations are a means of product differentiation” Levitt wrote. These changes, of course, change a customer’s expectations and increase brand loyalty. Countless examples exist, such as installing wheels on luggage after the technology used for scooter and skateboard wheels improved to the point at which the materials were substantive enough to endure in this other applications.

The applications were always “there” so to speak. They were simply waiting to be developed. Many times we will say, “Why didn’t someone think of this sooner?” This is because the solutions seem straightforward (after they are invented) and we know they are correct. Steve Jobs had this experience when he first saw the Alto computer, created in 1979 by Alan Kay. “I remember within ten minutes of seeing the graphical user interface stuff, just knowing that every computer would work this way someday.” Jobs said. “It was so obvious when you saw it.” (quoted in The Pixar Touch).

The real genius of Levitt, however, was his recognition that there is always a potential product. Forward thinking companies operate under the belief that there is always more to potentially offer to customers. The successful examples are the ones in which the innovations rely on simple, focused solutions to real problems. Those companies can be described as ambitious because they are always asking, as Levitt writes, “What’s new?” This helps “to define the potential product with which to compete more effectively under the (changing) conditions.”

Products and services are developed to take care of customers and high-performing organizations are founded on a culture and a discipline which continuously searches for better ways to deliver that service. They have created a system in which their people are working on the same priorities because they are looking at those priorities from the customer’s viewpoint.

The essence of this differentiation is not in individual tweaks to a product, but in a philosophy of how the entire creative system is managed to benefit the customer. Consider all of the items that were, until recent years, thought of as commodities: coffee, toothbrushes, chicken, beer, small kitchen utensils, and thousands of more examples. How much was differentiation worth in terms of sales and profits compared with selling a product or service caught in the “commodity trap”? Obviously, the advantages that were realized were worth a lot. And those sales came because of a win-win relationship with customers.

Differentiation is possible everywhere if it is designed by looking through the lens of the customer. Garr Reynolds, author of Presentation Zen, recently quoted Marty Neumeier, “Everyone designs who devises courses of action that change existing situations into preferred ones.” Companies that are taking those actions are never satisfied with the status quo. They are enabling the process of designing the ‘preferred situation’ of the future around their customers’ needs. How many more examples can you identify in which companies moved closer to that potential product or service by thinking like a customer?