Understanding the customer’s problem is no easy task. Just as with the critical path as a whole, this understanding begins with the customer, not your product or service. Ted Levitt summarized this idea superbly in his classic article “Marketing Myopia.” Levitt pounded home the idea that a customer seldom wants a ¼ inch drill bit. What the customer wants is a ¼ hole. Although the drill bit helps the customer obtain the hole, it is not the only way to solve the problem. Customers could use a nail or a screw to create the hole. Or they could buy a product that is pre-drilled with a ¼ inch hole, which negates the need to drill at all.
Levitt’s favorite example was the railroads. They saw themselves in the train business, not the transportation business. But the problem that the customer faced was getting from point A to point B. Railroads could have viewed cars, trucks, and airplanes as alternative “transportation” opportunities for their customers—and new business opportunities for themselves. Cars and trucks offered a better, more flexible solution to customers who did not want to be tied to railroad schedules or routes. Airplanes offered clear advantages of speed and time savings. By clinging to their train business rather than responding to the customers’ problem that needed solving, passenger railroads declined.
A more contemporary example is how Uber and Lyft upended the taxi business. In most large cities, customers found taxis to be unpredictable, untimely, over-priced, and often dirty, with rude drivers. By connecting customers to willing drivers through a cell phone platform, Lyft and Uber solved the customers’ problem in a way that taxis didn’t. Apply Levitt’s logic here: customers didn’t want taxis, per se—they wanted rides from Point A to Point B. The innovation of Uber and Lyft is to not only solve the immediate transportation problem of going from place to place less expensively than a taxi, but to provide more courteous drivers in more modern, cleaner vehicles who seemed to care about their passengers.
Lyft and Uber simultaneously solved another problem of car ownership that many young customers faced. Their services made it less necessary for these customers to own cars or to rent cars when traveling. These upstart businesses solved multiple problems for their customers.
Like the railroads, taxi companies around the world and their drivers are declining. For example, in New York City, taxis have gone from 100% market dominance to 65% in 2016 and 40% in 2018. This dropped the value of the required taxi medallion from $1.3 million in 2014, to $250,000 in 2016, to about $175,000 in 2018.
Newspapers and magazines fell into a related trap. They thought they were in the “journalism” business when, for many of their customers, they were actually in the diversion business. They gave people something to do while eating breakfast, riding the subway, or sitting in a doctor’s waiting room. Once people could get their diversion via millions of websites and social media, they had less use for newspapers and magazines which sent subscriptions tumbling. (Newspapers also failed to appreciate that they were also in the advertising business which Craigs List, Facebook, and Google took away from them.)
Going back to Roberto Goizueta, Coke avoided the railroad, taxi, and newspaper demise because Goizueta understood the problem that the customer was trying to solve: quenching their thirst exactly when they were thirsty with the liquid they wanted to drink.
Critical Path Action Items
What is the problem your customers are trying to solve?
Can you re-frame your business to address your customer’s problem more accurately?