The process of product selection that people do in their personal lives (e.g. shopping on Amazon) is strikingly similar to the process of product development that people encounter in their professional lives. Interestingly, people are often better at making the complex decisions associated with product selection than they are at similar decisions in product development.
There are three things we can learn professionally from our product selection experience on Amazon:
- Make the priority of your product attribute needs clear.
- Simultaneously and continuously trade-off attributes to optimize the products value.
- Information about the product only matters if it is urgent, relevant and/or unique, not just “new.”
Eric Arno Hiller, President, Hiller Associates
We just finished the biggest shopping season of the year from Thanksgiving to Christmas. A lot of people were making a lot of decisions about where to spend their hard-earned money -- mostly for the benefit of others with gifts.
During that same period, design engineers around the world were rushing to finish up pressing projects -- and, probably as fast as possible, because they had a lot of vacation left to use, before the end of the year.
We make decisions every day in our personal and professional lives. But, do we make decisions the same way in both worlds? I don’t believe so. People might argue that decisions made at work involve much more complexity. After all, how much product development is really going on in most homes? However, a lot of product selection is going on in people’s personal lives. When considering complex product purchases, product selection starts to resemble product development in many ways. Let’s take a look at how people (including design engineers) make decisions when shopping (product selection) vs. how they make decisions in the corporate world (product development).
Consider the ubiquitous Amazon.com. Customers’ product selection experience on Amazon is overwhelmingly positive: Amazon scores 89 out of 100 in customer satisfaction, the top online retailer score in 2012. But product selection is ‘easy’ right? Wrong. Look at Figure 1. Product Selectors on Amazon must consider multiple product attributes and, moreover, these attributes mirror the considerations of a product developer very closely. Product Selectors must consider performance, cost, delivery time, quality, capital investment, etc., without any salesman or other expert to guide them. But the really amazing thing is that the Product Selectors using Amazon are able to both prioritize these product attributes and consider them simultaneously.
So, how do the same people who are Amazon customers typically consider product attributes in the corporate world? Very differently is the short answer, as we see in Figure 2. First of all, people at work do not tend to trade-off product attributes simultaneously, but in series. Moreover, often each functional group in a product company (marketing, engineering, manufacturing, etc.) tends to be concerned with one dominating attribute, almost to the exclusion of other product attributes. How does the typical series-based consideration of product attributes that is common in the corporate world compare to the simultaneous trade-off approach that the customers of Amazon use? Exact numbers are difficult to find, but some sources say only 60% of products are successful. While not a precise comparison, the difference seems meaningful: Amazon scores 89 of 100 on the customer satisfaction index, whereas product companies have 60% successful products.
Why is this? Don’t people get college degrees to be great product engineers, buyers, etc.? Don’t they get paid well to do these jobs? In contrast, most people have limited knowledge of the products they select on Amazon and spend hundreds or thousands of their own dollars to buy them.
There are at least three reasons why the product selection and product development processes differ, and the corporation can learn from all three.
Clear attribute prioritization
Which product attribute is more important: time-to-market, product cost, or performance? There’s no right or wrong answer, in general, but there is a right answer for any given situation. The question is: Does the product developer KNOW the priorities of different attributes. As an individual shopper, you may not explicitly write down the prioritization, but you know it. Your preferences and value system are welded into your DNA, so it is clear. However, companies are not individuals, but collectives of them. It is the responsibility of the product line executive to make these priorities clear to everyone.