443: Product wisdom from an innovation veteran – with Ken Gray

Why product managers need to understand customers’ needs

We have had a lot of valuable guests on this podcast, and one of my favorites is Ken Gray. When we talked a few years ago for episode 046, he was the Global Director of Innovation for Caterpillar. Since leaving CAT, he has worked on 3D printing, advanced manufacturing, robotics, and more. He has also been a long-time supporter of the University of Iowa Institute for Vision Research, which is creating cures and solutions everyone can afford for vision diseases.

Ken will be sharing lessons learned from years of product innovation wisdom. 

Summary of some concepts discussed for product managers [6:43] How do we discover what customers want and need?

Innovation is people, culture, vision, and execution. Understanding what customers need is about having the right people on your team and building deep relationships with customers. You need people who spend a tremendous amount of time with customers to learn what they need. Customers generally don’t like to be on the bleeding edge of technology. They don’t want technology for technology’s sake or innovation for innovation’s sake. They have specific needs to improve their business. The most important product marketing work a company can do is understanding what customers need to improve their business performance and translating those needs into functional specifications, which define what a product needs to do to serve the customer’s needs. Functional requirements are the definition of what the product is, and technical requirements are the definition of how to engineer the product to deliver those functional requirements.

[9:10] What tools do you use to understand and meet customers’ needs?

Never write a product requirement document that isn’t prioritized. Never give engineering a flat list. Give them a prioritized list—at least high, medium, and nice-to-have. Otherwise you’re going to get the cool stuff first, which doesn’t necessarily align with what customers need.

There are things customers need that they don’t tell you they need. You need to understand why customers behave the way they do beyond their spoken word. Whatever appeals to them psychologically needs to be satisfied as well. Those buying decisions are harder to uncover than purely technical ones. To uncover them, you have to get to know your customers really well.

Maslow’s Hammer is the idea that if all you have is a hammer, every problem looks like a nail. This is unconscious bias. We tend to think if we have a technology that’s really cool or better than other technologies, people are going to come. It’s not that easy. You have to spend time understanding what drives success to the business and create an optimal product that helps your customers. You have to learn what customers need and explain your product to them. It isn’t about features and benefits. It’s about how your product improves your customer’s business—why they want it. If you can’t explain that to your customer on one sheet of paper, you’ve lost.

[15:10] What are some other lessons you’ve learned related to product innovation?

I would rather have an empty seat on my team than the wrong person in that seat. Don’t settle.

Nurture the dissenting voice. Have people on your team who will tell you when you’re wrong and ask hard questions.

[19:23] What tips do you have for working with team members?

We had town hall meetings with employees. I would sit on stage and have people fire questions. I always learned more about what was going on with my customers, my product, and my team culture in those settings than in any other place.

We always started these meetings with talking about safety. Everyone you work with—your team, customers, suppliers, and visitors—ought to have an expectation of getting to your facility safely, being there safely, and getting home safely. Then we got into how we were performing as a business. We showed profit and loss statements and took everyone through the numbers. We discussed the quality of the product and how it was performing. We talked about feedback we were getting and how customers were responding.

We did these town halls on a routine basis so people got comfortable asking hard questions. My philosophy is I will always answer questions as long as they don’t violate insider trading rules or something like that.

[26:51] How have you dealt with team members’ being afraid of you?

I met with anyone who wanted to meet one-on-one. I started scheduling one-on-ones with people I didn’t know very well. I have lunch every day anyway, so I invited people to have lunch with me.

When I was in Japan, in the factory there was a breakfast area where many of the leaders would meet before work to have breakfast. Everyone was invited. I started going to breakfast with the leaders, and they would discuss the topics that were on their minds at breakfast and not hide anything. They looked for our input and feedback.

You eat breakfast and lunch anyway. Take advantage of the time that’s already there and make yourself available.

We also did standup meetings. We had staff meetings where no one would sit because we wanted to get in, decide what we need to do, and get out.

[26:45] Tell us about setting vision.

Mark Randall, creator of Adobe Kickbox, told me, “You can’t create the energy of the storm, but you can help it coalesce. You want innovation in your company to coalesce. You’ve hired good people. They’re hungry to make a difference. It’s a storm. There’s tremendous energy in the storm. You want to set up lightning rods around which that storm will coalesce.” What he meant was, you have to have an overall vision that is around these lightning rods. When I was director of the excavation division at Caterpillar, I wanted my team to coalesce around ideas that would improve the performance, reliability, durability, owning and operating costs, emissions, and safety of the machines. If someone on my team had an idea—I don’t care how harebrained it is—and it impacted one of those areas, I had their back. One harebrained idea was putting the radiator and oil cooler alert on a hinge to swing out so we could clean it easily. It’s on just about every machine today. Putting GPS on every machine was insane in 1998. Now it’s standard.

[30:45] Tell us about portfolio management.

I want about 90% of innovations to take place in my core business. About 8% should be around projects in an adjacent space. About 2% should be in transformational, radical innovation.

Action Guide: Put the information Ken shared into action now. Click here to download the Action Guide. Useful links:

• Connect with Ken on LinkedIn
• Learn more about the University of Iowa Institute for Vision Research
• Listen to episode 046 with Ken Gray

Innovation Quote

“Anything that won’t sell, I don’t want to invent. Its sale is proof of utility, and utility is success.” – Thomas Edison

Thanks!

Thank you for taking the journey to product mastery and learning with me from the successes and failures of product innovators, managers, and developers. If you enjoyed the discussion, help out a fellow product manager by sharing it using the social media buttons you see below.