In High-Tech, the Customer Often Comes Last in Planning

In high-technology, the product development process is often inverted. Instead of starting with a customer need, it begins with a technological breakthrough or a clever idea from an engineer in the lab.

The typical (and flawed) process is:

1. An engineer invents a new device.
2. The company gets enthusiastic about the technology.
3. Marketing is then tasked with finding customers who need the device.

The Paradox of Technology-First Innovation:

While this approach is not customer-oriented and would offend most business school graduates, it is responsible for some of the most significant breakthroughs in high-tech history (e.g., the EPROM, the microprocessor).

• Customers Don't Know What They Want: For truly new-to-the-world technologies, customers often cannot articulate a need for them because they don't yet understand the possibilities.
• Marketing's Poor Track Record: Marketing departments have a notoriously poor record of predicting the potential of radical new technologies, often underestimating their market size.

The Shift to Market-Driven Planning:

This technology-first approach works best for radical breakthroughs. As a technology matures, the planning process must shift to become more market-driven.

• Mature Markets: In a mature market, customers have lived with the product and have developed a clear list of needs and requirements for the next generation.
• Extensions and Refinements: For product extensions and refinements, the quality of marketing input becomes much higher and more critical.

The challenge for a high-tech company is to know when to be technology-driven and when to be market-driven.