- Royal Philips Electronics

Applying market-driven principles to a world-class service organization.

CLIENT CHALLENGES

Serviceability requirements not based on customer input
Customer experience group did not have data to support investment in service tools

CLIENT RESULTS

Requirements prioritized for better resource allocation

PDC SOLUTION

Market-Driven Product Definition (MDPD) applied to a service organization

Selling a large piece of medical equipment such as an MRI, ultrasound, or X-ray machine is just the beginning of a customer relationship. As with a happy marriage, maintaining the relationship after the sale requires diligent attention. In marriages, this is called “working at communication and respect.” In business, it’s called “field service.”

Bringing a customer-driven approach to field service

In 2011, the customer experience group in Philips’ MRI division realized that the decisions it was making about serviceability—that is, how equipment would function after purchase, during maintenance and repair—were based not on customer input but rather on conjecture by a few individuals about what factors were important for customers. This was a significant realization, given that this group is the one responsible for the happy marriage that follows the sale. How can you keep a partner happy if you don’t understand what he or she really needs?

The leader of the customer experience group, Eric Jean, had used PDC’s MDPD (Market-Driven Product Definition) process for previous projects and saw the potential for gathering the same kind of data regarding service needs.

This data gathering represented a big change. Until that point, Jean says, “reliability and services were R&D driven… based on what we thought we could do based on what was coming down the pipeline anyway. That’s how we used to write requirements for serviceability.”

Prioritizing what we knew

To remedy this, Jean’s group decided to dig deeply by conducting in-person interviews with two distinct groups: The field service engineers (FSEs) who service MRI products and the end customers for the MRI equipment (radiologists).

Talking to radiologists about their needs related to serviceability proved somewhat challenging. Radiologists were quite accustomed to sharing their expectations about equipment features, capabilities, and quality. They were less sure of what they expected about reliability, other than to say, “It has to work.” However, by using the open-ended questioning techniques of the interviewing phase of the MDPD process, the team was able to get a picture of what bothered radiologists about service. Subsequent steps in the MDPD process turned this raw data on needs and challenges into prioritized requirements.

“At the end of the day what we found was not surprising,” Jean says, “Very little in what we heard were things we didn’t know about.” But the MDPD process helped with the critical task of prioritizing requirements. “We knew 100 things were important but we couldn’t tell you which was #1.”

Such lack of prioritization can be a big factor in misallocation of resources. If you don’t know what’s most important to customers, you don’t know how to optimize your R&D investment. With data in hand, Jean’s group could more easily make a case to the R&D group to invest in particular service requirements. Decision making would be grounded in actual customer needs.

Solid data for decisions

Having this solid data for decision making was crucial. Since the team charged with defining clinical (product) capabilities for MRI machines was bigger than the team responsible for serviceability requirements, the product team tended to get more attention and resources. Further, the definition process was led by R&D people, who tended simply to create a product roadmap by looking at what was already in the pipeline for development—a practice that often didn’t mesh with the goals of a customer-oriented group. And it meant that R&D investment favored clinical product improvements. As Jean puts it, “There was no way we [marketing] could win an argument about where to spend R&D dollars.”

By shifting responsibility for product definition from R&D to a cross-functional team led by marketing and following the rigorous steps of the MDPD process to gather input from hundreds of customers, the serviceability group now had extremely thorough and high quality data to put forth in discussions. This also allowed an additional focus on service, rather than on the product.

Understanding competitors

The process also helped Philips by forcing it to look more closely at competitors. “A disease of big companies is that they end up being too internally oriented,” Jean says. “They think nothing can happen to them and they don’t have to worry about competitors.” The output of the MDPD process provided Philips with a clear view of the competitive landscape. Not only could the group identify the #1 customer requirement for serviceability, it could evaluate that requirement in relationship to Philips’ major competitors.

A diverse team made the difference

Jean recognized that a key to making the MDPD process work smoothly was to expand the team beyond just the customer experience group. He “hired” people to join the team: staff from marketing, R&D, and even the CFO. “I wanted all of them to go out and talk to real customers.” It was surprisingly easy to solicit participation, despite the big investment of time required. Jean explained up front that being involved would mean an investment of many hours over several months, including almost a week of workshops. In fact, the team for the solution creation phase was even bigger than the initial team as word spread and other people requested to join.

“We end up smarter”

Philips completed the first serviceability requirements project, which focused on its premium market segment, at the end of 2011. Based on its success in that segment, Jean’s group is now working on applying MDPD to serviceability requirements for its value segment, which is targeted to emerging markets.

Other divisions also are adopting the MDPD approach.

One of the biggest benefits of MDPD is the way PDC introduces the process to companies. Jean (who previously worked as a consultant) describes his experience when companies hiring outside experts: “You gave a question to the consultant, they went out and did analysis, did the surveys, and came back with a binder containing all the answers.” Essentially, the company pays for the consultant to become smarter about whatever the question is. In contrast, Jean says, “PDC provides us the structure, but we have to do the work. We have to interview the customers. So we end up smarter.”