Okay. So, up until this point,

we've been talking about how to identify customer needs

as the basis of developing your product concept or your service idea.

And there are techniques in which you can begin to match up those

customer needs with the capabilities you have of meeting those customer needs.

One such technique is called the House of Quality.

Now, the House of Quality,

the purpose of it is to help you to prioritize

those needs in terms of those things that customers most want,

those that they desire that they're currently not getting from other products,

and something that will give you

a competitive edge as it relates to competition in the marketplace.

So, you're able with this particular tool to

identify trade-offs among the attributes and/or benefits that a

customer's seeking and your ability to satisfy based

upon your capabilities as the seller of a particular product or service.

So, if you use the House of Quality,

it's helping you to guide you through design decisions in terms of

what things you can trade off to maximize your satisfaction with the customer,

and also to maximize the ability to be competitive in the marketplace.

It's most useful when you have too many ideas.

And often, you may start out with multiple ideas and not know which one to focus on.

This particular technique allows you to better understand

which one will have a better chance of being successful in the marketplace.

So, when you're deciding on which benefits

to optimize and include in your particular product or service,

the House of Quality is one technique that will allow you to do that.

And finally, now we're going to talk about

different methods you can use in terms of designing the House of Quality.

It sounds like you're building a house,

and the objective is to maximize

the trade-offs between those things that customers require,

and your technical capabilities in providing solutions to the customer's problems.

So the House of Quality starts out with the question of why.

One, is to avoid misinterpretation of the voice of the customer.

Second, it tells you how.

This is a series of steps used to help describe that we've talked about earlier

in the module that helps describe how you will satisfy those particular needs.

And finally, in the end you're able to link the voice of the customer i.e.

customer needs to the particular design requirements

in developing a solution to the customer needs.

It helps to establish priorities and then helps you to set target values that will

allow you to achieve a better product or

service than currently in the marketplace by your competitors.

So let's look at what the House of Quality may look at.

So, envision a house,

that a house typically has multiple parts as you're building that house.

One, you start with the sides.

The side of the house in this case are

the areas that spell out the customer requirements.

Then you build the next side,

which is the technical requirements.

And you're trying to fit those two together,

which would be the trade-offs that you have to make in terms of how high each sides are,

or how wide the sides are.

Ultimately, you're trying to determine which things that you are able

to do better than competition in meeting those customer needs.

So the reason it's called the House of Quality

is that it looks like a house once you complete it.

These particular houses can be easily built with

templates provided online in any Excel program.

So if you're interested in terms of developing your own house, just go online,

type in the House of Quality Excel templates,

you'll find many copies of free templates available to help you build your house.

But we're going to spend a little time building a house here for

a product or service that we might be interested in developing.

The key components in developing

the House of Quality starts with understanding customer needs.

Now remember in previous modules,

we've talked about a number of techniques they could

use to help identify those customer needs.

These are opportunities in terms of the building a product or

service that will meet those needs that are prioritized by the customer.

So the second important step is establishing the importance of those customer needs.

And you can see by that second siding here in the diagram here.

In order to satisfy those customer needs,

we need to have the ability or capabilities based upon our technical expertise.

So we call these technical characteristics or

technical requirements and that's the top part of the House of Quality.

Now once we have both the need requirements of the customer,

as well as the technical characteristics,

we can do a relationship to determine how well we're

matching or meeting those expectations with respect to the customer needs,

either in terms of current products that they

have or either in terms of the product that we may be building,

and that's that center portion of your house which is where you're doing a correlation

of the relationships between customer needs requirements, and technical characteristics.

Now once we have that in place,

the next step is to compare our product,

our service idea to our competitors.

So that fourth major component is developing the competitive benchmarks.

How do we compare to our competitors in terms of

these customer need requirements that we've identified as being important.

By ranking those particular benchmarks,

we're able to determine what areas we need to improve,

or what the areas we will supersede in terms of our competitors in the marketplace.

That would then allow us to develop target goals as we develop our product.

And finally, the product concept that we develop is the final specification.

So, as you can see there are seven major steps,

including the importance rating of the customer needs that allows you to build a house.

So let's go through each of those steps individually now.

So we set the first step is to identify the customer needs.

In previous modules we've talked about

different ways in which you can uncover the customer needs for a product.

You can do it through surveys,

where you survey market segments,

you can do it through observation to understand how the customer is using your product,

but the objective is to be able to list

the set of needs or benefits that a customer is looking for.

An example we're about to go through now,

we're going to build a restaurant.

The concept for a a buffet type restaurant that's geared towards families.

So, we've done our research and the next step is then

to group these needs into similar categories.

So some may be related to the physical environment,

some may be related to the atmosphere,

some may be related to just the ability to make it more flexible.

But we have to have some idea as to how each of these relate to each other.

After doing the grouping,

the next step is to identify the importance of these attributes.

So we go back to the customer,

and we have them rank order the customer needs based upon how important they are.

So they are prioritizing these needs and giving you an idea as to

those things that should be critical as it relates to developing your product.

So as we see based upon the documents here,

modifiability, as well as ample capacity,

and something that's simple to understand in terms of

getting around in a buffet restaurant are the most important things,

but the least important thing is this idea that it has

to be catered individually to each individual.

Based upon that prioritization,

we have a better idea as to what are the key benefits we should make

sure that's offered in our particular restaurant service.

So it identifies the attributes or the benefits that we should focus

on when we begin to determine what trade-offs that we're going to make.

Now the next step would be after identifying these customer needs,

is to now understand the technical requirements to address those needs.

So, you have to generate the design requirements from a capability standpoint.

It's better to be able to measure these in terms of

your strength to actually deliver on the promise if these things are important.

It both gives you an idea as to how important they are in solving the problem,

but it also defines the direction of the requirement in case you'll need to improve it.

So we've gotten some simple design requirements here that we can look at.

So the ability to modify the lighting to change the atmosphere,

the colors scheme that you decided upon in the restaurant.

The acoustics if you're playing music,

the ability to have extra service point based upon how busy the restaurant gets.

Maybe you need the ability to marginalize

the environment and that would mean stacking the chairs.

And we're talking about a buffet restaurant,

but buffet service is probably an option as well as a la carte service.

And finally, the interior decoration.

So if we begin to match up those design requirements with the customer need requirements,

we can then weight how well we would be

able to satisfy that need in these individual cells,

with nine being the highest or the idea

that the characteristics that you're developing can be weighted in

a way that gives you an objective idea as to

what things you need to improve and how you stack up against your competition.

So any general weighting scheme would help you.

You can use symbols,

strong, weak and medium,

or you can attach numbers to those symbols as I've done here.

In terms of a strong correlation,

nine; medium, three; weak, one.

And that gives you a more of a quantitative approach to what

that particular engineering characteristic is as it relates to the customer needs.

So once we have that in place,

we can then do our correlation and then begin to

benchmark how well we're doing against competition.

So in this particular slide,

we first list the customer perceptions,

performance on each of the attributes as we think how well we're doing.

This is again based upon gathering

customer research and having the customer evaluate your concept,

or evaluate your actual product.

Then you take maybe your strongest competitor and your weakest competitor and

compare your level of performance against those competitors.

Now once we are able to target and evaluate each of those competitive offerings,

we can set a target level.

And based upon that,

identify areas that we need to improve,

differentiate where we can create a competitive advantage.

So, if you look at the information here,

the one area that we supersede competitor one on,

clearly are things related to the design of the product.

But competitor two seems to be equally as strong on

attributes or stronger than attributes on things that we are not strong on.

So that becomes our target point,

things we need to improve.

So, the criteria in which we rated a one at the present level,

we need to at least get up to three to make us competitive.

But in situations where competitor two is already at three,

then our goal is to supersede that and our target level becomes five.

You can weight each of those criteria,

remember we had the technical criteria across the various dimensions,

and the weighting at the bottom shows which ones are most important.

So if we go back here that will allow us to identify

trade-offs between each of those attributes based upon this weighting scheme.

Ultimately, we're trying to motivate the development of

a concept for a product or a service that maximizes our appeal to the customer,

but that also increases our competitiveness in the marketplace.

The House of Quality ultimately allows you to

assess the cost and importance of making those improvements.

If it's more costly to improve it based upon the return that you're going to get,

you might not invest in that particular attribute.

But you can set your targets on those characteristics that

actually achieve some return based upon the improvement that you make in your product.

So in the end, you'll have a house where it's completely built,

and you'll be able to make the trade-offs between

the various engineering or technical characteristics and

the customer needs to figure out what things you need to do better than competition,

what things you're doing better than competition now,

or things that are not important to the customer that

you don't have to invest in as much at this particular time.

Based upon that, the House of Quality will help lead

you to the next step which is developing your product concept.

House of Quality

Customer Insights: New Product Development Orientation

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