Is your R&D Customer-Driven?

In 2004, Therese Tucker, founder and CEO of BlackLine, then a provider of wealth management software, had an unexpected visit from a customer. An accountant at First National Bank of Nebraska expressed frustration over the bank’s manual processes to reconcile the books. Tucker, a software programmer at heart, took notice. The next year she reimagined BlackLine, coding its first product to automate the financial close.

In the years since, Tucker has institutionalized customer listening as a core tenet of publicly traded BlackLine’s software development. “Several new product enhancements actually began with a customer’s completely original use of an existing product,” Tucker says.

An example is a digital cable TV company that was using BlackLine’s account reconciliation tool to detect fraud, matching up different accounts to see where the balances might be out of whack. This was not the product’s intended use. “Learning how they did this, we extrapolated the process to a larger platform and then packaged it for a wider user base,” Tucker says.

“Several new product enhancements began with a customer’s original use of an existing product.”

Other B2B companies also are finding that their customers are a form of free R&D. By nurturing close relationships with these businesses in a user group, the companies acquire instant knowledge of a new product’s plusses and drawbacks, enabling a rapid redesign of the item to achieve the deepest market penetration.

“There is much more of a symbiotic relationship nowadays between companies and the businesses that buy from them,” says Robert Ployhart, Ph.D., professor of business administration at the University of South Carolina’s Darla Moore School of Business.

The fruits of this collaboration are enticing. “Customers are completely honest and frank in their product assessments, making their feedback potentially more valuable than comments provided from inside the company, where product developers may become overly attached to their creations,” says Ployhart.

BlackLine’s Tucker relies on her customers’ candor. “The honesty of the people you trust to tell you the truth about their product experience often sparks an interactive cycle of creativity,” she explains.

In return, these customers get products that closely approximate their needs and expectations. As Prof. Ployhart says, “Who wouldn’t want a supplier that’s responsive to your preferences?”

Russ Banham :Russ Banham (russ@russbanham.com) is a contributing writer to Chief Executive