“You've got to start with the customer experience and work backwards to the technology. You can't start with the technology and try to figure out where you're going to sell it.”
Steve Jobs
Two days after I had joined EDS (the inventor and leader of IT Outsourcing) as a sales manager I asked my boss for the price list so I could start selling.
There was none.
When I asked what I then was expected to sell the answer was “Go ask the customer what their problems are and sell them the solution”.
I was in my early 30s and up until then had sold HW and SW from price lists. Without a price list, I was lost.
How would you approach a customer without a product with its defined set of features, functions, and benefits?
I figured that calling on CFOs asking for their problems wouldn’t get me past their assistants. I had to come up with a message I knew they would be receptive to. I had to understand their problem BEFORE reaching out to them.
In these days the internet was in its infancy and companies had yet to call out their strategic initiatives right on their websites. So I started to find the problems they needed to solve by wandering inside EDS and its customer base. At this time EDS reported revenues of $14B and a backlog of $64B so there were plenty of existing customers I could learn from.
In talking to peers and account managers, reading EDS’ competition analysis and industry strategy papers I came across one topic users of SAP R/2 on IBM’s 43xx mainframes under DOS/VSE were struggling with: IBM didn’t guarantee for DOS/VSE's capability to manage date fields beyond the end of 1999 (the infamous Y2K issue).
As a consequence, all these users were forced to either migrate to IBM MVS (which appeared to be much more demanding than just a release switch and without adding any business value) or replace their R/2 with R/3 (which appeared to be an extensive process re-engineering rather than just a migration).
Here was the compelling event I was looking for: These customers had to do something that would cost them a fortune and carry significant risks.
Working backwards from this customer problem I developed an offering tailored for this specific customer segment where EDS took over management and operations of the customer’s SAP R/2 systems in EDS data centers and invested the resulting cost savings into an R/3 implementation (rather than passing them on to the customer). As a result, customers got their R/3 migration within their existing IT budget in a fixed price outsourcing contract and didn't have to fund an R/3 migration on top of running their R/2 implementation.
The message resonated well and got me in front of CFOs of SMBs in the German Manufacturing market. Before I then crushed into their CIOs (then called IT Managers) who had no intent of surrendering their IT organization to EDS (but that’s a different story).
20 years later when I joined Amazon I learned the term for what I had done as “Working Backwards”: The process of starting with a hard problem customers need to solve and working backwards towards the solution rather than starting with a product and working forward towards the problem it can solve.
I have applied the Working Backwards approach consistently since my days at EDS because it is a universal one. Regardless of whether you have a product or not: always start with the customer and work backwards. The solutions you will develop will not be found the other way around.
Working Backwards will deliver the non-traditional value propositions that set you apart from the competition.
For additional detail please go here for the full Anecdotal Evidence.
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