The concept of system logics grew out of an awareness that successful companies were often leveraging something far more extensive than the benefits of a single product, and yet far more powerful than a brand promise. Take, for instance, the case of motorcycles. Honda, Yamaha, and Kawasaki all have extremely strong brand names. Honda is, at the time of this writing, the largest motorcycle manufacturer in the world. Yet, when a motorcycle customer purchases a Honda, he or she isn’t necessarily making a statement about an underlying belief system. The case is entirely different where Harley-Davidson is concerned. Harley owners are consciously paying a premium to participate in a particular idea and lifestyle. So are the thousands of Harley T-shirt wearers who’ve never even ridden one. Put simply, a brand is something people buy. A system logic is something people buy into. Strong brands can communicate a robust system logic, but they cannot have an effect on customers’ needs in the absence of any meaningful solutions.

Table 2 outlines how system logics work in concert with other types of solutions, whether they are new features or entirely new product families, to provide coherent and comprehensive solutions. Every product and service these firms offer works to support the system logic they have worked so long and hard to develop.

A Question of Fit
Just as a system logic can determine the nature of offerings, it can also determine whether a particular offering fits at all. Over the past 10 years, McDonald’s has struggled to escape its own system logic. Much of the problem faced by McDonald’s in revamping its menu can be viewed as a disconnect between new offerings and McDonald’s existing system logic. Faced with shifting tastes away from hamburgers, McDonald’s has experimented with everything from tacos to pasta. A notable flop was the McPizza. McPizza didn’t fail because Americans don’t like pizza; it failed because pizza is contrary to the McDonald’s experience. Pizza is something we sit down to eat. Many of us eat it for dinner at home. It takes a while. Maybe we rent a video. Maybe we invite friends over. McDonald’s is about quick in-and-out. It’s about a predictable and reliable experience. More than anything, it’s about kids. But although pizza is appealing to children, it fails to leverage any other element of what makes up McDonald’s system logic. When we’re in the mood for pizza, we’re not in the mood for McDonald’s, and vice versa. The task, then, for McDonald’s is to explore radically new offerings that nonetheless reinforce the McDonald’s experience. McDonald’s recent salad offerings seem to fit the bill.

This is in no way an argument against innovating. Rather, it seems advisable for companies to deeply examine the needs that brought customers to their door in the first place. For instance, Nike’s system logic of high-performance athleticism allows for a wide variety of offerings far beyond footwear. It doesn’t, however, allow for non-athletic gear aimed at supporting couch potatoes. Nike would have a hard time convincing customers to buy into Swoosh emblazoned wing tips. Such a “test of fit” can gauge a system logic’s strength, and help to demonstrate the difference between a system logic and a brand.

Roadmapping Solutions
A detailed understanding of customers’ needs, combined with the creative conceptualization of new solutions, can be progressively rolled out over time. In other words, a long-term product strategy can encompass more than experimental extensions and spin-offs of existing products. Rather, each generation of offerings can be seen as a march toward meeting Context and Common Needs. Products that reinforce the system logic should help to meet a complex but well-understood pattern of needs. While Qualifier Needs, such as immediate product preferences, will undoubtedly evolve and change, the more fundamental needs will remain stable. A rich and detailed understanding of customers and their needs can then produce an evolving action plan composed of:

• Needs to be solved immediately by fixing existing offerings
• Needs to be met in the near-term through modifications of existing offerings
• Needs to be met in the medium-term through creation of new products and services
• Needs to be met over the long term through new offerings, new product categories, and even new ways of doing business

Such a plan outlines not only what solutions will be created, but also what milestones for organizational learning and change need to be achieved to make the solution both credible and viable.

Systemic Innovation
Corporations are beginning to realize the importance of understanding customers’ latent and unspoken needs. In the past two decades, the mantra of listening to the customer produced valuable, if only incremental results. Today, the message is to observe customers working in context to find out what those customers need, not just what they say they need. In doing so, firms hope to discover unarticulated needs that can be served through new products and services. While this approach uncovers immediate problems with immediately feasible solutions, it fails to incorporate deeper findings about longer-range needs that require more systemic innovation. An understanding of customer needs can lead to far more than immediate product improvements; it can help outline completely new business opportunities and strategic directions.

While immediate needs may be problems that are alleviated through new product designs, answering more fundamental needs may be far beyond a company’s current abilities. These needs, however, may point to larger strategic directions for the firm. In doing do, these long-term needs provide the strongest foundation for long-term success. Identifying such Common Needs and then working toward solving them can be a powerful way for firms to stop predicting the future and start creating it.

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