What to learn from customers

Is El Bulli closing permanently after 2011, or reopening after two years as an institute, or has Chef Ferran Adrià even planned that far in advance? Stories are all over the place, including speculation over how such a coveted reservation (estimates range from 300,000 to 2 million for how many people apply for one of the 8,000 annual seats) could lead to a restaurant losing half a million euros a year (a fact reported in a handful of articles).

In this synposis of an HBS case on El Bulli, Adrià offers a hint as to his restaurant's financial situation when he says, "I should charge 600 euros [for a meal at elBulli] but I do not cook for millionaires. I cook for sensitive people."

The article ends with HBS professor Michael Norton noting, "Adrià says he doesn't listen to customers, yet his customers are some of the most satisfied in the world. That's an interesting riddle to consider."

That's not actually puzzling. At Amazon.com, Jeff Bezos used to say that you can't build a product just by listening to customers. They're good at telling you what they don't like, but not so good at telling you what they want. As an entrepreneur you have to innovate on their behalf. We knew at Amazon that perhaps the most significant barrier to buying online was shipping charges. Customers would tell you again and again that they hated to pay shipping fees, even when they were offset by not having to pay sales tax. But they couldn't tell us what solution we could offer since shipping is not free.

That's where Amazon innovated on behalf of the consumer, first in the form of Super Saver Shipping, then in the form of Amazon Prime. We traded in some of the gross margin efficiencies of the business model to subsidize shipping and offset it with revenue volume from the increased orders that resulted from removing the massive psychological hurdle of shipping costs.

The case also highlights the distinction between understanding and listening to customers. "Adrià's idea is that if you listen to customers, what they tell you they want will be based on something they already know," Norton observes. "If I like a good steak, you can serve that to me, and I'll enjoy it. But it will never be a once-in-a-lifetime experience. To create those experiences, you almost can't listen to the customer."