I do love that quote and I find that it's true that customers don't know what they want. But what that quote tells us is that the customer's problem is speed. That is the value of talking to customers, not asking them what they want, but learning what their problem really is.
Sometimes customers don't know what they want. Many times they do. It's rather arrogant to believe otherwise. Most of us aren't creating cars. Some of us think we are and we spit out Segways (should've heard all the dummies that wanted faster legs!). But most tech startups are providing incremental, not disruptive, improvements. And flat out ignoring feedback from people that are going to buy your product and doing so because "they don't know what they really want" is an odd approach to me.
What really kills me about all this is your customer almost certainly understand the competitive landscape, problem space, and industry better than you do. Maybe every other entry failed because they tried to read between the lines rather than delivering what people want.
That's not to say your product should be built as an amalgamation of every feature request thrown your way. Balance is key. But thinking you know better than your customer might not be a great strategy.
Exactly - customers and users think in terms of features that they want. Our job is to look through the features and pull out requirements, then prioritise those requirements and work with a great team (or alone) to turn them back into the features that bring the most value.
So feature: I want a faster horse
Requirement: Get places faster, and without stopping for rest periods
I totally disagree with this. What the quote means to me, is that the customer's imagination (for lack of a better world) is so limited, that their problems are sandbox by the context of their understanding.
Something that doesn't shit all over their yard might actually be more important than speed, but they wouldn't even begin to think of asking that because it's not a possibility in their world.
What do you want in the next Blackberry? "real touch" and "real browser" were pretty far outside the box when the iPod touch launched..people weren't asking for it because they didn't know they wanted it (or that it was possible).
I think jonpaul is exactly right with his response to the famous Ford quote. Perhaps the customer's imagination is limited, but they know the pain points well. If you're listening carefully, you could figure out the solution. Unfortunately, too many companies use this quote as an excuse to think they're smarter than the customer and develop in a vacuum.
RIM did this. I was a Blackberry to iPhone convert, and I bet a company that was willing to listen to me could eventually figure it out. I would have asked for a browser that actually worked, a larger screen, and thin enough to fit in my pocket (rather than the ridiculous belt clip I had to wear). I had no idea we were capable of the iPhone when it came out, but sounds like my checklist doesn't it?