Category Archives: Customer-centric innovation

The Problem with Open Innovation

A recent article by Randall Wright in MIT Technology Review discussed the problems with open innovation. There has been lots of articles recently about how open innovation is the next big thing in innovation. In a nutshell, it involves open up your innovation to a large group of people in order to find new ideas.  It’s popular, and has been adopted by lots of well known organizations, such as Starbucks, Coke, and Nike.  Coke purportedly used this methodology, and came up with ideas that were very successful.  However, most of the ideas were based on consumer marketing.  In other words, they got the people that drink Coke (a large percentage of the population is at least familiar with what it is), and had them design a campaign to more effectively sell the product.  The results rivaled the quality and appeal of ads produced by top advertising agencies.  But did they innovate?  No, they “reverse surveyed.”  Instead of surveying consumers with a set of questions, taste tests, etc., to determine the best way to market, they just asked a whole bunch of people to give them the best way to market.  This is similar to asking every customer who leaves a restaurant, “How could we improve our appeal/food/restaurant?” except you do it all at once.

I think this method works well for consumer-oriented organizations.  It can help you select the best new paint colors, catch phrases, and product packaging.  It works in areas where the problems are well known and understandable, i.e., what is your favorite color.  However, when you talk about ground-breaking innovation, you’re referring to areas where the average person has no experience.  Consider Linux, the darling of open innovation, is still outpaced by the commercial products.

According to Wright, “real innovation is always the outcome of ongoing discourse among a small group of innovators who truly understand the importance of what they’re working on.”  Read his article for more insight.


A Fictional Example of Innovation

Tara had just finished visiting with her largest customer, a network of 13 hospitals in her county. She had met with many people that day, but one meeting in particular had stood out. She had met with Dr. George Freeman, chief of surgery, who explained the problem they were having with their aging set of surgical instruments.   Dr. Freeman explained that they have the budget and are prepared to buy new sets, but they have one major reservation with the ones that Tara’s company makes.  They are uncomfortable for left-handed surgeons, and George happens to be left-handed.  He goes on to explain that without something different, the sale will go to Tara’s competitor.

Tara knows that this is a major problem.  This hospital system is a major customer and purchases millions of dollars of products from her company.  Letting her competitor get an advantage like this could be devastating.  Tara takes her problem to her supervisor.
Tara works in the marketing department and presents her issue to the group.  She explains Dr. Freeman’s problem, and how they’ll lose the sale without a change.  Tara champions a suggestion made by Dr. Freeman, which simply involved moving the finger clasp about 20 degrees off center.  Tara is familiar with her company’s manufacturing capabilities and realizes that although this is a significant change, they can (and have) made this accommodation in the past.  After they talk with a few others in marketing, they realize that this is their only chance to make the sale, and take their issue to the engineering department.

A few days later, a meeting is scheduled with engineering, and they make their presentation.  The engineering group has assembled their senior engineers, and they’re joined by the company’s controller and manufacturing VP.  Tara prepared slides outlining the issue, and she documents how sales will likely increase substantially as a result.  No one else has instruments with this capability.  Engineering spends a few days and designs a new set of instruments, noting that the clasp should only be moved 19 degrees off center.   Preliminary mock-ups prove the point, and the change to manufacturing is estimated at $850k (a fraction of what the potential sales will be).  Finance approves the money and the project is started.

Tara’s company is responsive, voice-of-the-customer oriented, and innovative.  They addressed the need of a major customer, secured new sales revenue, and improved their product.  But did they really do the best that they could?

Tara’s company has repeated the missteps of many organizations.  They answered the question for an important sale, but they really didn’t innovate.  Find out how using MindMatters’ processes and the Innovator™ software system can make supercharge your organization.  Click here to request a copy.

Customer Innovation

I read yet another research report that espouses the need to work closely with your customers to develop products and get them to market faster. This customer innovation strategy–working closely with customers–implies that you’re capable of ensuring those products have a competitive advantage in the marketplace.

There are many elements to making this strategy work, such as having a clear innovation strategy, technical alignment, and competitive advantage, however, I’ll just focus on one element: innovation strategy, in particular, the management of very early innovation.

This type of innovation is high risk, high reward, and often has a great deal of uncertainty. Innovation, by most conventional definitions, is the combination of technology with market opportunity. As a client recently explained, “it wasn’t the light bulb that was the innovation, it was using it to illuminate streets thereby reducing crime and improving society.” So how do you find the next street light? If you think of it as a combination of market need and technology, then you need to start collecting both of these elements.

It requires a concerted effort to seek out new and ground-breaking technologies in academia, through research, or just “digging through your R&D attic.” These technologies should be captured, periodically reviewed and categorized. The second element, market needs, can be captured in the same ways, by listening to the interactions of customer-facing employees, attending conferences, and talking directly with customers. As you catalog technologies and market needs, you’ll begin to build a picture of your strategic customer innovation landscape, and it will be easier to see what’s missing, find your strengths, and focus on your future.

With both of the elements of innovation present: technology and market need, you can begin to combine this information in unique ways to build new product/service possibilities.

7 Rules for Improving Innovation: #7 Customer Input

Improving Innovation: Customer Input.

To fuel the innovation engine, companies need to pay extremely close attention to their customers and form strategies based around everything they can possibly learn.

To accomplish this, most organizations spend a chunk on R&D, market research, focus groups and feedback programs, simply to gather insight and suggestions for “potential” innovations.

To survive and remain competitive, regardless of your industry, your company needs to be the first to market with new offerings. That means understanding what your customers are like. Naturally, customers’ needs and wants are ever-changing, but you need to do everything possible and know as much as you can about your users. Earmark the time, money, and people to find out how customers interact with every aspect of your product, service, company, delivery, support, and so on.

And ask their opinions. It sounds rudimentary, but so many companies fail to do it, and make the information they find out actionable. This devotion to the “voice of the customer” could set you apart and become the gamechanger for your business.


Customer-Centric Innovation: Challenge Yourself!

There’s no lack of opportunitiesfor businesses to “create” – creating new products or service offerings,creating new marketsto pursue, creating new advertising,and so on. But “creation” doesn’t always mean you’re innovating. The difference between creating and true business innovation is that the latterinvolves taking a serious, hard look at the needs of your customers and doing only that which you know will change the game for them and for your business.

For this reason, you only wantthe innovations that aregoing tobe meaningful to your customers andprofitable to you -two things that are not typically mutually exclusive.Creative endeavors are a crucial piece of this model,butif it doesn’t make a measurable impact on some aspect of your business and drive you to get more customers, then why do it?

Customer-centric innovation begins withexamining every point at which you interact with customers (current, repeat,and prospective) and asking yourself this set of questions:What are the barriers that stand in the way of how this person or businessbecomes our customer,obtains our product, etc.? What can I do to eliminate that barrier and make it easier for them? How can I do this in such a way as to remain true to my business’ core values, and stayfocused on our critical essentials? How can I do this with thefewestcomplications (a.k.a.keep it simple)? How can Ido itbetter thanany of my competitors? When you can answer all of these questions, you’re firing on all 8 innovation cylinders.

These things goMUCHdeeper than “let’s create ournext big product because our customer is asking for it.”Take the time to look at things like: pricing, delivery methods, your suppliers, materials costs, systems in use, inventorization, materials, your investors, your accounting,your sales methods, your marketing team,and everything else you can possibly think of. If it seems like too muchwork, just remember:this iswhat your competitors are already doing. You’ll quicklyfind ways to improve quality in all of theseareas, and these improvementswill aggregate to impact how your customer becomes yourcustomer, and how you keep them as your customer.

Assign people in all of these areasto create “challenges” for their teams on how to improve something in their department. These can be as simple as “How can we improve ourpurchasing practices?”, “Has anyone seen a better system that we can use for billing?” or “How can we save money on shipping?”, “How can we fill orders faster”,and so on.

Allow their teams to answer the challenges with ideas and suggestions. Take time to encourage these folks to vote and comment onideas received. Make sure to follow throughimplementing the best ones, andreward folks for sharingthem. After all, the best solutions and improvements will invariably come from thepeople who deal with the issues you’re trying to solve on a daily basis.

The key is asking the right group with the right expertise to answer your challenge. The possibilities for “challenges” are limitless, just likethe areas for improvement ina company.

Some of the innovations that you find and implement using challenges may impact your customers or improve their experience in ways they will never even know about,and that’s just fine! Let them just be thrilled to be your customer andwonder how you do what you do so well!

Flagpole is an inexpensive, easy-to-deploy application built around the above-described challenge model. You can use it to query your employees, partners, even customers out in the marketplace to find focused, impactful ideas and innovations to implement.