Customers in Innovation – Sound and Fury Signifying…

The watch words for innovation at present are “open innovation” and “customer-centricity”. The idea that the customer should not only be invited into the innovation process, they should be at its very heart, is of paramount significance. The oft-quoted Henry Ford, “If I’d asked my customers what they wanted, they’d have said a faster horse,” for years held sway over product development. The thinking was that customers don’t know what they want until we tell them and sell them. That may have worked in the era of Mad Men, but customers’ access to data and ability to wield it to their own purposes means that that they can be excluded from product and service innovation at a producer’s peril.

We don’t know what we don’t know
If you’re not serving the customer, you’d better be serving someone who is.
- Karl Albrecht

The fact remains that most companies producing products and services have only a limited perspective on their customers’ needs (as those needs relate to their set of offerings). Which means often the stewards of innovation are flying blind. Recently April Dunford, of Rocket Watcher, posted on why it might be important to run a customer advisory board. Her directives speak to the need to include a customer perspective in the mix that not only provides insight into the customer experience of your products and services, but one that also reaches beyond the horizon to provide a glimpse into potential new markets.

Without customers’ perspectives it is very hard to know limits of what you do and do not know. Inviting them into the mix means that even if you can’t name the dragons at the end of your world (read: market) you can at least see them. The other opportunity to be created by including customers’ views in your thinking is that not only will the community that they form will feed you new ideas and innovation options, that same community will also generate the goodwill that comes from an expanded network. You can create the opportunity for customers to share and network with each other, which may not have an immediate benefit to you, but you better believe it will have a positive return.

One of my personal guides as I ventured into the world of consulting services many years, Nancy Truitt Pierce (the Founder and CEO of Woods Creek Consulting Company in the Seattle, Washington state area) was a great proponent of the customer advisory council. She actually turned the advisory council concept on its head and made networking the heart of its reason for being. She now has a model of consortia that encompass the needs of her customers: technology sector executive peers, senior executive peers, sales executive peers, and CFO’s. Each group meets to share insights, advise each other, and Nancy moderates. Long term many members have become Nancy’s clients and she brings their insights back into her firm to innovate her service offerings

Our customers don’t know but they can show us
Be everywhere, do everything, and never fail to astonish the customer.
- Marshall Field

For many companies though, the customer cannot conceive what they need because they are too close to their issues. No matter how hard they might try to articulate their concerns they fall short. This leads to poor communication and inadequate responses on the part of market to meeting their needs. This is not satisfactory for anyone.

Again, the key is to get closer to the customer so that the path to innovation is as pain-free as possible. The design power-house, IDEO, when working on product design opportunities for their clients uses ethnographic study (targeted, field-based observation) to achieve this end very readily. They have perfected a multi-layered approach to observing the customer experience, that may include questioning, but more often than not involves direct experience of customer’s challenges live, in real-time. Sometimes it involves their staff essentially moving into the home of a customer in order to glean first-hand experience. One of IDEO’s partners, Proctor & Gamble has actually adopted this concept and uses it to drive their own innovation processes.

P&G’s approach is called the “Living It” program. Living It creates opportunities for P&G’s ethnographers to live with customers (willing participants), to observe how they go about their everyday lives. The ethnographers get to rapidly identify customers’ needs first hand by seeing what their customers are trying to do, and how they might be hampered by their environment or the inadequacy of their tools. They can then use these insights to identify potential new products that would make customers’ everyday lives easier. This focus on understanding customers’ needs through jobs and desired outcomes is absent from the question and answer-based innovation process that passes for customer involvement in many companies today.

Opening innovation to the customer experience
The purpose of business is to create and keep a customer.
- Peter F. Drucker

The next step beyond experiencing the customer live and in real-time is to actually open the innovation process so that they are not passively observed; open innovation brings customers into the mix to co-create and design solutions that meet their needs without the filter of internal enterprise interpretation. This kind of inclusion would have been considered nightmarish in past generations. “Invite the customer to develop their own products?! Why the heck would I do that?!” might have crossed the mind of more than one researcher or product developer. The inherent fears at play driving that reaction were loss of control and like Nosferatu, once they were invited into the process they might never leave. The shock was that not only did customers behave themselves, but given their vested interest in the design outcome, they were enthusiastic collaborators.

Stefan Lindegaard, the founder of innovation consultancy 15inno based in Copenhagen, is one of the most vocal proponents of the open innovation model. His advocacy for open innovation is breaking open the discussion about its utility for all types of companies. Previously open innovation was reserved as the practice of larger companies with the funds to develop a customer engagement model (see P&G above), yet Stefan is making the case that open innovation should not only be embraced by all companies, no matter how small, but that it should tap the widest global network possible. His reasoning, why limit yourself when who knows where you might make the best solution connection?

Not every suggestion warrants action (but they all warrant a response)
Innovation comes from the producer — not from the customer.
- W. Edwards Deming

What happens when your open innovation network comes with ideas that are not the right fit for your organization? One of the failings of inviting the customer into the innovation experience is that companies do not actively manage that experience. If you think a customer having a poor purchasing experience can cause havoc you haven’t seen anything until you have seen a customer relationship poorly managed when it is invited into a closer discussion about product development and is ignored, or worse yet, discounted.

Including the customer in your innovation processes requires just as much planning and management as your marketing and sales management processes. To neglect this preparation, or poorly implement the management of the customer experience as you bring them into your organization’s systems and processes can not only damage the immediate client relationship it can actually damage their total lifetime value to your enterprise.

Before a customer suggests an idea that you know you cannot and will not implement, develop a plan to address that potential problem. Either, remove the circumstances in which that request might be formed by developing a set of clearly defined and constantly visible expectations against which you can manage their experience. Or, develop contingent strategies that acknowledge their contribution and defuse its impact. Failure to do so might result in disastrous consequences. Losing customers while trying to meet their needs is certainly not a good result from your innovation efforts.

After all, you are trying to meet their needs not create new ones that they will seek another provider to solve!