Customer and market research, competitive benchmarking, and focusing on market share could be detrimental to your organization’s future performance. These approaches are critical improvement tools. Top performing organizations have turned them into a disciplined and useful science. But they can also lead to “me-too” followership or — even worse — commodity products and services that compete only on price.
Market share, for example, is only meaningful if you’re in a stable, contained, and well defined market. Fat chance of that today as markets merge, converge, and diverge. In our turbulent markets with such high levels of flux, market share measurements can easily distract you from creating whole new product or service categories, markets, or even industries. How good an indicator of future success was market share, customer satisfaction, and quality levels if you were a horse-pulled carriage maker in 1912?
Many innovations come from a deeper level of customer and market understanding. They go beyond what current customers say they need. They solve problems that customers either don’t realize they have or didn’t know could be solved. These innovations create needs and performance gaps only once customers start using them and get turned on to the possibilities. For example, in the early eighties, no focus group, survey, or customer satisfaction measure could have shown a big demand for fax machines, lap top computers, or cellular phones.
Every product and service we now take for granted was once silly, interesting, or just an odd curiosity. What would you have said to a market researcher asking about a video machine for your TV when there were few movies to rent? How about CD players when there were no CDs to buy? What about a bank card to withdraw cash from an ATM? How about a personal computer?
Walk in Your Customer’s Shoes
Innovation is a hands-on issue. It calls for an intimate understanding of current customers and markets, potential new customers or markets, team and organization competencies and improvement opportunities, vision, values, and mission. You can’t develop that intimacy from a distance. Studies, reports, surveys, graphs, and measurements wouldn’t give it to you. Effective innovation depends on disciplined management systems and processes. But it starts with people. People searching for creative ways to do things better, different, or more effectively. People trying to understand how other people use, or could use, the products or services their organization could produce. That makes innovation a critical leadership issue.
Beyond the management tools of surveys, focus groups, and the like, innovation leaders find a multitude of ways to live in their customers’ world. They’re learning how to learn from the market, not just market research. Innovation leaders look for ways to align the organization’s product and service development competencies with latent or unexpressed market and customer needs. Since customers don’t know what’s possible, they often can’t identify innovations that break with familiar patterns. At the other extreme, leaders recognize that their organizations are constantly in danger of developing products and services with little or no market appeal. So many new (or extended) products and services come from empathic innovation. These are innovations that flow from a deep empathy and understanding of the intended customers’ problems and aspirations.
There are as many ways to innovate as there are potentially new products and services. Here are a few insights and ideas:
Make sure the “voice of the market” pervades every part of your organization. Bring customers into your company offices and plants for visits, joint problem solving and planning sessions, celebrations, focus groups, conferences, barbecues, presentations, and the like. Get everyone in your organization out to see customers or into the real world on a regular basis.
Don’t allow any manager, technical specialist, or support professional (such as accountants, marketers, or human resource staff) to participate in product, service, or market development decisions unless they’re spending a minimum of twenty-five percent of their time with current or prospective customers and partners in the market.
Make your senior managers responsible for at least some business development and ongoing customer service. They should be spending twenty-five to thirty-five percent or more of their time with customers (the same amount of time should also be spent with external and internal partners). Don’t allow senior managers to only cost cut and quality control their way to profitability and performance bonuses. Make sure it’s balanced with innovation and growth.
The people selling in your target markets and serving your customers are innovating every day to meet unexpected needs, beat out a competitor, or capitalize on a new opportunity. Unless you have a user-friendly, easy process (not an administrative bureaucracy) for gathering all that experience and market intelligence, you’re squandering one of your organization’s richest sources of innovation.
Identify your leading-edge external customers and partners and bring them into your product and service development processes. Ideally, these are customers and partners who extensively use your products and services. But they keep pushing everything and everybody to the limit. They are always looking for new and better ways to use your products and services. Find out what problems they’re trying to solve that no one else in your market provides solutions for.
Establish active user and support networks. Provide regular face-to-face, electronic, print, or audio-video forums to help customers, external partners (like distributors and suppliers), and internal partners exchange experiences, ideas, and problem solve. Capture and disseminate all this learning throughout your organization.
Keep asking your customers and partners (internal and external) lots of “what if…” questions. Ensure the answers are circulated throughout your organization. Don’t allow anybody to write all this off as just wishful thinking. Remind them that somebody’s wishful thinking brought us every service and product we use today, developed our modern economy, and gave us one of the richest lifestyles in history. Innovation leaders find ways to translate wishful thinking into the “logical and obvious” products and services we eventually take for granted.