Innovation as Collaboration

Being a consultant, the first question I asked them was about their innovation process. Specifically, I asked, how were customer needs, complaints and ideas routed from the front-line customer contacts (the sales and marketing people) to R&D. I got blank stares. New product ideas were developed in the laboratory, it seems, and the only customer input was from surveys and focus groups once the R&D people already had something to show them.

An interesting discussion ensued. The gist of it was the company’s argument that customers, not being experts in furniture, don’t know what they want until they’re shown something. If you were to ask them what they want, they’d just respond “what can you offer me?” My response was two-fold:

First, I said, you shouldn’t be asking people what furniture they want, because  it’s not a piece of furniture that they’re looking for, necessarily, it’s the attributes and benefits that the furniture offers that people want: Comfort, orthopedic support, mobility, prestige, ‘workability’. I described a company I had recently read about that had abolished chairs. All the work surfaces had been raised to a comfortable work-level while standing, and each employee had been given a lightweight, personal ‘memory cushion’ to stand on that clipped to their belt, and a pair of personal orthopedically-designed shoes designed to make standing for long periods comfortable. In this company, people were constantly on the move and an enormous amount of time was spent booking meeting rooms. Now, the entire office could be configured as ad hoc meeting areas, chairs (with their high attendant cost and floor-space needs) could be eliminated, and mobility was optimized. People even found that they were more productive standing up and constantly moving around. This was a company that understood furniture was a means to an end, and the end for them was mobility and flexibility, so they ‘invented’ tools (furniture, cushions and shoes) that had those attributes.

Secondly, I added, you need to use an iterative process to elicit what people need, want and would use, a process Imperato and Harari (in their book Jumping the Curve) call “Thinking the Customer Ahead”. This process entails a combination of visioning, asking a lot of ‘what if’ questions, and generally helping customers imagine the future state of their own organizations and needs, and how they would react if something new were suddenly available. This is an inherently collaborative process, as much as it is an innovative one. Just as asking people ‘what would you like to see on the company intranet?’ is likely to produce unimaginative (or no) answers, so would asking customers what furniture they need. But if you helped them to envision what the future of their business would look like, and then worked from that vision to ask an iterative set of ‘what if’ questions to elicit the kinds of furniture they could imagine using effectively in that future environment, and then collaboratively work with them to ‘design’ it, then you’d be getting somewhere.

As it turned out, the new product they had asked me to evaluate was designed to solve a problem in the professional services industry that had been widely talked about for a generation. Now they had an answer, but it was an answer to yesterday’s problem, for which effective work-arounds had been found and were still evolving. And they had designed a product that had several critical inconvenience factors that were show-stoppers, and which they could have known about by spending more time talking to customers much earlier in the process.

One of my creative suggestions to them, as a customer, was that if they really want to sell their top-of-the-line ergonomic chairs to CEOs, they should give them away free to hotels and conference centres for their meeting rooms, where CEOs hang out and where the chairs are notoriously uncomfortable. The proviso would be that the name of the chair be conspicuously emblazoned on each chair. I don’t think they ever took me up on the idea. I still think it would work, and pay for itself in no time.

Specialization has created intellectual and imaginative silos in organizations, and a recent Wharton study written up in S+B Magazine has found, as I did on that trip, that these silos are a huge obstacle to innovation: “The most effective product development and commercialization processes encourage dynamic communication and idea sharing among engineers, marketers, and customers…Failure to incorporate the customerís perspective often seriously limits the potential financial and competitive value of corporate innovation…Often, engineers are tucked away so far within a company that they donít see firsthand what customers really need.”

Other key findings of the study:

• over-concentration on technology and under-emphasis of the emotional appeal of products leads to market failure
• better products result when employees are themselves customers of the product
• ‘anthropological research’ — visiting customers to see how they actually use (and mis-use) products can provide huge insights on need and innovation opportunities
• when entering new markets, having local partners ‘on the ground’ can help tweak products to meet needs that are unique to that new market
• using cross-functional teams and having the R&D people ‘get out more’ can help reduce ‘customer blindness’
• spreading R&D efforts around the world can help global companies enhance their ‘environmental scan’ and tap into ideas and adaptations that may not be apparent at head office
• surveys that gather data on customer behaviour are insufficient — it’s more important to know why customers do what they do, to determine their true wants and needs, and this usually requires face-to-face contact and collaborative effort to determine
• it’s important to understand customers’ aversion to change, and annoyance with having too many choices, when developing products
• key qualities needed of the facilitators of dialogue between R&D, sales and customers: humility and curiosity

This study focused mainly on new product innovation, but the same need for collaboration with all the departments of the company, and with customers as well, applies equally to other types of business innovation. I like the Doblin Group’s Ten Types of Innovation, an excellent way of parsing all the innovation opportunities open to a company:

• Business model: How you make money (e.g. Dell’s pay-in-advance for a custom-made PC model).
• Networks and alliances: How you join forces with other companies for mutual benefit  (e.g. Sara Lee sticking strictly to branding and outsourcing all manufacturing)
• Enabling process: How you support the company’s core processes and workers (e.g. Starbucks’ premium wage and benefits packages to attract superior staff)
• Core processes: How you create and add value to your offerings (e.g. Wal-Mart’s reinvention of retailing as shelf-space leasing)
• Product performance: How you design your core offerings  (e.g. the Mercedes Smart Car’s unique and imaginative attributes — pictured above — pick up the new Feb/05 Fast Company for a fascinating discussion of why you won’t see it in the US)
• Product system: How you link and/or provide a platform for multiple products (e.g. the Microsoft integrated productivity suite)
• Service: How you provide value to customers and consumers beyond and around your products (e.g. Singapore Airlines’ thoughtful and pampering extras)
• Delivery Channel: How you get your offerings to market (e.g. Martha Stewart’s multi-media ways of getting her ‘home’ stuff to your home)
• Brand: How you communicate your offerings (e.g. Absolut vodka’s “theme and variations’ advertising concept)
• Customer experience<>: How your customers feel when they interact with your company and its offerings (e.g. the Harley Davidson owners’ community)

Collaboration within company departments and with customers is absolutely essential to the success of any of these ten types of innovation. My sense, however, is that in most large organizations collaboration (as opposed to mere coordination) is antithetical to corporate culture, modus operandi, and hierarchical structure. That’s why many innovation advisers think innovation is best done in a business unit separate from the main operating unit, where emphasis is inevitably on protecting the status quo.

And that’s also why I was surprised to see the results of a new study, by KPMG and Ipsos-Reid, of Canada’s most innovative companies. Only three of the top 10 are small-to-medium sized businesses (Research in Motion, Westjet Airlines and Ballard Power Systems). The others include four of Canada’s five largest telecom and broadcasting firms, its largest grocery chain, its largest engineering firm and its largest software distributor. And while this ‘bias to big’ is less noticeable in the Innovation category than in the overall Most Admired rankings (which are top-heavy with banks), it struck me as peculiar — until I read how the winners had been selected: Only the CEOs of Canada’s leading (read: biggest) corporations got to vote. It’s not surprising, then, that they picked almost exclusively other large corporations.

I wonder what the answers would have been if they had asked customers?