More on Customer-Driven Innovation

Our client is quite adamant that the innovations they seek to implement must be highly visible to their customers, so we have been focusing attention on the R&D, Sales & Marketing, Customer Relationship, Product/Service Delivery and Life-Cycle Management megaprocesses shown on the above chart — the five megaprocesses most directly visible to customers. In order to enhance our client’s (and our) understanding of customers’ needs and wants, we have used cultural anthropology extensively on this assignment, and our client is quite delighted with the value of having a cross-sectional team of its people systematically visiting customers, observing the use of their products, and interviewing customers about their perceptions, ideas, needs and wants.

The outcome of these ‘visits’, aside from a much better understanding of their customers’ businesses, and of the joys and frustrations customers experience using our client’s (and their competitors’) products, has been a large database of Learnings and Ideas. To oversimplify a bit, here is the process they have employed to date:

1. Understand the urgency for, and set criteria for assessing, business innovations for the company, and create a cross-functional Innovation Team.
2. Learn, through research, training sessions and by visiting highly innovative companies, what business innovation really is, how it helps companies compete sustainably and profitably in their marketplace, and the process the Team will use to make the company more innovative.
3. Understand, through competitive intelligence and through ‘cultural anthropology’ visits to selected customers, how customers experience the company’s (and competitors’) products and services, what drives those customers’ buying decisions, and what ‘keeps them awake at night’.
4. Drawing on steps 2 and 3, create a database of Learnings and Ideas.

The next two steps, now in progress, are:

5. Using the Learnings and Ideas in the database, the Innovation Opportunities Map, and an intensive process that draws on both the creative and the critical thinking skills of the entire Innovation Team, and their business knowledge, identify Innovation Opportunities that the company could deploy to improve customer satisfaction and hence improve company revenues, profitability and competitive position.
6. Aggregate these Innovation Opportunities into a series of Innovative Offerings, and tell a Vision or Story about how each Offering would be experienced from the customer’s perspective.

Our client has distilled hundreds of Learnings and Ideas down into about three dozen Innovation Opportunities, and has now begun aggregating these into Innovative Offerings using the following six-part template:

• A ten-word Name for the Innovative Offering.
• A Tagline and/or statement of the Value Proposition (“how is this different from and more valuable than what the company and competitors offer now?”) for the Offering.
• A listing of which of the identified Innovation Opportunities this Offering aggregates, listed in order by innovation type (A1 through J7) using the Innovation Opportunities Map above.
• A 200-500 word Story, told from the perspective of the customer in the future, explaining how the customer experience will have changed as a result of implementing the Innovative Offering.
• A list of New Capabilities the company would need to acquire in order to provide the Innovative Offering.
• A Strategy Canvas (see example below, for a different industry than our client’s) showing the different strategies and strengths of the company both before and after implementing the Innovative Offering, and contrasting them with those of the company’s major competitors.

The Innovation Team is now beginning the process of debating the pros and cons of the different Innovative Offerings the team members have come up with. The plan is that those Offerings that they consider most promising (using the set of criteria established in step 1) will then be evaluated by senior management to evaluate their feasibility, strategic fit etc., and will then be tested using small-scale experiments with selected customers. Only once the Offerings have passed all these hurdles will they be implemented full-scale.

Some of the Offerings the team has come up with are quite awesome. They show the power of combining a deep knowledge of customer needs, ‘space’ for creativity and observation, a disciplined assessment process and the ‘wisdom of crowds’. We may just be on to the perfect recipe for entrepreneurial innovation. Stay tuned!