Innovation is the lifeblood of business, with great ideas being the pump that keeps it flowing.
Innovation keeps business moving forward, whether it’s by one percent gains, like the British Olympic Cycling Team, or with ‘big hairy audacious’ new ideas like Google, Amazon, Facebook, and Apple.
But those businesses that don’t have the R&D budget of these tech giants, or the VC backing of up-and-coming Silicon Valley favourites, are challenged with how to maintain progress. A failure to innovate leads to stagnation and decline. One of the key questions shared by all leaders who want to innovate is: where will the next breakthrough idea come from?
Many so-called innovative businesses are in fact customer-driven when it comes to new ideas for their products and services. The question is: does this make them innovative in their own right? Or are they in fact just good at implementing the new ideas that have been given to them?
We argue that they are reactive, reliant on new ideas from a source they cannot control and, whilst on the face of it successful, at risk of having the rug pulled from under their feet should their customers decide to take their business (and their ideas) somewhere else.
To do more than survive, these businesses need to make the journey from being customer-driven to innovation-led.
In his recent book, The Start-Up Way, Eric Ries defines a modern company as one that is “founded on sustained impact of… and leaves competitors in the dust through continuous innovation”.
For a business to embrace continuous innovation, innovation must become a core competence of the business.
In our white paper, Finding your North Star – innovation in high growth small and medium enterprise, we put forward a model for ‘Differentiation by Innovation’, and set out a journey that, with the right leadership, could be implemented in the same way as any other organisational transformation. The resulting a company can:
- focus on its ability to innovate in all aspects of its operation
- be open and responsive to external developments
- relate to and working with competitors
- embrace risk to improve performance
It would be wrong, however, to infer from this that the customer no longer has a role to play in innovation, or that their ideas should not be encouraged. In many respects, the customer plays an even more significant role in an innovation-led business.
Innovation is not just about new products or new technology; it is about everything that a business does – from the way it markets and sells to the way it recruits its people, and to the way it manages risk.
An innovation-led business will put in place mechanisms and processes to generate new ideas based on an increased understanding of, and a closer relationship, with their customers. Here are two that we recommend:
Customer ‘discovery’ research
Many companies base their marketing on personas, which typically include assumptions about customer needs from the company’s perspective. Kristin Zhivago in her book, Roadmap to Revenue, talks about the value that interviewing your customers to find out what they really want can deliver. ‘Discovery’ interviews present an opportunity to ask questions to find out:
- What problem your customer was trying to solve when they bought your product or service, which will give you key words and phrases to use in your marketing
- What could you learn from your competitors, giving valuable information about what your competitors are doing
- What they think are the trends with the product or service you sold them, giving insights into new opportunities
- What they would focus on if they were in charge of your company, revealing what is most important in the customer’s mind
The focus of Zhivago’s book is the understanding of the buyer process and how better to match the company’s selling activities to it. Innovation-led companies learning to think like a buyer gets them off the back foot when it comes to selling and allows them to come up with and develop innovative new products and services without waiting for their customers to suggest them.
Proactive idea generation
Proactively going outside the organisation for new ideas is not new – it was first termed ‘Open Innovation’ by Henry Chesborough et al in their book of the same name published in 2006.
But there are now platforms available that make gathering ideas from external sources much simpler. Rapid Insights platforms, such as Ideeter make it quick and easy to generate insights through time-limited ‘challenges’, using a gamified social platform – asking a question or posing a problem to a specific crowd of people, such as your customers, who share and vote on ideas.
Ideeter has evolved from an extensive body of established technologies into a digital environment typically associated with organisations with a more innovative mindset and culture.
It enables these innovation-led companies to get real-time feedback as a challenge progresses. The winning and most-liked ideas rise to the top, providing the company with a rich source of new opportunities.
Getting closer to your customer
Making the journey from being customer-driven to innovation-led does not mean turning away from your customers as a source of new ideas. If anything, you must get closer to them by implementing proactive and innovative approaches to learning about them and involving them for rapid insights into the challenges you face, and the generation of new ideas to solve them.