The thing Missing for Innovation
“Innovate or die,” the old saying goes. But as companies try to sharpen their competitive edge with new product and repair ideas, many don't understand their work is fundamentally misguided.
That's as their innovation process is usually missing one essential ingredient: their customers.
Companies establish innovation incubators and idea labs. They hold brainstorming sessions and ideation off-sites. They produce and analyze reams of researching the market.
But should you wander through any of these innovation-fostering instruments, you would be hard-pressed to run into an actual customer. What you will see are numerous executives and employees discussing the things they think customers need and what products or services will help them.
Seldom, however, do companies directly include customers in the innovation process, which is actually a dangerous misstep.
The most clever customer insights-the ones that drive game-changing innovation-rarely originate from focus group rooms or market research surveys. They are available, instead, from observing customers within their natural habitat.
Nothing-not the most intense ideation session nor the most robust researching the market report-can compare with what you improve by simply heading out “into the wild,” watching and hearing customers because they travel through a full day, as they make use of your services and products and as they (sometimes) bastardize those services and products to accommodate their demands.
Automobile manufacturer Chrysler owes its dominance within the consumer minivan sell to this idea of customer observation (technically called “ethnographic research”). In excess of 30 years, the company has been the U.S. minivan sales leader, a situation fortified within the decades by a tradition of customer-centric innovation.
That approach was perhaps best exemplified by Chrysler's 1996 introduction from the Dodge Caravan, the very first U.S. minivan with two sliding doors. Previous models were designed with merely a passenger-side sliding door.
Whereas other auto manufacturers just asked customers if they'd like a second sliding door (and didn't sense much interest), Chrysler sent a group in to the wild to determine with their own eyes what minivan owners struggled with but might not have thought to share in a focus group.
In a 2012 interview, Chris Theodore, one of the lead design engineers for the 1996 Caravan, recalled his team's approach to the work:
“We really had a wonderful time. We looked at customers. We visited customers. We videotaped customers resting stops, truck stops and lumber yards. This is where we created all of the ideas. From cupholders to tissue holders to rollout seats towards the fourth door, they were all things that people saw the customer needed but didn't volunteer when asked.”
As Theodore and the team witnessed firsthand, whenever you observe customers in the wild, you find stuff that even the best internal brainstorming sessions might possibly not have revealed. But they also saw the inherent limitations in merely asking customers for their opinions, because individuals generally have needs and frustrations that they would not think to vocalize to a market researcher.
A great illustration of which comes from OXO, maker of popular houseware items like Good Grips. As Alex Lee, president of OXO, recounted at a 2008 conference, once the company was considering reinventing the measuring cup, it went to consumers and asked them straight out: “What's wrong with your measuring cup?”
In response, people mentioned things such as how measuring cups are often made of glass, so if they drop the cup, it breaks. They discussed how measuring cup handles get slippery when your hands are greasy, and just how the cup itself could possibly get hot based on what's poured in it.
And that was practically all people had to say.
Then the OXO team made a simple request of the consumers with whom they met: Show us how you measure having a measuring cup.
And they saw people undergo a ritual with which we're all accustomed. They pour something into the cup, then bend down to look into the measurement markings. Then they pour a little more and bend back off. Over and over.
Yet no consumer mentioned this as a problem. It's an part of the measuring cup consumer experience which was so ingrained in everyone's psyche that no one thought to question it-except the team at OXO. By observing people actually while using product, they exposed inefficiencies in the customer experience that indicated the measuring cup was indeed ripe for reinvention.
That led to the launch of OXO's now famous “angled measuring cup”-a cup that allows you to read measurement markings by looking lower, obviating the need to repeatedly fill, bend and appearance. The organization sold millions of these cups in just the first few years these were available on the market.
It's worth noting that both OXO and Chrysler, once they sought to include the client perspective into their innovation efforts, did so by observing and questioning consumers of the product.
Both companies at that time relied heavily on distribution partners (houseware retailers and auto dealers)-entities that they could even have viewed as customers. Yet when it came time for you to consider the world in the customer's perspective, when they may have engaged distributors in the exercise, it was never done to the exclusion from the end consumer.
This is really a critical point for just about any company that works through sales intermediaries but wishes to foster customer-centric innovation. You cannot define “the customer” as this is the next person in the distribution chain. In so doing, you might very well lose out on important insights that are hard to capture in almost any other way.
While lots of companies tend to exclude customers from their innovation efforts, the oversight is most likely even more pronounced within the insurance industry. Many industry executives are puzzled thinking of observing customers. After all, insurance-unlike cars or housewares-isn't something people use every day.
Even though insurance can be a relatively low-interaction business, you may still find plenty of possibilities to observe customers “using” the product. The key is to reject the standard and incredibly parochial view that customers just use an insurance coverage product at claim time.
The insurance customer experience is shaped by many kinds of episodes and touch points: research and buy, underwriting and issue, online and offline service, billing and payments, premium audits, loss control reviews and, of course, claims.
These are all examples of customers interacting with their insurance product, and as such, they afford meaningful opportunities to observe and learn.
If insurers ever do attempt to incorporate the customer view, it always happens relative to product. And while that's commendable, true customer-centric innovation needs a broader view around when and where to solicit another perspective.
That means spending time observing customers when, for instance, they receive their initial policy package. Or watching once they attempt to interpret reasonably limited billing notice after which pay it on the internet. Or seeing what steps they go through to prepare for a premium audit. Or witnessing every stressor they're saddled with when their business is interrupted or their house is flooded.
Great unexpected things happen when you liberate from the four walls of the office, head to the wild and immerse yourself within the customer experience. You see things from a completely new standpoint. You will get understanding of how you can enhance your services and products. You spark ideas for satisfying not-yet-obvious customer needs.
There's not one proper way growing innovation inside a company. However, regardless of what ideation approach you employ, the important thing is to make certain customers are included.
And not only included in a cursory way, with some focus groups or research surveys. It's about including their perspective in an immersive way, by observing customers in their natural habitat, as they communicate with your products and services.
Once you do that, your company's innovation engine will truly begin to fire on all cylinders.