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  • What is Outside Innovation?
    It’s when customers lead the design of your business processes, products, services, and business models. It’s when customers roll up their sleeves to co-design their products and your business. It’s when customers attract other customers to build a vital customer-centric ecosystem around your products and services. The good news is that customer-led innovation is one of the most predictably successful innovation processes. The bad news is that many managers and executives don’t yet believe in it. Today, that’s their loss. Ultimately, it may be their downfall.

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      Observations

      • LEAD USERS
        Eric von Hippel coined the term "lead users" to describe a group of both customers and non-customers who are passionate about getting certain things accomplished. They may not know or care about the products or services you offer. But they do care about their project or need. Lead users have already explored innovative ways to get things done. They're usually willing to share their approaches with others.
      • LEAD CUSTOMERS
        I use the term "lead customers" to describe the small percentage of your current customers who are truly innovative. These may not be your most vocal customers, your most profitable customers, or your largest customers. But they are the customers who care deeply about the way in which your products or services could help them achieve something they care about.
      • LEAD CUSTOMERS AND LEAD USERS
        We’ve spent the last 25 years identifying, interviewing, selecting, and grouping customers together to participate in our Customer Scenario® Mapping sessions. Over the years, we’ve learned how to identify the people who will contribute the most to a customer co-design session. These are the same kinds of people you should be recruiting when you set out to harness customer-led innovation.
      • HOW DO YOU WIN IN INNOVATION?
        You no longer win by having the smartest engineers and scientists; you win by having the smartest customers!
      • CUSTOMER CO-DESIGN
        In more than 25 years of business strategy consulting, we’ve found that customer co-design is a woefully under-used capability.
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      « How Do You Communicate Your Vision? | Main | The Future of Programming and Innovation »

      August 24, 2007

      Has Your Firm Adapted to the Blurred Boundary between the Internet and Your Products and Services?

      In late July, our client work had me thinking about the fact that our organizational structures aren’t keeping pace with the speed with which all of our products, services and business processes are becoming Internet-enabled.

      Our corporate marketing organizations are working hard to transition to “Web first” content creation, catalog maintenance, and marketing campaigns. They lead with well-tagged and granular e-content and then produce glossy brochures and catalogs, rather than the traditional approach of the other way around.

      Our product development groups are incorporating “phone home” features into products for troubleshooting and diagnosis. Many products are now Internet-connectable, from your cell phone to your stock portfolio, from your tractor to your home or office energy management system, from your exercise bike to your blood test equipment. Some products now include Internet-based service updates (book a service appointment), replenishment (order more ink cartridges), and email alerts (your stock just hit a threshold) based on events or on triggers customers can set. Many products offer built-in subscription features (“do you want to download updated tax tables now?) as well as renewals (licenses, maintenance agreements, subscriptions, memberships). Some products now come with electronic dashboards. And many of today’s products and solutions are custom-configurable online.

      Our customer support organizations are ramping up customer self-service applications, knowledgebases, and online community self-help groups. Ideally, these self-service and assisted support offerings can be accessed from the product itself, from the Web, or by phone.

      Our education and training groups provide interactive learning modules that can be delivered online and just-in-time. These e-learning modules are often accessible from the product itself.

      Our Web teams are grappling with tight budgets and technology revolutions to re-architect the online customer experience to provide a full continuum of seamless services (single sign-on, search and navigation, content management, knowledge management) across public anonymous sites, community-of-practice specific sites, and account-specific sites. At the same time, our e-teams are eager to engage customers through customer-contributed content, tagging, blogging, interactive feedback, and social networking.

      Our IT organizations are struggling to respond to and/or to proactively anticipate the many service requests from all these online tools and agents; and these requests need access to information and application functionality that resides in back-end systems of record. Many IT organizations are finally embracing service-oriented architectures in order to adapt to this new reality. But most IT SOA groups don’t talk to the R&D product development groups, or to the e-learning team, or to the online community managers.

      You find Internet services designers in the product development group. You find them on the Web team. If you’re lucky, you can find them in your IT organization. And maybe they’ll find one another and chat over lunch.

      But nowhere do I find a group of Internet services architects that actually straddle all of these functional organizations. Everyone is dealing with the overlaps among these different functional silos as “one offs,” when what’s really happening is that their businesses and their product lines are decomposing themselves into a set of reusable Internet-aware services.

      Is It Time for an Internet Services Strategy for Your Business?

      Maybe the time is right to begin to pull all these disparate people and services together—not from a command and control point of view, but from a strategic coordination and architectural point of view. I predict that the most profitable businesses in the future will be the ones that have taken a strategic Internet-services approach to business design, rather than a business process approach to business design. They’ll design their businesses from the outside in, focusing on the e-services that are most strategic to customers. Ideally, these services will be understood and leveraged across all of the functional areas in the business.

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