New ways to engage customers in co-designing your company's future - a weblog to complement the book, Outside Innovation, by Patty Seybold
Description
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.
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.
It’s been fun “watching” Steve Ballmer negotiate this week. First, in Brussels, he finally surrendered to Neelie Kroes, the EU’s competition commissioner, agreeing to comply with the EU’s ruling that Microsoft must allow open-source software developers access to interoperability information for its work-group servers, thus reducing the “Windows tax.” Then, popping up in Palo Alto and San Francisco, he triumphed over Google to gain the privilege of being the exclusive third-party “advertising platform partner” for social networking darling, Facebook. Microsoft sealed the deal with a $240 million equity stake.
It says a lot about what our society values when the hottest news of the day is Facebook’s $15 billion valuation. With “nearly 50 million active users” who attract others at a rate of 200,000 per day, the $240 million investment is a small price to pay for the value to Microsoft of keeping Google from grabbing more of the social networking turf and giving Microsoft a much-needed platform to expand its reach for both ad revenues and for its applications and utilities (Xbox, Microsoft Live, and Bill and Steve’s newest hot button—responding to iPhone with unified communications).
Last week, I met with our Pioneers—a group of seasoned technology architects who have each designed and deployed advanced distributed applications. Many of the pioneers now have five or ten of these enterprise-scale systems under their belts. Most of their original applications or descendants thereof are still running nuclear power plants, electric utilities, financial derivatives markets, global shipping and logistics systems, banking and financial trading systems, digital phone systems, nanotechnology robotics applications, and, soon, the world’s most powerful supercomputer. As always, my head is spinning from our rich discussions about how these “lead users” view the world and what they’re up to. I thought I’d share a few top-of-mind observations.
We are all grateful (or should be) when our customers care enough about our sins of commission or omission to point them out to us.
Our family members do it all the time. So do really good friends. They let us know when we let them down. They tell us when our speech or actions cause them aggravation or embarrassment or extra work. Often, when my husband or son complains about something I said or did, it surprises me. I had no idea that he would interpret or experience my actions the way that he did.
The same is true with our customers. We go trucking along with business as usual, oblivious to the fact that there may be something we do routinely—or something we did once or twice—that causes unnecessary annoyance and aggravation to our customers.
There’s an important privacy debate taking place on the global policy front. This latest round has been triggered by Google’s attempt to consummate its proposed merger with DoubleClick. Of course Microsoft, Yahoo, and the advertising community are raising antitrust concerns over the marriage of the two biggest players in internet advertising. Yet it’s the privacy concerns that are gaining the most traction among policy makers and enforcers worldwide. This is good news. It means that Google, Microsoft, Yahoo, and privacy watch dogs worldwide are all engaged in a renewed dialogue about how to protect citizens’ privacy in an era in which all our searches are captured, all our cookies are collected, and both the ads that were presented and the ads we clicked on are stored and mined for an indefinite period of time.
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