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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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      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.
      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.
      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.
      You no longer win by having the smartest engineers and scientists; you win by having the smartest customers!
      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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    January 25, 2008


    Graham Hill


    My experience is similar, but not the same. Let me explain.

    Like you I see quasi-segment managers in place in financial service companies, particularly credit card companies. But they are responsible for creating as many collaboration problems, as the segment management problems they resolve. And the brand managers in automotive are a hybrid between product and segment managers, but not lets fool ourself that the customer carries anything like as much weight as the model-lines. And the collaboration problems are just as endemic in automotive as in financial services.

    Segment managers are an end-state of a logical organisational evolution from e.g. a product-centricity, towards a customer centricity. The evolution goes through a series of stages, each one of which is necesary if the next stage is to work.

    The stages start with pure product-centricity. This typically evolves through the development of internal networks of colleagues who need to work together to deliver the value proposition. To cross-functional teams that formalise the collaboration of the internal networks. To a customer segment coordinator who takes on formal responsibility for collaboration across different teams. To a matrix organisation with nascent segment teams reporting to both product and customer management. And finally to bona fide segment managers responsible for all aspects of segment experience delivery. The vertical silos of product-centricty have given way to the more connected, more collaborative customer-centric organisation.

    The problem with many of the so-caled segment managers in financial services and the brand managers in automotive is that companies have usually just jumped from a product-centric siloed structure to a customer-centric siloed structure, without working through the necessary intermediary stages first. It is the intermediary stages that drive the transformation to customer centricity, not just organisational restructuring.

    To be honest, I am not sure that a formal customer segment manager approach is relevant anymore. They too quickly ossify into rigid, inflexible roles that neither serve customers nor the business. In the information-rich business environment we find ourselves in today, dynamic sensing of changes in the market and responding to them rapidly is the key to success.

    I still see a role for a customer segment manager, but mostly as the conductor of how the whole organisation orchestrates the end-to-end experience. Not as the designer of how specific touchpoints will be delivered. Supporting the segment manager are a number of customer analysts, delivery staff, delivery partners, even customers themselves, who are responsible for taking the experience framework and mass-customising/personalising it so that it delivers the right value, to the right customer, at the right touchpoint.

    Customer segment managers sound like a great idea, but the devil is in the organisational evolution details.

    Any further thoughts Patty?

    Graham Hill
    Independent CRM Consultant
    Interim CRM Manager

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