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.
The gloomy
economic news has everyone on edge. Some pundits were hoping that
Oracle’s earnings report would give the stock market a boost yesterday
by proving that at least the technology sector is firing on all
cylinders. But yesterday Oracle reported lower than expected revenues
and lowered its expectations for the year. So it appears that the
high-tech sector isn’t immune to the global economic downturn after
all.
However, after checking in with many of our largest clients, we don’t
see people putting a hold on technology spending. We do see clients
gravitating towards SaaS suppliers with “pay as you consume” business
models and lower perceived IT overhead. We see them taking advantage of
the professional services being offered by smaller, boutique firms,
rather than large body shops.
What are companies spending money on? Here’s a list based on our customer-centric clients’ activity and interests:
Here’s an update on one of the companies featured in Outside Innovation.
CohesiveFT is a software company. Their products are digital. But I
believe that some of the patterns we’re seeing as customers create
their own digital products hold up well for physical products or for
hybrid physical/service products.
In
fact, I’m writing this post from St. Louis, the center of the Bio-Belt,
where the products that are sold—seed for growing corn, soybeans,
fruits, and vegetables—are designed and packaged in ways that are
surprisingly similar to today’s hardware and software. As Monsanto's CIO, Mark Showers, explained to me, what’s going on
in bio-agriculture is that there’s an increasing split between the
hardware (the seed or germ plasm) and the software (the traits) of a
plant. Advanced bio-technology has made it possible to optimize the
traits at each layer of the seed stack (below ground/roots;
ground-level/weeds and pests; above ground/leaves, flowers, fruit). In
fact, today’s hybrids come in triple-stacks—soon there will be 4 to 6
stacks—of optimized traits. Farmers select the traits they need in
their seeds based on the soil conditions, pest patterns, weather
patterns, and their expectations of what the growing season will hold.
(Then they hedge their bets through commodities trading where they make
their real money!) While farmers don’t CONFIGURE the optimal seed
traits at each layer today (that’s done in the lab and on the
manufacturing farms), they do SELECT seeds with optimal traits at each
layer for different sections of their farmland. It’s a very
sophisticated and complex set of choices. Much of the value of the seed
resides in the intellectual property involved in optimizing each layer
of the stack for the precise conditions required and in the ability to
mix and match these traits to meet the particular requirements of a
particular strip of farmland in a given micro-climate. Companies
license the intellectual property—the traits—to one another.
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