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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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    August 31, 2010

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    Comments

    Patty Seybold

    Great comments, Doug!

    I agree wholeheartedly.. particularly with the "if the organization looks at customer support as a "cost centre", then it has a cultural problem"....!!!

    Doug Hadden

    On the other hand, if customer-centric initiatives require all sorts of analysis and justification, the organization doesn't get it. Similarly, if the iniative doesn't come from the very top, only incremental improvements in customer engagement is possible. (And, if the organization looks at customer support as a "cost centre", then it has a cultural problem.)

    Executives need to be involved in customer engagement. Financial information does not provide the context needed to make effective decisions.

    Executives, not just one of them, must be in constant vigilence to see how customer-centric processes can be improved. The typical structure of organizations where "support" is responsible for customer engagement needs to be broken. Every executive needs to understand the customer impact - and this needs to be driven from the top. So, one or more VPs could be operationally responsible for customer-centric initiatives, but it needs sponsorship from the top.

    My company went through this process. Many in the company thought they were customer intimate, but not from the customer perspective. The flow from customer inquiry to product development or defect fixing was hampered by numerous steps and organizational divisions. That all changed, but it took time and sponsorship from the CEO. Even today, executives like myself reveal when we encounter a customer issue so that we can solve problems and improve processes.

    As a side note: in the pre Web 2.0 world, it was almost impossible to use customer-centricity to drive innovation. This is no longer the case.


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