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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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    « Protecting IP without Trashing Computers | Main | Early Book Fodder »

    December 01, 2005


    Patty Seybold

    Thanks for your encouragement. I agree with you. I think there are a lot of principles that companies in other industries can learn from the open source software movement. In fact, I'm looking for a good summary of some of the lessons learned in customer co-design of software--both the positive and the negative. Do you have any insights or pointers to share?

    Thanks and Happy New Year!


    Mark Griffin

    I think you have hit the nail on the head with how successful companies have engaged their customers. We are still in the early stages(I'm speaking of software vendors not the broader base as you are) but I see the open source model playing a huge role in shaping at the very least the software industry. The open source folks have figured out how to engage customers albeit informal but yet very effective. I think the traditional software vendors are going to begin to struggle a bit more with open source and its impact on how they develop and deliver software. The traditional software vendors are typically slow to market and usually do not hit the mark when delivering what customers want and need. There is definitely an art to interacting with the open source developers but the key is they are accessible. Unlike the walled off developers in traditional vendors, the open source developers do respond and interact with customers.


    Patty Seybold

    Absolutely. In fact, one of the fun things about my research to-date is finding all the hotbeds of activity in stuffy old companies as well as interesting new startups, where customers are at the center of the action!

    Good point..

    What did you mean about being "televised"?



    Innovation also occurs in 195 year old institutions and your book should reflect this. Innovation is happening at all levels regardless of whether it is televised...

    The comments to this entry are closed.

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