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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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    « Nice Review in the Economist! | Main | Do Customer Communities Increase Revenues by Active Customers? »

    November 22, 2006


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    I could not refrain from commenting. Perfectly written!

    Patty Seybold

    Thanks for your kind comments. I visited your blog.. it's great! I understand enough French to keep up (I attended the Lycee Moliere in Paris when I was 10 and 11) but not enough to comment in French.. OK for me to add my two cents in English??

    You raise a good question. Here's my "seat of the pants" take...cost-conscious customers, including bargain hunters need a particular brand promise/customer experience. What they care about and value is always knowing they got the best deal and never feeling ripped off (to use an American vernacular term). The areas of customer experience they tend to care about most, in my experience are:

    1. the ease of comparison shopping--making sure I am getting the best deal (the internet is great for that, but you can make it easier, as Progressive Insurance does in the States, by honestly listing your competitors' prices up front, and the things you offer that they may not.

    2. The ease and time in rebate/coupon processing--this is an area that many companies don't focus on enough--it frustrates and annoys lots of customers.. There are two aspects to coupons/rebates that ALL customers find annoying.. one is making sure you're getting the BEST DEAL (see point 1 above); the second is not having to jump thru hoops to take advantage of the promotion.. In my book, I describe how Staples streamlined rebate processing in the States as a good example of how to please cost-conscious customers and build your brand image.

    3. The cost and efficiency of returns handling. Cost conscious customers are much more likely to buy and return products if they find a better deal, change their mind or just don't like them that much. They favor suppliers who don't charge extra for shipping and handling and who don't make them jump thru hoops, (e.g. phone for a Merchandise Return Authorization code). My advice is to streamline the returns process (e.g. eliminate extra phone calls, include a return/exchange label, etc.), but make sure that the return-happy customer DOES pay for the additional shipping/handling costs.


    I agree with everything that's in your blog. I'm a fan of the customer centric & cocreation business model (your blog is one of my favourite) and would like to influence my customers here in France through my advices and my blog. I have a question concerning your opinion about hard discount and low cost companies and their capabilities (in term of costs) to deliver customer service and perhaps empowerment. Isn't the customer centric concept antynomic with hard discount, because those customers are only interested with low prices ?

    The comments to this entry are closed.

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