Innovators must deeply experience the world of their Customers
Miriam Webster defines innovation as a new idea, device, or method. Most people want to be innovative and often think that their good idea will lead to their success and happiness. Ralph Waldo Emerson is famously misquoted as having said “Build a better mousetrap and the world will beat a path to your door.” (Kassinger, 2002 p.128). Mousetraps have been created since the 1800s, but even since 1976 there have been 309 additional mousetrap patents filed (USPTO, 2014). However, if one goes searching for a mousetrap, they will probably find it gathering dust at the back of an old hardware store. Though there is continuing innovation in mousetraps, customers do not seem to be very interested. This paper explores the relationships between innovators, customers, innovation success, and the innovation process.
Analysis of the Field
There is no standard definition. A common definition of innovation success in the research industry is survival. Is the product still in distribution after 2 years? (Soulsby, n.d.). However, this definition is focused on consumer products and is too limited. Definitions based on time criteria are too restrictive. For example, nobody today needs the smallpox vaccine because a wonderfully innovative World Health Organization eradication program eliminated the disease in 1979 (WHO, 2010).
Definitions based on financial success ignore very important innovations, acclaimed by many. Linus Torvalds, born December 28, 1969, is not a rich man, but his innovative Open Source Methodology for Linux computer software is operating on over 99,000 computers serving 70 million people (Linux Counter, 2014).
Perhaps, it is best to use a customer-oriented definition. An innovation is a success when a significant number of people realize that the result of the innovation will solve one of their problems and bring them benefit. The term “significant” would include not only widespread use, but also, for example, important use by a small number of patients suffering from a very rare disease.
Does successful innovation lead to financial success?
In a survey of 450 innovation executives, it was found that the companies voted the most innovative were also highly successful, including Apple, Google, 3M, GE, Toyota, Microsoft, P&G, IBM, Samsung and Intel (Jaruzelski and Mainardi, 2011). It was further found that these successful innovators were not necessarily the companies that spent most on Research and Development. According to Jaruzelski and Mainardi (2011), the key factors were found to be:
- At the idea stage, it is essential to be able to identify the deeper needs of customers, and understand if emerging technologies can be of any help.
- At the product development stage, it is important to be able to engage with clients so to prove “the validity of concepts and to assess market potential and risks, and the ability to leverage existing product platforms into new products” (Jaruzelski and Mainardi, 2011)
- At the commercialization stage, it is considered a great ability to be able to “work with pilot users to roll out products carefully but quickly” (Jaruzelski and Mainardi, 2011), as well as manage to coordinate every task necessary for an effective launch.
It is evident that the successful companies not only understood their customers’ needs, but also closely worked with those customers throughout the development and pilot testing phase. This involvement is popular with software companies, who often ship a “beta” version to key customers for evaluation.
The research topic implies a distinct separation between the innovators on one hand and the customers on the other. This convenient and clear distinction is not always present, and the dividing line promises to be even less distinct in the future.
Assuming that the parties are indeed separate entities, is innovation enhanced by the innovator becoming closely involved with the customer; and thereby really understanding real problems that the customer faces?
These two topics are explored with examples.
What does the Customer want?
The answer to this question is the key to innovation. Sometimes, what the customer wants is obvious. Mariners since time immemorial have needed to know where they are when out of sight of land. Way back in 1714, the British Government authorized a large monetary prize for a chronometer that could help Royal Navy ships determine longitude (UK, 1714). It becomes obvious that when the technology became available, the Global Positioning System was as much an engineering development as an innovation. Within 20 years, GPS has become woven into the fabric of people’s everyday lives.
Sometimes, the customer does not realize what he/she wants. Steve Jobs spurned Customer Focus Groups. He did not want to fill a need. He wanted to create a new need. Nobody said they needed an iPad as none of them existed. When Steve Jobs created the iPad, everyone wanted them, which is partially why many people think Steve Jobs was unique. However, most innovation resides in the middle ground between the obvious and Steve Jobs.
The Customer finds an innovative new use
In understanding what the customer wants, nobody is better informed than the customer. The customer does not necessarily need to develop the product. Sometimes a customer can find a new use for something that already exists.
Maybe the best example is the Internet. During the Cold War, the United States Army needed a fault-tolerant communications system. There could be no central “telephone exchange” because a bomb on that central point would disable the whole system. So, the Arpanet was born, where no component was in itself critical to the whole. Components could be incompatible. Missing elements were tolerated, and signals switched through alternate routes (BBN, 1981).
In the days before email and file sharing, universities started using the Arpanet for sending messages and documents. Usage grew, but it was awkward to use. Tim Berners-Lee in 1990 removed the awkwardness (Berners-Lee, 1990). The world flocked to the renamed “Internet”, developing uses far beyond recovering from atomic attack. Similarly, the SC Johnson Company canvasses its customers for new uses of the familiar Ziploc bags.
The Innovator is the Customer
Again, if the customer can perform their own innovation, this would be a true alignment between customer and innovator. The United States Defense Advanced Research Projects Agency is an unusual and amazingly successful group. Generally, governments and bureaucrats are risk-adverse. They cling to precedents and rules, grudgingly making small incremental changes.
DARPA is different. It was initiated to try totally radical and innovative solutions, no matter if most of them failed. Their success is legendary, including the Arpanet/Internet already mentioned (DARPA, 1958).
The US Army needed a way to shield its soldiers while driving supplies from one battle area to the next. DARPA initiated 3 innovations.
- First, do not have drivers! Computers can do the driving. Nobody had previously considered this option.
- Second, put out a prize for all people to try their best – similar to the 1714 UK approach mentioned above.
- Third, actually develop a self-driving vehicle.
The first DARPA Grand Challenge in 2004, had self-driving (autonomous) vehicles driving in the Mojave Desert wilderness, where they could not hurt anyone. The next year 22 teams finished the course (DARPA, 2006). Today in 2014, several ordinary Google office workers let their specially equipped cars drive them to the office along the San Francisco freeways.
Who is the Customer?
In understanding the relationship between the innovator and the customer, it is necessary to define who the customer is. This may not be as obvious as it first seems. We often have a pleasant vision of a lone genius or small team working diligently to produce a marvel. Names spring to mind like Michael Faraday (1791 – 1867), Thomas Edison (1847 –1931), and the Wright brothers, Orville (1871 –1948) and Wilbur (1867 –1912).
The German chemical company IG Farben turned this impression of innovation on its head in the 1920s and 1930s. In their quest for the first infection-fighting drug, IG Farben developed industrial innovation. Their laboratories were creating hundreds of new molecules each month, and turning them over to a production line of thousands of testing staff, who determined which molecules were effective. The result was the life-saving sulpha drugs, so important for the World War II wounded (Hager, 2006).
The IG Farben situation was a pattern for the future. The lone researcher usually needs expensive equipment and staff to complete the innovation. Therefore, there is a need for Third Party Funding. Such funding can come from government organizations, such as the National Institutes of Health, or private individuals and foundations, such as the Bill and Melinda Gates Foundation. The Researcher applies to the Funding Organization for money to develop the idea. This brings up the question “Who is the Customer?” Is the customer the cancer patient desperate for a cure, or a committee at the NIH?
Discounting rare groups such as DARPA and to a large extent the Gates Foundation, the temptation of committees is to fund likely successes. Members of a committee are not necessarily great innovators. So there is a tendency for funding to be allocated to projects that are fairly certain of a small incremental advance. Small incremental advances may be useful, but after 40 years of limited success in the War on Cancer (US Government, 1971), we probably need a breakthrough, not an increment.
Incremental Innovation is rarely successful
If we see an idea for an incremental innovation, will our customers be excited and embrace this new feature? Very often the answer is no. Apart from the mousetraps previously mentioned, a good example of incremental innovation is Microsoft Word. An amazing software program, in 1983 Microsoft Word was the first word processing software to show on the screen what the final printed text would look like. Microsoft Word was a great innovation that became the worldwide standard for writing documents.
Microsoft then released new versions, such as Word 2003, and Word 2010. Customers were not excited, and many held onto their Word 2003 until forced to change with Windows 7 and 8 during the 2012 time frame. Word 2003 worked quite well, and Word 2010 was only slightly better. People gradually upgraded as they bought new computers, but there was no excitement.
Microsoft Word still has a universal presence, but is losing market share to free alternatives, such as Open Office, which is almost equivalent to Microsoft Word. Similarly, without Steve Jobs, the iPhone 5 is an increment, and many people are happily sticking with their old iPhone 4.
Customers want Innovations that solve current problems
Customers want innovations that solve current problems. Peter Drucker noted that an innovation should focus on a specific need that is satisfied and on a specific end result that it produces (Drucker, 2008). So if in the traditional scenario, the Innovator and the Customer are two different entities, what is the Innovator to do? The simple answer is that the Innovator should ask the Customer what problems exist in the current situation or process.
Discovering Customer Problems using Focus Groups
A common approach is a Focus Group. In a Focus Group, the researcher gathers potential customers together and asks them questions about their problems, and the attractiveness of potential solutions. Despite their widespread use, there seems little deep analysis of the effectiveness of Focus Groups. One respected opinion believes that Focus Groups actually kill innovation (Reed, 2012). Steve Jobs said “It's really hard to design products by focus groups. A lot of times, people don't know what they want until you show it to them” (Jobs, 1998).
Unlike this paper’s title idea, a Focus Group does not involve the Innovator experiencing the world of the Customer. It is an artificial environment, replete with one-way mirrors, and the potential reward of a free lunch.
Discovering Customer problems by performing service work
Some companies perform extensive service work for their customers. This is particularly true in heavy engineering, such as aircraft, aero engines, and electrical generating equipment. Here, the innovator’s employees are working shoulder to shoulder with the customer, struggling in the heat and grease to service a component. The “deeply experience the world of the customer” rings especially appropriate.
One can imagine that this close relationship contributes to both Boeing and General Electric being considered some of the most successful and innovative companies over a period of several decades.
Discovering Customer problems by monitoring activity
In the internet and information age, many companies and individuals are connected electronically. Supply chains are interlinked. Cloud services are monitored. Individual websites feedback activity statistics. So even though the innovator is not there helping the customer struggle with a misbehaving turbine, the close interaction is present. Google and Amazon have huge databases of customer behavior activity. These statistics can be mined to improve search results, or arrange warehouses for fastest delivery. This style of customer problem discovery would not be possible by just asking a few customers about their opinions. Though geographically remote from their customers, these innovators are intimately linked into the world of their customers. Perhaps partly by really knowing their customers’ worlds, Google and Amazon survived the Dot Com crash and 10 years later are growing and dominating their business sectors.
Impact of innovation on different industries
Some industries, such as pharmaceuticals, are built on innovation. Others, like newspapers, have gone along unchanged for over a century. As innovation means something new and in the future, it is difficult to predict which industries will be affected by innovation, let alone what strategies they should adopt.
“Big Pharma” placed its best on huge research projects, with very little useful result (Hensley, 2009). Newspapers did almost nothing and were submerged in the disruptive technology of online news and classified ads. Neither pharmaceuticals nor newspapers, with all their combined knowledge, were able to choose a winning strategy.
This paper makes no prediction on a future winning strategy for innovation.
Must Innovators and Customers be different people?
The title of this paper indicates a separation between Innovators and Customers. The intent is to discuss the way those two entities can best interact. However, the separation line between innovators and customers is becoming less well defined. Information sharing over the internet has opened new possibilities. The Encyclopedia Britannica was a wonderful source of information, but expensive to buy, heavy to carry, and quickly out of date. Wikipedia is a free online source for information in almost every area of life. Serious researchers look first at Wikipedia for a general overview of a topic. High school students routinely copy and paste homework assignments. Anyone can look at any Wikipedia article, and interested people with knowledge can add their own updates. The customers and the authors are the same, facilitated by a small group that makes the information sharing platform available.
Complex systems like Linux, mentioned above, also use their customer community to guide and implement innovations. Organizations like Expedia in travel, or Angie’s List in household services, provide the platform. However, the real innovation is the customers themselves providing critiques of hotels and services, rather than relying on experts.
The combination of “Wiki” information sharing, inexpensive 3D graphic design software, 3D printers, and numerically controlled cutting tables is likely to further involve the general population of customers in the innovation and build process. Current examples are the Global Construction Set (Jakubowski, 2011), and the WikiHouse (Parvin, 2013).
Future Research Topics
Despite the huge expenditures on Innovation, there is surprisingly little rigorous research on the factors determining success. There is no generally accepted definition of Innovation Success. The topic is full of anecdotes, but few hard numbers. Lacking definitive studies, examples are a good, but not perfect, avenue of analysis.
The area needs an analysis of a reasonably large sample of situations, each of which used different innovation methodologies and approaches. The resulting success or failure of each approach could then be used by organizations and individuals to proceed in proven optimal avenues. Such situations are not easy to identify. The project would require considerable funding and follow situations over several years. This would require a major commitment. However, given the vast amount of effort and money expended in the innovation process, such a commitment would certainly be worthwhile.
Major longitudinal studies have been performed in Public Health, for example, with good results (Framingham, 2014). A similar commitment in the field of Management may also bring substantial results.
The paper explores the relationship between innovators and customers. Using several examples, it is shown that the concept of considering innovators and customers as two separate and distinct entities is not a universal situation. There are situations where the customer and innovator have effectively merged into one group. Customers may innovate by finding a new use for an existing product; customers may do their own innovation; technology is providing platforms, such as Wikipedia and the Global Village, where individual people can make their own innovations. These enabling technologies will increasingly blur the line between customers and innovators.
Some conclusions may be drawn. Incremental innovation may prolong a product life, but increments do not excite customers, and may lead to declining market share. The high expense of many innovations has led to the presence of Funding Sources. These Funding Sources disconnect the innovator from the final customer. The innovator has to please the Funding Committee, rather than the actual customer. There is a tendency for Committees to be risk averse, and fund only incremental improvements, which will bring modest but certain success.
The occasional genius like Steve Jobs can ignore the customer and have brilliant results. Getting ahead of the customer is not for the faint hearted, and the landscape is littered with electric cars that few people want. Like Steve Jobs, DARPA is an outlier. Who else could bring us both the internet and self-driving cars? Such organizations are few and far between. We should concentrate on the mainstream. The traditional mainstream is represented by the two parties – innovators and customers - getting together to imagine solutions to important customer problems. Successful outcomes have resulted from three approaches:
(1) The innovator provides extensive service within the customer’s world and so learns the problems directly;
(2) The innovator receives extensive electronic data on a customer’s operation, and can derive problem points using statistical measures,
(3) The innovator makes a distinct outreach to the customer, and involves the customer in each phase of concept idea, product development, and pilot testing.
Since the Newcomen Steam Engine in 1712, the world has benefitted from wonderful innovations, and the pace of progress seems to be accelerating. For example, it is just astonishing to go in 10 years from a rough idea to self-driving cars traversing San Francisco freeways on a daily basis. However, innovation does not seem to be a settled process. There is good, but incomplete evidence that innovation success is linked to close involvement between customer and innovator. However, that approach is not supported by a mass of solid data. Some dramatic successes have ignored that approach completely.
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