I’ve always been fascinated by innovation. I guess that’s because I’ve always enjoyed creation – of new things that didn’t exist before. Just knowing that you’re breaking new ground, doing something that hasn’t been done before – or finding a new and better way to do something, is very exciting and powerful.
So, when should we concern ourselves most with innovation? In good times or bad? According to Jim Bedzos, founder and President/CEO of Amazon.com, “there’s no bad time to innovate. You should be doing it when times are good and when times are tough—and you want to be doing it around things that your customers care about.”
And that’s the point of innovating around customer communities – it helps you remain properly grounded and centered around your customers – the ones our innovations are intended to serve and please.
Community Leverage strategies provide a highly-efficient avenue for interacting with many thousands of customers throughout the innovation process. One of the big risks with innovation is having a sample size that’s either too small or improperly targeted (wrong customer group). Community Leverage is like Miracle Grow(tm) for your business.
By building a strong community of hundreds or even thousands of “representative” customers and prospects, it’s possible to iterate much more quickly – innovate, test, learn, refine- innovate, test, validate, etc. – then prepare and take the new invention to market, knowing for a fact that it’s going to be succesful the day that it launches.
So how do we go about innovating then?
There are many ways to innovate, but here are 5 of my favorites:
1) Create better outcomes for existing customers
By first understanding our customers’ existing circumstances in greater detail, it’s possible to craft new solutions that outperform the competition and our own existing products. By customer ”outcomes”, I’m talking about the “whole experience” a customer encounters when using the product, including all the the intended outcomes, as well as the unintended consequences that arise…
When a customer uses a product, there are typically both good and bad aspects of their usage experience. Never underestimate the powerful innovation opportunities lurking in the bad, or painful, aspects of adopting a product.
As Anthony Robbins has taught us for many years, it’s basic human nature for people to move away from pain (bad) and toward pleasure (good). In fact, Robbins says that people are actually more motivated to avoid pain than to gain pleasure.
Wow! If that’s so (it is), then how much time are we investing understanding the painful “side-effect outcomes” that our products are thrusting on our customers?
What if we identify our product’s painful side effects and systematically eliminate them, replacing them with customer satisfiers and delighters instead? Well, this is what often happens through incremental innovation throughout the normal lifecycle of a product that’s well-kept.
Here’s an example. Consider a table saw product for a minute.
What’s the job to be done by a table saw? Cut a piece of wood into two pieces, at the most fundamental level. Well, a straight line would be nice! In fact, cutting a straight line is often a must for the user to be satisfied with the “primary outcome” she seeks to achieve with the saw.
So, what does it take to cut a straight line? What happens that causes us to sometimes end up off course while cutting? (a painful outcome due to wasted material and time)
It turns out, there are a number of things that can and do go wrong. First, is there enough light to actually see where we’re cutting? No problem – we’ll add a light to the saw head and ensure the sawing region is very well lit.
Second, the sawing motor requires power and the power cord can get in the user’s way, get caught up and even cause the saw to stick. No problem – we’ll use a spring-loaded power cord that coils up, travels right along with the saw head and automatically stays out of our user’s way.
By understanding the “secondary outcomes” that can often prevent our user from achieving their desired primary outcome and then overcoming those limitations in our product, we can successfully innovate in a way that reduces the bad outcome side effects. This reduces the pain level and increases the number of positive outcomes our user will experience and then associate with our product.
The end result – more accurate cuts with this particular table saw and many happier users.
Don’t underestimate the power of carefully managing these customer outcomes, and how it emotionally affects your customers. By associating good emotions with our product, we’re much more likely to get referrals and repeat business, which then drive the growth and profits of our business.
By truly understanding the circumstances our customers find themselves in and then crafting innovative solutions that reduce painful outcomes, we can often create powerful differentation that results in real, lasting value – and that can be used to justify a higher price tag, resulting in even greater profits and potentially market leadership.
2) Serve new customers who are currently underserved
Much has been written about the “underserved” customer – for example in the Innovator’s Solution, by Clayton Christensen. To recognize a customer who’s underserved and worth serving in the first place, we need to focus first on the jobs that customers are trying to get done in their lives.
It’s not enough that a job is underserved; meaning the user isn’t completely satisfied, experiences frustration or bad outcomes when trying to get a particular job done.
To truly matter to us, this job must also be “important” or even ”critical” to the customer to achieve. In other words, there’s little value in addressing jobs that people don’t consider important enough to actively prioritize into their lives.
In the case of new customers who are underserved, these folks may not even be trying to do a particular job now, because it’s always been out of reach for some reason; e.g., existing alternatives are too expensive, too difficult to do or require specialized skills the user doesn’t posses and isn’t willing or able to acquire.
To innovate successfully for these kinds of non-consuming customers, we must first ensure this is a job they would prioritize into their lives, if the right product presented itself which enabled the job to be done.
Next, we must understand the areas where the customer falls short using existing products. Notice I said “customer falls short” here, not the existing product falls short.
The existing products were designed for customers with a given set of capabilities (budget, skills, time, etc.). To successfully innovate for our new customer, we must first understand why these customers aren’t consuming the existing product.
More importantly, we want to focus on the new customer – not the old product that’s unfit for this customer’s use. By concentrating on our new customer only, we’ll see things in the proper light – through their eyes for a change. It’s often a company’s inability to ignore their existing customers that prevents them from seeing these non-consumers in the proper light, which inevitably gives rise to new competitive entrants into the market.
These non-consumers made a decision not to buy the other products for one or more reasons. We must learn exactly what those reasons are, and then ensure our new product is seen instead to be a marvelous solution for these customers by meeting their needs, but not overserving them with too much.
Often times it’s difficult for existing engineering and designers to see how such an “inferior” solution could possibly meet a customer’s needs. This is because they are blinded by their higher-end customer’s perspective, which skews their point of view heavily to the customers they know best – the ones they already have.
It’s important to keep in mind that when a non-consumer is presented with a “good enough” solution that enables them to get a new job done in their life, this solution is 100% better than what they had available before – which was nothing at all.
Because the new product is 100% better than having no solution at all, the customer is willing to accept what we might consider to be significant limitations and side effects that would’ve been totally unacceptable to our higher-end customers.
Using our table saw example again, let’s say we produced a table saw that’s missing the light and retracting cord. It will still cut the wood. Perhaps this saw is less than half the price of our higher-end model, putting it within the reach of a many new buyers; e.g., the “casual home carpenters”.
Perhaps this saw also folds up quickly and easily, making it portable, but much less stable and less capable of cutting a straight line reliably!
Our non-consumer actually sees this less stable, less capable saw as a much better device. It’s more “convenient” to use, folds up and stores away easily when not in use, and costs less than half the price of the other saws sitting next to it in the store.
Our portable saw is suddenly a winning product that retail stores just can’t keep in stock when it first hits the market, because there’s a huge group of underserved folks without the ability to dedicate their garage to a saw who can suddenly get their jobs done. This users primary job and outcome is “cut that board into two pieces” (not necessarily in a perfectly straight line every time).
Then Marketing kicks in and properly positions this new saw as the “Handy Portable Table Saw”, highlighting its key benefits of being so convenient to use and portable.
So, how do you know when customers are overserved?
You must begin by gaining the requisite ”carnal knowledge” of your customers, and especially non-customers. It takes an open attitude by product managers and product owners – to listen very carefully and take special heed when a prospective customer says they’re not interested. Ask one simple question: “Why?”
It also takes finding and listening closely to large numbers of non-consumers – prospects who, unfortunately, the company probably doesn’t know well because they’ve never been interested in the company’s product line before.
In addition to active listening, we must build a true understanding of the non-consumers circumstances, their environment, and finally empathize properly with their situation.
Afterwards, it requires an ability to take everything we’ve learned about these non-customers and envision a solution that would actually meet their needs – and that would absolutely delight them – and simpler is usually better for these folks.
3) Change the business model to serve new customers
Another way to innovate has little to do with the product and everything to do with how the product is sold and delivered to market. By changing our business model parameters, we open up new markets and appeal to customers in new ways.
So what are some of the business model “knobs” we can turn? Here’s just a few of them:
- Payment Model – offering a monthly subscription service vs. a larger one-time fee plus annual maintenance
- Delivery Model – making the product available in a different way; e.g., downloadable software (online) vs. software shipped in a box (offline method); delivered to your car door (Sonic) instead of drive-through (McDonalds)
- Packaging Model – organizing the offer differently; e.g., creating “purpose-built” solutions where both product and installation services are offered together. For example, we recently bought a new patio door at Lowe’s. We wanted it installed, so we bought the door along with two services: 1) pre-inspection service, where they measure the door and ensure they know exactly what will be required to properly finish it off, and 2) the actual installation service itself.
- Sales Channel – by taking a product to market through a new sales channel, we can effectively change how the product is distributed and get our product in front a new customers; e.g., selling a product online via our Web store, through a reseller network, through a retail store chain, via tele-sales, via infomercials and call centers, or through our own direct sales force.
These are some of the common ways to innovate around one’s business model to create new growth. Of course, it’s always a good idea to ensure this new business model will be profitable by understanding all of the cost, margin and volume implications turning each knob has on your bottom line.
4) Change the game by disrupting existing value-chains
Disruptive innovation is an extremely powerful technique that when used properly often creates the biggest source of sustainable revenue growth and profits. In any market, there are existing value-chains that are typically well-established.
For example, in the music business the record labels license music rights from musicians, then package up and brand the music, creating a CDROM master. The CDROM is replicated to produce as many copies as the various music distributors can sell through all available channels.
One of my favorite examples of massive disruption of existing value-chains is the Apple iPod and iTunes. Apple has effectively re-routed the delivery of music from CDROM media to its online iTunes download delivery mechanism. It re-routed the consumption of music from the CDROM player to its proprietary, slick iPod player.
In the process of re-routing the delivery and consumption of music, it successfully “disintermediated” the traditional music industry value-chains – slicing off a major piece of that market for itself, generating billions of dollars of sustainable revenue growth. With the introduction of the iPhone, it further solidified its position in the music market from an adjacent market protected by a big partner (AT&T).
Apple’s successful disruption of the music industry value-chain is the by-product of great product innovation, to be sure (the iPod and iTunes store are both more convenient to use than the alternatives), but the real genius was the value-chain innovation.
5) Make it more convenient for customers to consume or use
Let’s face it, we humans are lazy creatures at heart. We’ll go out of our way not to go out of our way! We’ll choose the path of least resistance whenever we can, preferring convenience and ease of use. Why is that?
Well, back to Tony Robbins for a minute, it’s because of our need to what? Avoid pain and gain pleasure. Pain = Bad, Pleasure = Good. Pretty simple stuff, really, but it truly does govern much of what we do (and don’t do.)
Another favorite example is the Swiffer(tm). Once upon a time, there was a mop and pale of water. Remember those? Well, I sure do because I had to use them to “swab the decks” while in the military, on latrine duty. Talk about pain!! Now who wants to go back to using a mop?
P&G introduced the wet Swiffer after initial success of its original Swiffer (which was the cats-meow for cleaning tile and linoleum floors). The wet version suddenly enabled us to not only leave the broom parked in the broom closet, but now we could also leave it’s dreaded cousin, the mop, behind as well.
The Swiffer must be a mighty profitable invention. Imagine how many brooms and mops are no longer getting used and worn out each year; moreover, just imagine how many new Swiffer pads and jugs of cleanser are being sold – on a recurring basis each week.
So if innovation is such a great process that generates so much value, why don’t more companies take it seriously and invest more into their R&D and innovation programs? According to article by President of Innosight, Scott D. Anthony at Harvard Business School, it’s due to these 6 Drivers of Change that must be present to successfully innovate:
- The need for a crisis or some kind of “burning platform” to motivate transformational change
- A clear vision and strategy … that allows room for iteration
- A recognition that transformation is a multi-year journey
- A need to put the customer or consumer in the center of the transformation equation
- The critical importance of demonstrating to skeptics that different actions can lead to different results
- The need to over-communicate to employees, customers, stakeholders, and shareholders
As we’ve seen above, there are plenty of ways to innovate, but unfortunately, innovation involves the “C-word”: Change.
People at companies are reticent to change, because change is too often perceived as what? Risky. Painful!
What if we fail? What if it takes too long? What if… (your favorite list of fears and excuses not to take action goes here)
What we really need most to get moving and innovate more and faster is to realize this simple fact. Those who fail to innovate and change will perish. It’s a matter of evolution. Only the fit and smart survive, especially in an increasingly competitive, gloabl world we live in today.
So, what’s your next innovation going to be? Which of the 5 innovation methods will you use?
And how can you possibly get in front of enough customers fast enough to stay on schedule?
Answer: Try building yourself a good Community of customers and innovate around them. Community Leverage is a powerful way to ensure you get it right the first time, before the product is actually launched.
Need help with your next innovation project? ConXentric can help. Contact us and let’s have a confidential discussion about how to combine Community Leverage with your Innovation Strategy for rapid results and products that Drive Profit on Day One(tm).
If you haven’t downloaded and read our Community Leverage report, you can get it here.
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