Avoid innovation blind spots – Unshackle from your customers
Tightly aligning your innovation pipeline to your customer feedback would lead to innovation blind spots. In famous words from Ford
“If I had asked people what they wanted, they would have said faster horses.”
Recently, I re-read Innovator’s Dilemma by Clayton M. Christensen. When I first read it 10 years back, I was in bschool and I thought I had a good grasp of the concepts discussed in the book. To my surprise, when I re-read it recently, after having worked for ~10 years on various products and business problems, I took a lot more from the book. I want to explore one of the topics from the book, unshackling companies from their customers.
Customers literally make or break businesses; without them, companies will have no revenue and we will all be closing shops to pursue something else. With such an unyielding power, customers influence every aspect of the company from day-to-day decisions to long term direction. Sometimes it is easy not to notice how customers drive companies’ operation and strategy. Influence of the customers becomes very clear, when we observe how we make decisions such as what features to implement, when to release, why we praise our employees, how we decide bonuses and the list goes on. For every decision, we have our customers in our mind and hard to escape our urge to make them happy by delivering value. What is the problem is just doing so?
This mode of operation works great for companies riding on an innovation curve. A established market space provides the guidelines to improve the products and satisfying customers. However, when a disruption emerges, first, new product will be inferior in performance in almost all known dimensions such price, performance etc. except for one new dimension. Established companies would talk to existing customers, conduct a customer study and would conclude that nobody wants the new product. And they would continue to polish their existing products by listening to customers and continue to over-deliver. For example, Comcast offers 500+ channels while Netflix doesn’t have those selection but continues to improve selection at a lower price point and on-demand. Key point to note is customers may not want 400+ channels i.e Comcast is over delivering and will continue to add new channels. Eventually, Netflix’s offering improves and might be good enough for mainstream to switch from cable.
How can we identify and overcome this problem?
One symptom that shows that you are over delivering and might be on the edge of the cross over is your ability to price. If it is getting harder to make customer pay for the new features, then your red flags should go up. This is an important symptom that shows the efforts vs. value add vs. willingness to pay is reaching its saturation. This might be time to think of what new disruptions, and dimensions emerging in this space.
If you can’t listen to customers, what else can you do? One option is to watch what customers do and understand what they are trying to accomplish vs. asking them what they want. By observing their tasks, you don’t limit yourself to current product, and you can think beyond product features. You can truly understand what the customer needs are. Still this won’t completely solve the problem but you might be better off. Often, you might have to venture to areas knowingly it will cannibalize your current product. Developing such a culture to innovate is hard. How you setup such an organization to foster innovation and risk taking requires a whole another set of discussions that we will cover later.