Outside innovation
Co-creating futures with customers
Description
Innovating by involving passionate customers in your business processes surpasses traditional product development teams. Customers equipped with the right tools can create superior products.
Engaging customers more deeply transforms them into loyal advocates, energizing your business to launch new offerings, enter fresh markets, and potentially revolutionize your industry. Customer-led innovation is a proven success strategy, yet some executives remain skeptical, which could be detrimental to their future business viability.
This approach, termed "outside innovation," is when customers actively participate in shaping your business and products, fostering a vibrant, customer-focused ecosystem.
Table of contents
01Five customer innovation catalysts
When embarking on the journey of customer-led innovation, it is essential to target five distinct groups of individuals for recruitment. These groups are pivotal in the process of harnessing the creative power of customers to drive innovation from the outside in. The ultimate objective is to reengineer the entire business model with the assistance of visionary customers, thereby transforming the company's approach to innovation.
Traditionally, innovation has been an internally driven process, but by incorporating customers into the development cycle, the dynamics of innovation undergo a significant transformation. With customer involvement, the focus shifts from the products and services themselves to the role they play in bridging the gap between customers' current situations and their desired outcomes. This shift is beneficial as it aligns the company's efforts with the true needs of the customers, who are more concerned with the end result than the tools used to achieve it.
Customers can assume various roles in shaping a company's innovation projects. The first group, Lead Customers, are those who take the initiative to create new solutions that better meet their needs than the existing offerings. By observing and learning from these innovators, companies can develop hybrid products that have strong commercial potential. To foster this innovation, companies should provide these customers with toolkits to customize products and services, sponsor their research, and engage closely with them to understand their goals and the results they seek to achieve.
A case in point is the LEGO Group, a leading toy manufacturer known for its iconic Lego bricks. The company took note when Fred Martin, a graduate student at MIT, created a "programmable brick" that allowed Lego toys to move autonomously. In 1997, LEGO launched Lego Mindstorms, which became its best-selling product. The product inspired a community of adult hackers and hobbyists who used it for a wide range of applications, from soda machines to toilet scrubbers. This community is now actively involved in developing the next generation product, Mindstorms NXT.
02Customer driven innovation process
Once you come to the realization of the innate creativity present within your clientele, the subsequent step involves strategizing on how to effectively utilize this invaluable asset to fuel the growth of your corporation.
This process encompasses a quintet of stages that are pivotal in leveraging innovations led by customers:
1. The most expedient and efficacious method to foster innovation is by tapping into the wellspring of creativity and ideas emanating from your most astute customers – those who harbor a deep passion and possess extensive knowledge concerning your domain. Observing these customers as they interact with your product or service within their natural environments and engaging in dialogues about their actual objectives can unearth insights of immense value. With a stroke of fortune, you might discover that the ingenuity of your premier customers can be the driving force propelling your business forward.
2. The optimal approach to actualize this involves the following steps: Firstly, scrutinize the behavior of customers in their natural settings – understand how they utilize your product to fulfill their goals. Pay close attention to their actions in real-life scenarios. Rather than querying, “What do you desire from us?”, shift the focus to understanding, “What are you endeavoring to accomplish here?”
3. Secondly, immerse your entire organization in a profound understanding of the customer – ideally by disseminating all known information through an accessible online platform. Some enterprises adorn their office walls with photographs of actual customers, while others create and distribute “personas” – detailed profiles of typical customers.
4. Thirdly, endeavor to uncover the passions that customers hold dear – as opposed to merely their likes or dislikes regarding your offerings. Grasp their aspirations and the emotional ties they have.
5. Fourthly, explore avenues to streamline those scenarios critical to the customer – how you can enhance their ability to achieve their objectives. Clearly, if you comprehend what your customers are striving for, you can then engage in creative thinking about how to simplify their path to success using your products and services. This might necessitate a fundamental overhaul of your business processes or even the entire business model. If such is the case, then proceed to implement these changes.
6. Fifthly, encourage customers to co-design their ideal scenarios and solutions – actively involve them in the design process of products they will adore.
7. Lastly, center your brand around the customer experience you deliver – from a customer’s perspective, the experience they have with your brand is synonymous with the brand itself. Ideally, you want the promise of your brand, the customer experience, and the customer scenarios to be in harmony. When this alignment is achieved, you create a business that can progressively strengthen based on the foundation of highly satisfied customers.
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