New Rules of the Game for Successful Innovation

A new understanding of innovation success factors is making traditional logic obsolete. Successful innovation has less to do with the best investment, technology, research and designers, according to Booz Allen Hamilton: “Unless their R&D efforts are driven by a thorough understanding of what their customers want, their performance may well fall short — at least compared to that of their more customer-driven competitors.” [1]

A thorough understanding of what customers want is based on their desired end-results rather than features and reactions to concepts and prototypes. From the customer’s viewpoint, the solution that your firm sells is a means to an end. It’s simply a tool meant to enable the customer’s desired end-result.

Customers should be segmented by circumstances surrounding their desired end-results in place of demographics or psychographics. Metrics for innovation and operations can be obtained from customers themselves, capturing their inherent evaluations throughout their selection and usage processes. And innovation is expected to be a part of everyone’s job across the organization, instead of the engineers’ realm.

Consider the past decade at Procter & Gamble, as shared by chairman and CEO A.G. Laffey:  “In 2000, for every six new product introductions, one would return our investment. Today, about half of our new products succeed. That’s as high as we want the success rate to be. If we try to make it any higher, we’ll be tempted to err on the side of caution, playing it safe by focusing on innovations with little game-changing potential.”

He continues: “In 2000, we hadn’t explicitly or inspirationally enrolled enough of our 100,000-plus people around the world in our mission; it was neither fully embraced by employees nor fully leveraged by the com¬pany’s leadership. At least 85% of the people in our organization thought they weren’t working on innovation. They were somewhere else: in line management, marketing, operations, sales, or administration. We had to redefine our social system to get everybody into the innovation game. Today, all P&G employees are expected to understand the role they play in innovation. Even when you’re operating, you’re always innovating – you’re making the cycles shorter, or developing new commercial ideas, or working on new business models. And all innovation is connected to the business strategy. Last year, the business development group reviewed more than 1,000 external ideas. This year, they’ll see 1,500. We tend to act on about 5-7% of them.” [2]

Business models may spur growth more than product and service innovations. Affinities and convenience are powerful levers in the emotional as well as functional aspects of customer experience. These include social status, flexibility, form, time, policies, and environment for purchase and usage. Culture, policies, skills and processes also affect the solution purchased by customers.

To build common language and vision for innovating toward desired end-results, development of customer experience personas is essential. A persona describes the customer’s perspective of total value and total costs, representing the circumstances of their experience lifecycle. “Personas foster empathy among the development team that empowers them to understand requirements with less detail and specification, make good reasonable implementation decisions independently, raise valid concerns and opportunities, stay focused on the real requirements, and talk among themselves and with the rest of the company using a common language.” [3] 

Consider these best practices:

A. In-depth Knowledge of Customers

1. ___  Crystal-clear description of customers’ desired end-results
2. ___  Segmentation of customers by circumstances
3. ___  View of customers’ experience from need awareness through need extinction
4. ___  Preserved customers’ wording of their built-in value judgments (metrics)
5. ___  Emotional as well as functional characterization of experience and end-results
6. ___  Customer experience defined for touch-points and other influences across the life cycle
7. ___  View of customers’ world includes their barriers, short-cuts, ad-hoc and alternative solutions
8. ___  Observation of customers in their natural customer experience environment
9. ___  Personas incorporate customer complaints and call-logs
10. ___ Metaphors capture unconscious triggers of motivations and behaviors
11. ___  Research includes prospects and customers at all levels of affinity toward the brand
12. ___  Customers’ perspectives defined for what the brand does and does not represent
13. ___  Customer personas updated as circumstances change
14. ___  Customer personas shared with all employees, suppliers, partners and channels
15. ___  Customer personas inspire and guide everyone’s thoughts and behaviors

B. Innovation Applications

1. ___ Innovation targeted at business models, affinities, conveniences, policies, processes, skills and culture – as well as products and services
2. ___ Innovation adapts to customers’ priorities without asking customers to adapt their priorities
3. ___ Innovation respects customers’ perspectives on what the brand does and does not represent
4. ___ Competition defined by customers’ circumstance-based desired end-results instead of similar solutions or target demographics
5.    ___ Customer personas and solutions prioritized by cumulative lifetime profit
6.    ___ Existing solutions compared with segments’ desired end-results to identify under-served, over-served, and un-served customers
7. ___ For over-served and un-served customers, innovations seek market-altering scenarios
8. ___ Management supports market-altering scenarios as much as under-served customer scenarios
9. ___ Innovations address barriers to the customers’ desired end-result and over-arching reasons for customers’ desired end-result
10. ___ Ideas are borrowed from other disciplines, cultures and industries
11. ___ Common language of innovation used throughout the organization
12. ___ Risk-taking is rewarded
13. ___ Positive and negative outcomes are studied, documented and shared across organization
14. ___ Channels, alliances and partnerships are utilized throughout the innovation process
15. ___ Organization capabilities are fostered in accordance with innovations

References:
[1] Barry Jaruzelski & Kevin Dehoff, The Customer Connection: The Global Innovation 1000, Strategy+Business, October 16, 2007.
[2] A.G. Laffey, P&G’s Innovation Culture, Strategy+Business, August 28, 2008.
[3] Bonnie Rind, The Power of Persona, The Pragmatic Marketer, Volume 5, Issue 4, 2007.

See the e-handbook Innovating Superior Customer Experience for step-by-step guidelines, diagrams and templates covering these 30 best practices for in-depth customer knowledge and innovation applications, as well as creativity tools and internal innovation techniques:  www.clearaction.biz/innovating.