5 Steps to Success in Customer Innovation Programs

I believe that customer-led innovation should constitute 50% of your innovation portfolio. But, I have yet to find many mature and well thought out customer-led innovation programs that aren’t one-offs. Most organizations that engage customers in co-designing and evolving their products do so in a fragmented fashion. What’s sorely needed is a customer innovation framework that will work in medium and large organizations—those with multiple divisions and product lines. It would enable each innovation team to benefit from the mistakes and learnings of the others, but it would also allow the entire organization to become more conscious of customers’ current and top-of-mind issues.

There’s a growing set of best practices in how to develop and sustain a core competency in innovation, including such elements as:

• Executive sponsorship and formal innovation charters—that give teams milestones, resources, and air cover
• Incubation/innovation labs to keep the emerging ideas from being killed off
• Cross-disciplinary teams
• Making innovation a part of peoples’ approved and valued activities
• Engaging in open innovation to get the best and brightest minds working on tough problems
• Putting in place organizational learning tools and practices to foster continuous improvement and to boost your organization’s collective IQ

Now we need to add to that body of knowledge a tested framework for engaging with customers at every step of the way for those solutions we want to drive from customers’ unfilled needs and/or to commercialize customer-led solutions:

1) Customer Innovation Research—Living with your customers, observing them as they do their jobs, looking for the places where they’ve come up with creative work-arounds and new gadgets. It’s important that you don’t just job out this vital piece of observation and learning. Although you probably should learn from an expert in customer observation, you don’t want to let this rich understanding degrade into artifacts. The rich context you gain from observing and living with customers needs to stay fresh. So make customer observation an internal skill.

Make sure that the people who engage in customer observation stay part of the innovation team and process, and that you revisit customers in the field every few months to observe their changing context. You probably want to reach out to different customers in different geographies and demographics, and/or to refine your observation to focus on particular roles.

2) Co-Design Solutions with Your Lead Customers—Identify the creative innovators within your customer base who are problem-solving and/or identifying new frontiers. Have your team work hand in hand with them to understand their goals, how they want to achieve them, and what part you can play in their success.

3) Let Your Customers Design the Adoption Process—This is a piece that everyone leaves out. It’s one thing to come up with an innovative product and service, but how do you get people to use it? The customers you work with on your co-design and innovation teams are early adopters. But you have to make it easy to for the rest of your customer base (and potential customer base) to start buying and using. Your lead customers can help you with this adoption process, but you’ll need early majority customers to define and design your marketing campaigns, their migration plans, and all of the tips and tricks that early users will need to be successful.

4) Recruit Non-Customers to Cannibalize Your Products. Yes, it does sound bloodthirsty, but you eventually have to kill off your current generation of offerings to get to the next innovation level. At this point, you need a new set of “lead customers” to work with. Likely, they aren’t your customers, although you think they should be. What you offer isn’t satisfying their needs, and they are the best source to come up with something fresh. Your current customers like what you have and will be instrumental in the evolution and expansion of these offerings. But these customers, and your company, get so enamored with what you have that you can’t get out your own way to come up with ideas that are totally out of the box. You’re looking for smart people who will come up with the innovative product or service that will make what your offer obsolete—a new set of customers who will start with a completely clean slate. Eventually, you’ll bring the two groups of lead customers together to figure out how you get from today to tomorrow.

5) The Customer-Centric Ecosystem. As you do all this, you’re working with not just customers, but with your entire go-to-market ecosystem. The ecosystem gives partners and suppliers a chance to be in on the evolution of the service that revolves around customers’ critical scenarios.