Customer Experience Matters

As described in management imperative #2, companies operate in an increasingly dynamic environment driven by shifting consumer needs, intense competition, and new enabling capabilities. The result: faster obsolescence of offerings, processes, and business models. To maintain value in these fast-pace conditions, firms needs to accelerate their pace of innovation. Why is innovation so important?

Innovation distinguishes between a leader and a follower. 
     – Steve Jobs

Never before in history has innovation offered promise of so much to so many in so short a time.
     – Bill Gates

But isolated innovation projects aren’t good enough. Large initiatives take too long, can’t respond to market shifts, and don’t provide enough options for an unknown future. Instead of thinking about innovation as a function of an R&D department, companies need to cultivate innovation as an underlying activity across their entire organization.

Here are some ways that execs can turn innovation into a continuous process:

• Make obsolescence a goal. Don’t wait for other companies to displace your products and services; do it yourself. So establish clear goals for replacing existing revenue or profit; something like “30% of revenue needs to come from products introduced in the previous 2 years.” Don’t just have overall corporate goals, translate it into specific goals for each organization.
• Reward some failures. One of the 6 laws of customer experience is that employees do what is measured, incented, and celebrated.  So companies need to measure, incent, and celebrate behaviors that lead to innovation. Since innovations require trial-and-error, people need to be rewarded taking chances, and in many cases, failing.
• Allot time for innovation. You can’t just “expect” innovation to happen. Create specific processes for innovation, so that it doesn’t get buried in the day-to-day activities. Apple, for instance, holds 2 meetings each week throughout their development processes: one for unconstrained brainstorming and the other for production details.
• Uncover customer needs. The best source for innovations often come from customers’ needs. But don’t expect customers to be able to clearly articulate their requirements, many great opportunities come from meeting customers’ latent needs. After ethnographers helped uncover unmet needs of men who view garages as their personal domain, Whirlpool developed its successful Gladiator Garageworks product line.
• Integrate customer communities. Rather than just looking to customers for initial requirements, companies should create an ongoing dialogue with customers; getting feedback all along the way from concept to rollout. How? By using online communities. Mattel’s online community of moms with small kids, for instance, provides the toymaker with ongoing feedback from this key segment.
• Seek out innovation partners. Many of the best innovations cut across the multiple organizations. So companies need to encourage cross-functional collaboration. But don’t stop there; engage your suppliers and partners into the innovation activities as well.
• Manage an innovation pipeline. Innovation looks a bit different than other ongoing activities. The time to market can be longer and the success rates can be lower. That’s why companies need to track innovations across multiple stages of maturity. For example, P&G uses a 4 stage innovation process: 1) Search & Discover; 2) Select & Resource; 3) Design & Qualify; and 4) Launch & Leverage.

The bottom line: Innovation is too important to leave to chance.

P.S. Here’s a link to all 6 New Management Imperatives