How to Create Customer Led Innovation Strategies

Is it ever OK to lie in business? Standing on stage at a central London hotel last week to launch the FT Innovate conference, Martha Lane Fox, co-founder of Lastminute.com, used her own experience to suggest that, sometimes, it was.
The doyenne of the UK’s dotcom industry made what seemed a startling public admission. “The first customer testimonials on the site were made up by me,” she said. “I can say that now with aplomb but I took my friends and I wrote stories about them and the incredible experience they had buying products and services from Lastminute.com.”

The comments elicited barely a murmur among the audience but they matter for two reasons. First, because of Ms Lane Fox’s status as a dotcom trailblazer and, since she sold the company in 2005, her high-profile roles as the UK government’s Digital Champion and as a non-executive director at Marks and Spencer and Channel 4.

Second, and more important, because they hint at the big question underlying all the presentations, the chatter in the hall and on Twitter: how being innovative today means finding how to engage with your customers as early in the process and as deeply as possible.
Context matters. Ms Lane Fox wouldn’t get away with concocting customer feedback today. Why? Because, as she pointed out, in the wild west days of the early dotcom era, customer testimonials were only a small part of the business model. Now, the smartest businesses, from retailers to fashion brands to credit card businesses and manufacturers, are trying to engage their customers to drive innovation in their offerings.
Tasti D-Lite, a US low-calorie frozen dessert chain, says its edge in engaging has been the intelligent use of social networking technologies to do this. So, it uses the location-based app Foursquare to push offers directly to customers that are part of its loyalty programme when they pass within a block or two of its branches. The company is also very active on Twitter, intervening when potential customers are still weighing their options. If a consumer is considering Tasti D-Lite or a rival and tweets about it, the company will start following that individual or send them a message. This, it says, increases its chances of making a sale.
The company also makes sure its employees follow its social networking sites on their monitors, enabling them to understand how powerful a tool they are for the business. B.J. Emerson, head of technology, says a failure to engage with customers who are already using these technologies is a form of “social negligence”.
Using customers to inform your decisions directly is not just about the clever use of technology. Good designers such as Michael Bierut, a partner at Pentagram and co-founder of the Design Observer weblog, understand this better than most. One of his rules for being innovative, he told the conference, is to “shut up and listen”.
When he was hired by conductor Michael Tilson Thomas to come up with a logo for his Frank Gehry-designed concert hall in Miami, Mr Bierut presented him with a series of options. The client’s response to one of them, Mr Bierut said, was to ask if “this is supposed to make us feel nauseous?” and to put forward his own designs. Rather than seeing this as a professional slap in the face, Mr Bierut used the designs to come up with a better one himself.
For big organisations, the big challenge is how to create a culture that encourages customer-led innovation. The best answer I have heard was from R. Gopalakrishnan, a senior executive at Tata. He said that companies need to be willing to look beyond market research and focus groups to understand the context of what their customers’ needs are. When the company, for example, was designing a water filtration system, he personally spent time in the homes of poor Indian families, sitting round the fire to understand how they used water.
Customers have always engaged with those companies with which they have a special affinity. Ms Lane Fox explained that she was once accosted in an M&S shop and asked why the company had changed the packaging of its figs.
The difference now is that this is more of a business obligation than ever if only because if you aren’t engaging, your competitors will be. And that is a very uninnovative way to lose business. ravi.mattu@ft.com via ft.com
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Jim Woods is president and founder of InnoThink Group; a leading Strategic Management and Innovation Consulting Firm in Denver, Colorado. He is an author, speaker, and a strategic innovation and hypercompetition expert to profit, non-profit organizations and municipalities. He advises clients with an objective view of their competitive capabilities and defines a clear course of action to maximize their innovation return on investment to achieve profitable growth. Build a capability for ongoing competitive innovation across your company. Call 719-649-4118 or complete our form: contact us for more information on hiring Jim to advise or speak for your next event.