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Understanding Customer Needs is Critical to Innovation

In our Innovation Interview series, each month we talk to thought leaders, inspirers, and innovators to pick their brains about the state of innovation, strategy, culture, and trends. This week we caught up BEI: Back End of Innovation speaker Len Ferman, who is also Adjunct Professor of Management at University of North Florida. 

Why is execution the most critical part of the innovation process?

Ferman: While execution is an essential part of any successful new product or service launch, I advocate that accurately understanding customer needs is the most critical part of the innovation process.  When you analyze the most often cited examples of new product launch failures, the root cause always comes down to an inadequate understanding of customer needs. This could be due to lack of understanding in the concept phase, the design phase or the develop phase.

For example, when Coca Cola replaced Coke with New Coke, they failed in two areas in their market research.  First, they designed their taste tests in a way that only captured feedback based on the initial taste, not on the satisfaction with the product after drinking an entire 12-ounce portion. Pepsi was sweeter than Coke and so in short sips, consumers preferred Pepsi.

Second, and more impactful, Coca Cola did not take into account the emotional connection that consumers had with the product. The experience a customer has with your product goes beyond just the consumption or use of the product. By not understanding the full end-to-end experience that the consumer had with their product, Coca Cola missed a key driver of delight. Even in the latter phases of the innovation process, understanding customer needs is still essential. Often, a product concept undergoes many changes prior to execution, or key features might be eliminated in the development phase to meet expense requirements. If a final evaluation of the product is not conducted a much more costly launch failure result.

What is the biggest challenge of innovation?

Ferman: Obtaining an accurate assessment of customer needs is the biggest challenge.  If you do that correctly, the rest of the innovation process simply flows from it. Albert Einstein famously said, “If I had an hour to solve a problem I’d spend 55 minutes thinking about the problem and 5 minutes thinking about solutions.”  In practice, I have seen that when a team properly frames a customer need they suddenly have a clear vision of what to do and can more readily obtain organizational alignment to implement a solution.

What does it take to create a balanced portfolio that wins?  

Ferman: I always advise companies that they should think in terms of an innovation portfolio. Just like an investment portfolio you should have some projects that are short term/low risk and some that are long term/high risk. The short term/low risk projects are incremental innovations that have near certain returns that may even be achieved inside the present fiscal year. While the long term/high risk projects are breakthrough type innovations that can result in a new business model and possibly a sustainable competitive advantage.  

How can we ensure buy-in of an idea across the entire organization?

Ferman: Obtaining buy in across the entire organization requires that all parts of the organization be involved in some manner in the innovation process. I have seen firsthand what happens when you are inclusive vs. exclusive in the innovation process and it is a tremendous, deal making difference. Very simply, when you give a part of an organization the opportunity to participate in the innovation process, they become emotionally connected to the process and have an interest in finding ways to make something happen, rather than finding ways to avoid having to make changes to their status quo.

Why is it important to drive and embed innovation into every part of the organizational culture?

Ferman: When parts of an organization do not understand or share in the vision behind the innovation process, they gravitate towards simply optimizing the status quo. And that makes them resistant to changes in the underlying business model. Only when everyone in the organization embraces the innovation process do you have the culture necessary to facilitate a smooth rollout and to gain the advantages of everyone proactively thinking about potential improvements.

How can large corporate power-houses capture the spirit of a nimble startup? 

Ferman: Most corporations have embraced the principles of Six Sigma and Lean. They have required most if not all of their mid to senior level managers to have Six Sigma / Lean training. This has helped instill an efficiency minded environment in which corporate employees are trained to optimize the present business models. This has been a very good thing for large corporations. We now see corporate earnings that are very strong and fueling record highs in the stock market. However, this has led to a situation in corporate America where there exists a lack of balance between optimizing the status quo business models and fervently designing the next generation of business models. The great companies that are generating wealth for investors, the so called FAANG stocks (Facebook, Apple, Amazon, Netflix and Google) have one thing in common. They are great innovators. They have corporate cultures that encourage their employees to identify new business models, and not simply optimize the status quo. Corporate power-houses can capture the spirit of a nimble start up by balancing the training focus between Six Sigma/Lean and innovation, and then providing the freedom for employees to contribute towards innovation the way they so effectively contribute towards efficiency today.

How can you ensure a successful go to market strategy? 

Ferman: When you engage the customer throughout the innovation process to:

  • Understand their needs
  • Evaluate concepts that solve for their needs
  • Identify the features they need as you design products, and
  • Test products prior to launching
  • You have a recipe for almost certain success

Want more on these topics? Don’t miss Len Ferman speak at BEI: Back end of Innovation October 22-25, 2017 in Orlando, FL. For more information or to register, click here

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