Forget about a stereotypical approach to innovation. It’s not about designing solutions that will enthral the world. The point is to come up with an idea that will meet real people’s needs.
There are plenty of legends about Steve Jobs. One of them says he chose to ignore market research and did not care about consumers’ opinion. The founder of Apple allegedly claimed that he himself knew best what potential customers need and that the successful brands will be the ones that can suggest innovative solutions to customers. It is the brand that should assure the consumer that it can change his life. And win him over with this argument.
Good story, but … this is not true! Just as with most of the myths and examples of stereotypical thinking.
Genuine innovations require superb understanding of customer’s needs. Yet companies far too often focus solely on the business project – its costs, implementation stages, schedule, deadlines, etc. Forgetting about the most important thing along the way: the needs of the target group.
Well, we might ask then – what an ideal process should look like? First of all: you can achieve a lot if an organization shows empathy. And, yes, this trait associated with humans can also apply to companies. But first things first.
Will your innovative idea meet the market’s needs?
One of the greatest experts on innovation, professor Clayton Christensen from Harvard Business School, points to an interesting phenomenon. Every year about 30 thousand new products dedicated to consumer markets are created. However, as many as 95% of them disappear almost as quickly as they have appeared, not having won customers’ acceptance. Not necessarily because of poor quality or inadequate price. The main problem is that new products do not meet consumers’ needs. In other words, there is no demand for them. This phenomenon has existed for years despite advanced consumer research, which usually precedes the launch.
Even the most impressive and best planned marketing activities cannot help then. Christensen remarks that it’s not the demographic profile that impacts the purchase decision. We don’t decide to buy a new pair of Nike shoes because we do a lot of sports or because we fit into the 20-35 age group and have higher education. The choice of product, or rather the purchasing need are influenced by:
- Something we could call “relevance” of the product to customers’ life,
- The fact that a given product solves some problem in our life and meets our real needs.
The art of understanding our customers
What does cognitive empathy have to do with it? A lot! It helps to put oneself in the buyer’s situation. As James Allworth, head of strategy at Medallia company (specializing mostly in researching customers’ needs) and co-author of his and Christensen’s book entitled “How Will You Measure Your Life?” remarks – it is true that such leaders as Akio Morita from Sony or Steve Jobs were no big fans of traditional market research. Instead of it, they chose to carefully watch the world around them. To put it simply, they „stepped into consumers’ shoes”, were great observers with the ability to draw conclusions from what they can see (how people live, how they use various devices, what problems they are grappling every day).
“Most companies strive to be innovative and look for the differentiator in the wrong places. They forget about the customer’s perspective and his real needs. Even a project honed to perfection may prove a misunderstanding and business failure. Genuine innovations should meet consumers’ actual needs, which can be achieved only by watching the customers and trying to understand how they live and work and what they are grappling with every day,” says Ola Hesselroth, Partner at Euvic.
Where to start?
It is easy to become overwhelmed by another company’s spectacular success. Instead of using the copycat method, though, businesses should completely revamp their approach. It’s worth focusing on a chosen target group – one that will be close to us from business perspective. Next, it’s recommended to analyse behaviour of customers belonging to this group so as to select a problem, even a niche one, which hasn’t been solved yet. Then, a company should focus on this particular issue to come up with a solution that customers have been searching for in vain for a long time. Hence, the innovation may be simple and revolutionary at the same time.
The example of complex organizations
This approach will prove highly effective for every, even the smallest business. However, what should we do if the entity does not belong to the SME sector, but it is a large, complex organization, operating with the help of a sophisticated supply chain or collaborating with a number of other entities? Leaders of such companies focus predominantly on their own needs, also in the context of searching for innovations. However, the outcomes may not be satisfactory as a number of stakeholders – necessary to run their business operations – may have quite different expectations. After all, a business partner may look for innovations somewhere else. Choosing a niche, which we know nothing about.
Quite recently experts from Wharton School – Martin Ihring and Ian C MacMillan presented a solution to this problem. In Harvard Business Review they announced 6 stages of a process that will help companies determine which innovations can cause tension among stakeholders and which stand the greatest chance of becoming successful. It’s worth having a closer look at them, think them over and learn one’s lesson:
- Chose the key partners and identify their most important needs.
- Determine “consumption chain”. This is a term coined by MacMillan and Rita McGrath, which is to facilitate meeting the key needs of stakeholders. It puts the greatest emphasis on considering the partner’s perspective and understanding his needs.
- Define a current offering and create its profiles. Divide the offering (product or service) into:
- fundamental characteristics (which are absolutely necessary),
- distinctive characteristics (which distinguish it from the competition)
- unfavourable characteristics (which the stakeholders don’t like; it’s the part they accept for the sake of common business, however, it does not correlate with their own interest).
- Use the profiles to select and define the activities, which though “joint forces” will lead to growth (allowing to implement innovations, which all the collaborators will take credit for).
- Draft up a tension map among stakeholders. Think about the factors disturbing cooperation among the collaborating parties. Above all, pay attention to the fundamental characteristics – whether fulfilling them does not interfere with relations among companies collaborating with your organization. Remember: it’s not only your relations with business partners that matter, but also the quality of collaboration among them.
- Chose the best path. With ready solutions and plenty of insights, make a choice: which approach guarantees the greatest chance of success. Which approach will least interfere with your business partners’ needs and, at the same time, help achieve common goals.
It’s perfectly natural that everybody wants to be innovative and hence stand out on the market. The problem is that most ideas don’t work. Instead of trying by all means to find an innovative approach, it’s worth focusing on watching the customer’s real needs, then choosing one of them and trying to respond to it. It’s a good idea to learn from the experience of others.As in the case of large and complex organizations.However copying the existing solutions or banking on a spectacular product that would astound the world, won’t usually bring the expected outcomes.
Euvic is one of Europe’s leading IT-companies with 1700 highly skilled system-engineers and system-developers. It provides a full range of IT-services like software development, application testing, integration projects, IT Service desk, cloud migrations and IT out-sourcing. We are expanding into the Swedish market thanks to the confidence from customers within the transportation industry, production industry and service industry.