Michael Schrage may have minted a cliché: "Who do you want your customers to become?". The title of his new e-book, the query is a tool for understanding why some innovations—and the companies that make them—become a part of our lives, while others don’t.
Fast Company recently spoke with the MIT fellow about why innovation is an investment in the customer, why changing values is more important than adding value, and why the business world is getting customer centricity completely wrong.
This interview has been condensed and edited.
FAST COMPANY: You propose that insight into the customer is the engine of a company’s growth, is that correct?
MICHAEL SCHRAGE: I’d frame it a little differently: There’s this traditional, completely legitimate notion that leadership means getting your people aligned. Getting your people inspired. Investing in the human capital of your people and making them more valuable so that they can then deliver more value to your customers. Do that through innovation and change and constant improvement.
My view is a different kind of leadership: How do we use that innovation to make our customers more valuable? Why don’t we look to creating human capital in our customers in the same way that we look to create human capital in our people?
We live in an environment of open source and crowdsourcing and engagement and participation—why not look at innovation as an investment in our customers, as a way to add value to our customers, not just as a way to provide value for our customers?
And that’s a different kind of a leadership, because it means that your people have to look at customers not just as partners, but as people, organizations, and institutions that they’re investing in.
That’s a nontrivial change. You’re not just leading your people, you’re leading your customers and clients.
What is the thing that differentiates you? What you are asking them to become by the innovations you put out there, with them, and for them?
So how can a company access that? It sounds abstract.
It’s a mind-set. This is the thing that gets me. This is directly analogous to the Ted Levitt Marketing Myopia question: What business are we in? It’s a pretty obvious question; it’s a cliché at this point. I’m trying to create a new cliché here: What kind of customers are we trying to create?
Okay, that’s not what most innovators ask these days. Most innovators ask, "How can we be disruptive? How can we create new value for our customers? How can we do things that allow customers to do things that they’ve never done before?"
Take the question that you’re asking and be more intense: How do you want to transform your customers? People like Henry Ford and Steve Jobs and Larry Page and Sergey Brin didn’t just ask; they had an answer for it. Google just doesn’t create search—it enables the creation of searchers. Everybody talks about Henry Ford, the mass production of automobiles—he mass-produced drivers. Driving is human capital.
It’s not enough to create new value in your products and your services. You have to create new value in your customers and your clients.
I’ll give you a perfect example: you. Fast Company. Leadership. Your goal is not just to provide timely information in quotes and insights for people who are interested in learning about leadership. What kind of customers are you trying to create? You’re trying to create better leaders! People who are transformed by interacting, not just reading, interacting with your material.
If we take the questions I’m asking and map it onto Fast Company, the answer is you’re trying to create a different kind of leader. That is your source of differentiation, and God forbid you make the same value proposition that Businessweek or Fortune has.
So what’s the relationship between the leader meditating on these questions and the consumer that he or she is trying to reach?
You don’t want introspection to become narcissism and you don’t want people to impose themselves upon their customers or their clients. The reason I propose that notion of "be your own best beta" is how do you cultivate empathy? I believe your ability to empathize increases when you look at how innovations transform who you are.
You look at how your mobile device has changed who you are, your automobile, your coffeemaker—the innovations that have changed you. You meditate on that (change), then you take the next step and look at our innovation road maps. How do we think? How do we believe? How do we want our customers to transform themselves with those offerings? Not just what value does it create but what values does it shift.
Remember when the BlackBerry came out? One of the reasons people disliked the BlackBerry was you were always on call. Mobile phones meant that you were always accessible. If you don’t respond immediately, your friends, family, or colleagues think you are avoiding or shirking. Those are the kinds of issues that innovators need to address. Values matter as much as value, and that’s why transformation, not just economics, is what’s key to understand here.
So is innovation, particularly this kind of behavioral innovation, a matter of empathy?
Yes. I am stealing shamelessly from the literature of user experience and interface design. People are not lab rats that we impose interfaces and innovations upon, they’re human beings of choice.
Successful innovation is more of an act of empathy than an act of imposition. If you look at sustainable innovation cultures, what you are seeing are people who really try to align innovation with individual and institutional transformation.
So a leader is supposed to set up parallels between the customer vision, the corporate vision, and the user experience?
That’s exactly right. Leadership is about creating and coordinating that parallelism and keeping them in sync.
So how do you do that?
There are other people who you interview who you should ask that question—and I’m not being coy. The problem I have is I can look you straight in the eye and say, "You know those three parallel paths you’ve articulated? You tell me how many people you’ve interviewed talk with you that way."
Not too many.
Exactly. Is it because they’re stupid? No. It’s because they're captives of a model of innovation where that sort of parallelism is irrelevant, incidental to how they think. They think customer-centric means listening better to their customers or empathizing with their customers, instead of asking themselves, how do we invest in our customer or how do our innovations improve the human capital, competencies, and capabilities of our customers.
It’s not a hard question to ask. And I’ll go one step further: I don’t think it’s that difficult a question to answer. The best feedback I have gotten is from people who I’ve known for years and worked with as entrepreneurs, and they look at this and say, "You know, the more I think about this, the more obvious it becomes."
[Image: Flickr user Miuenski Miuenski]