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Innovation: Start With the Customer?

One of the most interesting debates on the subject of innovation is where it starts. Some innovation gurus think it begins with pure invention and imagination, unadulterated by focus on a pre-identified customer need. One of my favourite bloggers, Kathy Sierra at Creating Passionate Users, argues for example that great innovation is about imagining and creating new needs, not satisfying unmet ones.

One of the most interesting debates on the subject of innovation is where it starts. Some innovation gurus think it begins with pure invention and imagination, unadulterated by focus on a pre-identified customer need. One of my favourite bloggers, Kathy Sierra at Creating Passionate Users, argues for example that great innovation is about imagining and creating new needs, not satisfying unmet ones.

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As compelling and recurring an argument as this is among innovation thinkers, I think it’s wrong-headed. In a major research paper I wrote a few years ago on the genesis of innovation, I argued that great innovation has always started and must start with the customer, and with important, unmet customer needs in mind.

More recently, I described a process, and a tool I call the need/affinity matrix, for identifying unmet customer needs with commercial potential, and the ‘communities’ of people that share that need and represent the potential customer base for the innovative solutions that address these needs. I’m republishing that article here, and I’d love to hear readers’ and fellow blogjammers’ comments on the process, the tool, and the whole debate over whether innovation should, or should not, start with customers and pre-identified needs.

Does Great Innovation Really Start With the Customer?

(The flowchart illustrating this argument can be found here).

There are two opposing views on the role of the customer in innovation. One school holds that all innovations start with conversation, observation, and understanding of the customer (current or potential) with the goal of surfacing and then filling an unmet need. The other school says that customers don’t know what they need, at least until they see it, and sometimes a need doesn’t even exist until a solution is available to fill it. There are compelling arguments for both positions, and both have their advocates.

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Complexity theory would tend to favour the second view. This theory holds that a true understanding of a problem (such as a need) only emerges in parallel with, and co-dependently with, awareness of possible ‘solutions’ or approaches. But it could also be argued that conversations with customers, to “think them ahead” and get them to imagine possibilities, and ‘cultural anthropology’ observation of customers, are approaches that do start with the customer, in order to “find a need and fill it”.

The evolution of mp3 players is worth a bit of study to decide if this is really a chicken-and-egg question. Do you remember mini-CDs, about half the size of regular CDs? They were an early attempt to grapple with the lack of portability of CD players — to fill the untapped (perceived) need for a pocket-sized music player. At the same time, some large, clunky “jukebox” players used mp3 format to compress hundreds or thousands of songs into a small hard drive — to fill the untapped (perceived) need to transport or back-up a customer’s complete music collection. And at about this time, a new product that no one thought would ever be accepted, pay (satellite) radio, was introduced.

Contrast the community (the potential customer) and the job-to-be-done (the perceived need) of each of these inventions:

mini-CD player:
Community/ Customer: students, commuters, workout enthusiasts who love music on the go
Need / Job to be Done: record & play songs with high sound quality with a pocket-size player

mega-mp3 “juke-box” player:
Community/ Customer: fussy aficionados with eclectic tastes, and those paranoid about losing original copies, who sometimes like to port their collection around with them
Need / Job to be Done: record or back up & play an entire 250+ song collection with high sound quality with a transportable player

pay satellite radio player:
Community/ Customer: picky listeners who lack the time or skill to prerecord their own content
Need / Job to be Done: play any of 1000+ ‘narrowcast’ collections of songs or other audio content, on demand, from anywhere

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I bought one of the original 6GB “juke-box” mp3 players, transcribed my entire ‘favourite music’ collection to it (about 700 songs), and even bought a waterproof, rechargeable (mono) speaker that attaches to it (I use it on the pool deck in summer, and for instrumental backup when we go caroling around the neighbourhood at Christmas). I never understood the appeal of mini-CD players, or the current lot of mp3 players that only hold a few dozen songs at a time. Not my community. Nor did I understand the appeal of satellite radio, since I can simply plug my “jukebox’ into the car radio. But I acknowledge that there was a need for these products. Music is really important to a lot of people. The three products were designed for three distinct needs and customer communities.

Soon, the technologies that had been adapted or developed to meet these needs improved to the point that they satisfied additional needs. The new iPod-type players render both the mini-CD player and the “juke-box” player obsolete, since they offer both in one, elegant package, with some incremental advantages to both products’ communities at no extra cost. And podcasting now allows owners of music players to prerecord ‘narrowcast’ content as well, opening the potential that satellite radio, Howard Stern notwithstanding, could be disruptively innovated out of existence just when it looked like it was getting traction.

But would the iPod and its ilk have been possible were it not for the predecessor innovations that filled specific identified needs? Apple prides itself on its “second mover advantage” — not innovating, but rather studying and significantly improving on existing innovations. And without the Walkman creating the ‘need’ for portable recorded music in the first place, and the transistor radio before that, would customers have had any idea that they ‘needed’ a portable music player? Even if someone with great foresight had imagined the possibility of a device with iPod features fifty years ago, it is doubtful that potential customers would have viewed it as any less fanciful — or ‘needed’ — than the flying cars that were predicted in that era.

The truth is that most innovations are evolutionary, rather than revolutionary. That doesn’t mean they are incremental — they are discontinuous, making leaps in design, technology application and functionality, but do so in response to evolving customer needs.

Suppose you wanted to invent the successor to the iPod, the next great portable electronic device. How would you do it? You’d start with potential customers, observe what they are doing, converse with them about their frustrations and wants, identify constituencies or communities of customers with common needs or wants, and articulate the job to be done by the product or service that will meet those needs and wants. Now you can fill in the second and third columns of the table above for the as-yet-undetermined new product or service innovation. When you identify a whole group of jobs to be done for a whole group of different customer communities, you are ready to start imagining possible solutions, using a whole slew of techniques: individual invention, “thinking the customer ahead” collaborative sessions with some of the prospective customers, and group brainstorming.

The successful ideas that emerge from these techniques need to be qualified for economic feasibility (is the technology ready; can we make money at it) and organizational fit (do we have the capabilities to produce it), and then prototypes, pilots or models need to be re-qualified by potential customers to assess market acceptance (using the flowchart above).

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What might this process come up with in our search for the next great portable device? Although it’s hard to speculate, I would suggest that the results would be very different from, and much better than, the results that come from more traditional ‘innovation’ processes that start with a ‘solution’ (some technologically feasible idea that someone thought up, thought sexy or intriguing, and sponsored) and then go in search of a ‘problem’ (need) to apply it to.

Suppose your target customer community was empty-nesters in affluent nations who are either retired, semi-retired, or working substantially from home or virtually. This is going to be a huge community in a few years. What do they need, what ‘job do they need done’, that a portable electronic device might solve? I can tell you it’s probably not about general information, or news — the kind of stuff you find on the Internet, or in the information media. It is quite possibly related to health, and to communication. It may be related to recreation. It is almost certainly social.

Do you smell some great potential innovations here, and want to know more? Start with some customers.