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Published: 1/12/05
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How Companies Turn Customers' Big Ideas into Innovations

Levers for Innovation
Discovering customer insights about products, and then incorporating those insights into product development, requires a number of initiatives at a variety of levels — personal, interdepartmental, and strategic. Although no two companies innovate in exactly the same way, successful companies often share a number of characteristics, according to Booz Allen and Wharton experts:

1. Employees use the product. It might sound elementary, but being a consumer of your own product is an important way to stay close to the customer. Many companies go wrong simply because after a number of years at the helm, successful senior executives lose interest in what they sell, according to Leslie H. Moeller, a Cleveland-based vice president of Booz Allen. “I once had a client who didn’t like the products produced by the division he ran. When they had product tastings, he wouldn’t taste them,” he recalls. “How can you lead an organization if that’s how you feel?”

One company that does seem to get it right, according to Moeller, is Harley-Davidson of Milwaukee, Wisconsin. Many company executives are great fans of the famous “hog,” and frequently attend rallies with other Harley motorcycle enthusiasts. Such involvement creates real empathy with the customer, Moeller says, and often provides executives with a clearer vision about both what the customer wants most and what kinds of improvements they would like to see.

2. Successful innovators conduct vigorous market research of customer needs. Computerized design and improvements in supply-chain dynamics have shortened product development cycle times to levels that were unheard of just a generation ago, tempting many companies to try to take shortcuts with their market research to stay ahead of the competition. “When you have such pressures, very often companies skip the marketing research,” warns Wharton marketing professor Yoram “Jerry” Wind. “But that can be a huge mistake.”

Booz Allen and Wharton experts agree that the most successful innovators still spend a great deal of time trying to understand their customers’ needs, in spite of those pressures. Procter & Gamble, the Cincinnati, Ohio, personal care giant, not only conducts focus groups but also undertakes what are essentially anthropological expeditions to see how consumers are actually using their products in the home. Similar stories can be found in the business-to-business world: CLAAS KGaA, a manufacturer of agricultural equipment based in Harsewinkel, Germany, maintains practice centers in each of its major markets. These are model farms where farmers test new equipment and company employees can observe close at hand what they like and how they use the new machinery.

“Procter & Gamble conducts anthropological expeditions to see how consumers actually use their products in the home.”
The strongest innovators don’t overlook former customers, either. Although it is natural to want to hear positive feedback from satisfied customers, Day says companies need to be more aggressive in seeking out the unhappy customer. Indeed, it is well known that dissatisfied customers and former customers are often great sources for useful information for both modest and major product innovations. But most companies don’t pay as much attention as they should to what they can learn from discontented customers.

In new markets, local partners can also be an important source of insights. That’s especially true in developing countries, where it’s harder to purchase market research, Booz Allen experts note. For example, Alexander Kandybin, a vice president at Booz Allen based in New York, says that sales of confectionary and tobacco products increased in many emerging markets once the brands’ owners understood that although most consumers couldn’t afford to buy packs of cigarettes or bags of candies, they could and would buy individual pieces. “It’s really hard to understand even such simple things unless you develop those [local] relationships,” he advises.

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