Customer Intimacy and Empathy are Keys to Innovation

"Above all, we know that an entrepreneurial strategy has more chance of success the more it starts with the users — their utilities, their values, their realities ... the test of an innovation is always what it does for the user...it is by no means hunch or gamble. But it is also not precisely science. Rather, it is judgment." — Peter Drucker, Innovation and Entrepreneurship

Just because a company is spending money on research (such as markets, customers, or new technologies) and development doesn't mean they will get innovation. Innovation, as with advertising, training, or many other organization investments, depends on the quality of the investment as much as the quantity of resources put in it. A high proportion of innovative new products, services, and companies flop. That's often because managers build better mousetraps without first making sure there are any mice out there. Or that people still want to catch them.

Many innovations come from a deeper level of customer and market understanding. They go beyond what current customers say they need. They solve problems that customers either don't realize they have or didn't know could be solved. These innovations create needs and performance gaps only once customers start using them and get turned on to the possibilities.

Every product and service we now take for granted was once silly, interesting, or just an odd curiosity. What would we have said to a market researcher asking about a video machine for our TV when there were few movies to rent? How about CD players when there were no CDs to buy? What about a bankcard to withdraw cash from an ATM? How about a personal computer? In the fifties, how highly would we have rated the need for jet planes when our business was conducted within a few hundred-mile radius of our office?

These are a few examples of the thousands of innovations that customer or market research and competitive benchmarking would never have identified a need for. The companies who pioneered these sorts of innovative breakthroughs had years of spectacular revenue growth and market leadership.

Walking in Our Customer's Shoes

"The need for innovation on an unprecedented scale is a given. The question is how. It seems that giving the market free rein, inside and outside the firm, is the best — perhaps the only — satisfactory answer." — Tom Peters, Liberation Management: Necessary Disorganization for the Nanosecond Nineties

Innovation is a hands-on issue. It calls for an intimate understanding of our current customers and markets, potential new customers or markets, team and organization competencies and improvement opportunities, vision, values, and mission. We can't develop that intimacy from a distance. Studies, reports, surveys, graphs, and measurements wouldn't do it.

Effective innovation depends on disciplined management systems and processes. But it starts with people. People searching for creative ways to do things better, different, or more effectively. People trying to understand how other people use, or could use, the products or services their organization could produce. That makes innovation a leadership issue.

Beyond the management tools of surveys, focus groups, and the like, innovation leaders find a multitude of ways to live in their customers' world. They're learning how to learn from the market, not just market research. Innovation leaders look for ways to align the organization's product and service development competencies with latent or unexpressed market and customer needs. Since customers don't know what's possible, they often can't identify innovations that break with familiar patterns.

At the other extreme, leaders recognize that their organizations are constantly in danger of developing products and services with little or no market appeal. So many new (or extended) products and services come from empathic innovation. These are innovations that flow from a deep empathy and understanding of the intended customers' problems and aspirations.

Through living in and empathizing with their customers' world, innovation leaders focus their organization's development capabilities on solving problems or meeting needs that customers may not realize could be done.

As my first consulting company, The Achieve Group, was working with current and prospective Clients to move beyond the training field to organization improvement, we stumbled across the need for senior management education, strategy formulation, and implementation planning sessions. This came from working closely with Clients struggling to get people in their organization trained and using new approaches to customer service, quality improvement, and teams. It became clear that how the senior management group pulled everything together and led the effort was the key stumbling block or stepping stone to the whole effort. After experiments, pilots, and few failures, Achieve's highly successful executive retreat process evolved and developed to meet a need no one had anticipated.