Many elements contribute to making a company innovative and to making innovation programs successful. A few key elements being quality of customer insights, access to cutting edge technologies, alignment between innovation strategy and overall business strategy, and the big one—corporate culture.
Even though there is a rich tradition of incorporating the voice of the customer (VOC) in the innovation programs of a company—to make them valued and relevant—there is little discussion of the role and importance of customer communities; a contemporary way of hard-wiring the voice of the customer in the central nervous system of a company.
Which leads us to a critical question, “Is there a natural connection between innovation and customer communities? Do they feed off each other?”
Absolutely. Let’s dig deeper and understand how the two are virtually joined at the hip.
Every year Booz & Co, a leading consulting company, conducts a study—The Global Innovation 1000 Study—to dig deeper into the innovation practices and mindsets of companies. The specific objective each year varies. In 2011 that objective was to understand the key drivers of innovation performance: Why do some companies overperform, why do others underperform?
The answer lay in how companies went about architecting and implementing their innovation programs. Using its Innovation profiler tool—an instrument that characterizes a company’s innovation strategy based on its approach to incremental versus breakthrough innovation and the role that end customers play in defining future product needs—Booz & Co. identified three distinct innovation strategy groups:
- Need Seekers
- Market Readers
- Technology Drivers
Need Seekers, as the name suggests, actively connect with, listen to, and engage with their current and potential customers to shape their new products and services based on deeper and superior insights of customer use behavior.
Market Readers are more cautious. They adopt the wait and watch approach; rarely the first to market they rely on being “fast followers.” So, they don’t rely on active engagement, preferring instead to monitor, to watch what others are doing so they can figure out when best to jump in.
Technology Drivers prefer to let their technology assets and their investments in R&D do the talking. Their primary focus is to solve “white space or unarticulated customer needs” through cutting-edge technology.
Which group does better? Had a feeling you were going to ask that question.
The study found that the Need Seeker group did consistently better than the other two groups on a number of strategic and cultural variables. But most importantly the Need Seeker group outperformed the other two groups financially. In short, the choice to actively connect with, listen to, and engage with customers enabled them to produce a better ROI on their innovation efforts, or to quote the study, …” (Need Seekers are…) 30 percent more likely to report their overall financial performance as being superior to that of their peers….”
And what better way to be a Need Seeker than to invest in an online customer community.
Connecting with, listening to, and engaging with customers is no longer an every other Friday event. It requires seeing the world on an everyday basis the way customers do. For precisely this reason, the ability to “have ongoing and continuous conversations with customers” is a strategic differentiator, because it enables companies to be constantly open for innovation. By constantly listening to and engaging with customers it breeds a different mind set, one more open to ideas from outside the company, and one hungry to identify potential innovation opportunities. Customer communities enable companies to achieve both goals earlier and more effectively than other traditional alternatives to seeking customer needs, like periodic, episodic, and transactional marketing research.
Innovation and Customer Communities are truly made for each other. Just like the “Seeker” is vital to winning in the fabled game of “Quidditch,” in the Harry Potter series, constantly seeking customer needs is vital to winning at innovation. Customer communities help do that. They clear the fog about what customers really want, how they intend to use new products and services, and most importantly provide a co-creation platform. Because what customers co-create with companies they are willing to pay for and use. No small reason why Need Seekers outperform rivals by 30% in terms of ROI on their investment dollars.