From egocentric, to customer centric innovation

Over the past years we have been involved in a lot of innovation and product development. There are two things that strike me the most:

1. The most successful companies are the ones that innovate. Based upon academic research we have seen that radical innovations are more successful than innovations that gradually build. So, as long as we will innovate, we will grow.
2. Most innovations don’t last very long, and ultimately, fail. Within a year, the vast majority of innovations are no longer on the market.

Why are introductions failing?

In our interviews with CMO’s that we conducted for our Brand Growth Study, we learned that innovation is the most important ingredient for growth. We even did an analysis on the entire database and realised that companies that spend significantly more on innovation, were more successful than companies that don’t invest in innovation. The biggest question that pops up in my head is: if we all believe that innovation is important, and should get the proper attention, then why are many introductions failing? Is it a lack of creativity? A lack of knowledge? Are we not able to put something on the market that people are interested in? Or is it something else? In order to understand this, I dived into some research that has been done on this topic, and found the following interesting chart.

Source: R. G. Cooper, Winning at new products

The biggest reason companies gave for in market failure, is inadequate market analysis. In order words, we don’t listen to our consumers enough. We introduce something that people don’t want to have. The main question during our CMO interviews was therefore: Why don’t we listen to our consumers before launching something? We’re too much focused on what we could make, instead of what people really need. Someone in the organisation has a great idea, and we’re all so convinced, we start developing it. The further we go into the process, the more difficult it becomes to stop it. We changed the customer centric approach into the egocentric approach.

Customer centric innovation doesn’t mean you ask consumers what they want

After we discussed the biggest failure in the Brand Growth interviews, we asked a simple question: “Why didn’t you test it?” The first story we heard is that consumers aren’t able to judge innovation. ‘If we would ask people what they need, we would’ve never had the smartphones we’re currently using’. In my eyes, this is nonsense. I believe it has more to do with the questions we ask, rather than there not being a need to be connected to the world at any time. Being customer centric doesn’t mean you ask your consumers what they want, it’s about understanding deeper emotions and understanding the real meaning behind an insight. It’s about asking the right questions. Over the years, we learned that storytelling is a great way to uncover that.

Companies are pennywise, pound foolish

Another aspect that is mentioned a lot, is related to costs. ‘There was simply no time and budget left to test everything. We were so far into the process and invested a lot of money already. We were at the point of no return.’ A well-known saying is that these companies are pennywise, pound foolish. They’re afraid they lost a little bit of money. So, for that reason they are willing to spend even more. They close their eyes, and hope for the best.

From quick and dirty, to good and agile research

It’s time we moved on from egocentric and went to customer-centric. Research automation and the possibility to adjust research to a fast and agile process, is a big step forward. What we do need however, is good research. We shouldn’t just ask consumers what they want. Good customer centric innovation requires a good customer centric research set-up. So, in order to become customer centric, instead of egocentric, please don’t make research quick and dirty. Make sure that it’s good and agile.

Blog Lucas Hulsebos – CEO DVJ Insights