Innovation is the path to customer relevance. Relevance is a moving target because customers do not stand still. Products and business models become less relevant, and companies depend on creating and transitioning to new ones for their very survival. An organisation’s ability to innovate becomes an essential factor in determining its value, attracting investors, or retaining customers.
We covered in a different post why internal innovation is a challenge for most organisations. Here I want to explore four things any company needs to do to drive innovation:
- 1. Understand the changing reality of your customers.
Innovation is about removing customer pains or helping them with their jobs to be done (JTBD). We all have things we need to do and challenges we want to resolve. The world changes and it changes us all the time. What we are aware of, interested in, or already doing is highly dynamic. Think of the newest app you have on your phone, your expectations on visibility and real-time information, your attitude towards online shopping, on-demand entertainment, or payment choices.
For most of us, it is safe to say we are not the same we were six months ago. New options are changing the way we behave without us even noticing it. Netflix saved us from unwanted TV advertising and gave us the freedom to chose when to watch series and for how long. Yet, it also created binge-watching which made people show up at work after sleepless nights. When our situation changes we encounter new pains and discover new JTBD. It never ends because improving our situation is part of being human. The same happens to your customers, and those changes affect how they see you and what they expect from you. Are you offering them the same as six months ago?
- 2. Business experimentation
It is hard for organisations to keep up. An innovative company monitors expectations closely through a combination of customer feedback and business experimentation. The way to validate how our customers are evolving requires both to capture their opinions and to observe their behaviour. Sometimes we do not even realise how our behaviour changes and what we say we do is not actually what we do.
Business experimentation is more than A/B testing. It is about understanding what drives your business and the effect any change you make will have on customer behaviour. Placing more ads on a web, or increasing ad duration before the user can skip it can raise revenue short term, but it may negatively affect traffic and revenue long term.
We can experiment in non-digital environments by capturing customer feedback at the point of sale or observing customer activity at the supermarket, or in a theatre. Sensors help us to track real activity in a building, a factory, or on a vehicle. The goal is both to identify changes and to validate assumptions about the impact of our proposed innovations.
- 3. Every role must be involved in innovation.
Innovation adds value to both the customer and the organisation bringing it to the market. The arrow must hit the centre of the innovation target triangle: It must be desirable, feasible and viable. To hit the target requires many iterations and input from lots of people. We need everybody´s input, support and buy-in and for that, we need the whole team to have the same level of understanding about innovation concepts.
Capturing employees’ ideas on a board or database is one thing, getting them to analyse customer experiences and their impact on their JTBD and business models is another.
- 4. Velocity in the execution
Many things happen from the time we detect a change in customers preferences until we implement an innovation. Velocity in execution is critical. DevOps as a philosophy of communication and collaboration started in Software development, but the same principles and way of thinking are needed everywhere in the organisation.
Many companies are well aware of what their customers are missing or demanding and are unable to respond to their changes because of rigid information systems, lack of coordination between teams, or conflicting interests.
To be innovative, we must automate things, listen and observe the customer regularly, ideate constantly, build and test small prototypes and observe customer reactions. We need short cycles for product delivery and small and constant enhancements to what we offer.
It takes Inditex less than 25 days to move from cloth design to product availability at the point of sale. Some companies in several industries spend about the same time processing a deposit refund.
Stay Relevant helps companies on this journey of business acceleration to build growth through customer relevance.
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