Excerpts

Outside Innovation How Your Customers Will Co-Design Your Company's Future Chapter One How to Harness Customer Innovation Co-Design Business Models, Business Processes, and Solutions with Customers to Help Them Accomplish Their Goals How do you figure out what customers really want, need, and will pay for? This is the foundational question for any business. It's also a question to which many business theorists and practitioners have devoted a lot of thought (and ink). We were delighted to discover that Clayton Christensen, the author of two well-regarded business books-- The Innovator's Dilemma and The Innovator's Solution --has discovered and documented a basic business truth that we've been practicing for almost twenty years: You design solutions to help customers accomplish their desired outcomes. We call these Customer Scenarios ® ; Clayton refers to them as "the jobs that customers need to get done." Customers--people and companies--have "jobs" that arise regularly and need to get done. When customers become aware of a job that they need to get done in their lives, they look around for a product or service that they can "hire" to get the job done. . . . The functional, emotional, and social dimension of the jobs that customers need to get done constitute the circumstances in which they buy. In other words, the jobs that customers are trying to get done or the outcomes that they are trying to achieve constitute a circumstance-based categorization of "markets." Companies that target their products at the circumstances in which customers find themselves, rather than at the customers themselves, are those that can launch predictably successful products. 1 We believe that what Clay Christensen groups together under the rubric "circumstances" actually includes several distinct concepts: the customers' context, the "job" they need to do (our Customer Scenario), their desired outcomes, and their constraints (what we refer to as "conditions of satisfaction" 2 ). This concept of "jobs that customers need to do" or Customer Scenarios® is subtly different from traditional customer segmentation and needs analysis. But that subtlety is important. It's not enough to identify a group of customers who have certain things in common for whom you are going to develop a solution; you also need to know what scenarios these customers actually care about accomplishing. What outcomes are they trying to achieve? What's the Relationship Between Customer Scenarios ® and Innovation? Innovation occurs naturally as a result of the structural or creative tension between what you ideally want and what you currently have. The secret to mastering the creative process is to understand and to leverage the structural tension that powers it. Once you've created the correct structures, creativity will take the "path of least resistance," according to Robert Fritz, who authored a seminal book by that title. 3 "People think innovation is about brainstorming; it's not. It's a very focused activity," 4 Fritz explained. "People studying innovation should start by understanding the creative process." Innovation is a form of creation. Like any creative endeavor, innovation emerges from the structural tension between current reality--the way things are--and a vision--what we'd like to achieve. 5 The keys to unleashing customer innovation are to: 1. Find lead users who are already closing the gap between how they do things today and what they'd ideally like to be able to do and commercialize their innovations. 2. Engage with your most creative, yet grounded, customers--your lead customers--to work with them to co-design how they'd like to achieve their ideal outcomes. 3. Empower your lead customers with co-design tools and innovation toolkits so they can design their own solutions, innovating as they go (a favorite approach of both von Hippel's and mine). In all three approaches, the discrepancy between what customers can do today and what they ideally want to be able to do is the structural tension that spawns innovation. How We Use Customer Scenarios ® in This Book In the case studies in this book, we'll identify the key Customer Scenarios ® that companies have addressed though customer co-design and customer-led innovation. The firms you'll be reading about have used a number of different approaches for harnessing customer innovation. We don't claim to have worked with each of these firms, nor do we claim that they used our particular methodology in their journeys. We offer this common terminology of Customer Scenarios ® and customer outcomes for understanding customer-led innovation as a way to help us all stay focused on "the jobs our customers need to do." As you'll see throughout the examples in the book, by understanding your customers' scenarios--the jobs your customers are trying to do--you can help them create the outcomes they're seeking. In essence, customers' scenarios should fuel your business strategy. Letting Your Customers' Ideal Scenarios Power Your Business How do you truly design or transform your business from the outside in? Many companies claim to be "customer-centric." Yet too often we find disconnects between the things that customers care about and the way that companies' resources are allocated and results are measured. Shedding the Inside-Out Legacy of Business Design In the inside out way of running a business, you usually design a product, wrap a brand around it, figure out how you're going to produce and distribute it, and along the way, of course, decide to whom you want to sell it and how you're going to describe and market it. Creating a viable business model is an important part of your business development and commercialization process. What will customers value? How much can we charge? How much profit can we make? Then, as the business grows, you develop new products to sell to customers in the same market, and/or you diversify into new products for new markets. Most business executives or business school graduates probably wouldn't describe the business definition process as following the approach we've just described. (They would claim that they start with a customer need and work from there.) Yet if you look at the ways in which most of today's businesses are structured and observe the ways these businesses behave, this model--which we describe as the "old way" to design . . . Outside Innovation How Your Customers Will Co-Design Your Company's Future . Copyright © by Patricia Seybold. Reprinted by permission of HarperCollins Publishers, Inc. All rights reserved. Available now wherever books are sold. Excerpted from Outside Innovation: How Your Customers Will Co-Design Your Company's Future by Patricia B. Seybold All rights reserved by the original copyright owners. Excerpts are provided for display purposes only and may not be reproduced, reprinted or distributed without the written permission of the publisher.