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3 Critical Success Factors for Customer-Centric Innovation

Thursday, December 19, 2019
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Have you ever made a business decision that you were sure would be successful but didn’t work for one reason or another?

If you answered yes, you’re not alone. Some 20 years ago, I was an R&D engineer designing laundry detergents in different global markets. One was a washing machine detergent for China. Having analyzed the data showing widespread ownership of washing machines in Chinese homes, we were confident it would sell well. We were wrong.

It was baffling. But this became crystal clear to me when I moved to China and spent more time in Chinese homes. I saw that washing machines were rarely used because most laundry was done by hand. In retrospect, a better product would have been a great hand-washing detergent.

It’s easy to make flawed assumptions about the products that consumers in an unfamiliar part of the world may want. Successful customer-centric innovation means genuinely understanding our customers’ needs. But that alone is not enough. The IDEO Design Thinking toolkit identifies three critical success factors: desirability, feasibility, and viability.

Success Factor #1: Desirability

Customers don’t buy products simply because of their gender, age, or profession. As customer motivation experts Bob Moesta and Clayton Christensen put it, they buy because they have “jobs to be done” in their lives. Truly customer-centric organizations identify the jobs their customers need done and find solutions, often breaking out of pre-existing industry or product categories in the process.

A case-in-point is my experience working with Godrej & Boyce on a refrigeration product in India. Our initial market research focused on non-consumers. We observed that while some had access to community fridges or had second-hand units, they were usually much bigger than needed, making them expensive to run. Our insights led us to a radical design: the chotuKool portable, compact, and customizable fridge. It used much less power and was far more affordable. Our innovation made it highly desirable and created a new growth category for Godrej.

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Success Factor #2: Feasibility

After desirability is determined, work through feasibility—the technical ability to create and deliver the solution. For chotuKool, an important part of our success was partnering with India Post, the largest postal network in the world, to reach our target rural consumers.

By contrast, feasibility was a real issue for a laundry service start-up I was part of launching in 2009. Our service was highly desirable—we offered a quality but affordable and convenient service based on putting laundry kiosks on street corners. But that distributed model meant we needed to collect cash every day, which proved to be difficult. After trying several approaches, we sold the business. Our model simply wasn’t feasible in the Indian market at the time. (Today, with the rapid rise of smartphones and cashless payments, things would be different.)

Testing an idea with small pilots and incorporating the lessons learned is vital. Planet Fitness has become one of the largest and fastest-growing fitness centers in the United States by offering lower-cost gyms that cut out premium features. This approach was initially tested and refined in its first few sites.

Success Factor #3: Viability

Great products also need a solid financial and business model. Research by one of my colleagues at New Markets Advisors looked at 5,000 innovations over a 15-year period: just 2 percent of those initiatives delivered 90 percent of the cumulative value.

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One of the key things that marked out the high-performing initiatives was that they shifted the means of customer engagement and the business model. They went beyond simple product improvements, having seen a job to be done that required a new business model and often fundamentally changing their industry.

For example, businesses like Harry’s and Dollar Shave Club have seized the opportunities created by digital technologies to build a new model for selling razors, going directly to consumers on a subscription basis. Their model is viable thanks to digital technology, which has helped them disrupt a market long dominated by major incumbents.

Get Started

One important first step in customer-centric innovation may sound unorthodox if you’re used to making decisions based on spreadsheets and charts. Building customer empathy by talking to the actual people who may buy your product is essential to this success. Observational research can unearth jobs to be done that are simply not visible in consumer data. This is especially the case when you are innovating to meet new jobs to be done and there is no data to draw on.

You cannot find opportunities by solely relying on spreadsheets or graphs. It needs real engagement with customers. As the first step in developing your next product, find a real question or unknown that’s important to your work, frame some questions using the “jobs to be done” theory, and get out of the office for some real conversations.

About the Author

Hari Nair is a fellow of the Advanced Leadership Initiative at Harvard University, senior advisor at New Markets Advisors, an instructor on Duke Corporate Education’s Building Strategic Agility course, and a leading practitioner of innovation and corporate transformation. He has more than 25 years of operational experience applying innovation approaches across multiple sectors and markets.

Hari served as chief strategy and innovation officer for Sime Darb, a publicly-traded Malaysian conglomerate with interests ranging from Caterpillar distributorships to palm oil plantations and property development. Hari also led Kimberly Clark’s Global Innovation Center in Seoul, where he worked with a team of 100+ researchers on customer-centric innovations.

In addition to leading business lines for P&G in the United States and China, Hari was partner and vice president at Innosight, a growth strategy consulting firm founded by disruptive innovation expert Clayton Christensen. Hari teaches leaders around the world about disruptive innovation.

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