Three keys to customer-centric innovation

Successful customer-centric innovation demands that we genuinely understand our customers’ needs, says Hari Nair.

Two decades ago, I was an R&D engineer designing laundry detergents for markets around the world. One of these was a washing machine detergent for China. The data indicated widespread ownership of washing machines across China, and we were confident our new detergent would sell. We were wrong.

The reason why became clear when I moved to China and spent more time in Chinese homes. I saw that washing machines typically sat in the living room corner, covered by a sheet and rarely used, save for bulky clothes. Most laundry was done by hand: a better product would have been a great hand-washing detergent.

In global businesses, it’s all too easy to make flawed assumptions about the products that consumers in an unfamiliar part of the world might want. Successful customer-centric innovation demands that we genuinely understand our customers’ needs. But that alone is not enough. As the IDEO Design Thinking toolkit identifies, there are three factors for success: desirability, feasibility, and viability.

Desirability

Customers don’t buy products simply because of their gender, their age, or their 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.

My experience working with Godrej & Boyce on a refrigeration product for the Indian market shows the importance of really understanding the job to be done. 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 was small, suitable for keeping just a few items cold overnight, used much less power, and was far more affordable. Our innovation made it highly desirable, and created a new growth category for Godrej.

Feasibility

Desirability needs to be backed up by 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, offering 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 hard. After trying a number of approaches, we ended up selling the business. At that time, our model simply wasn’t feasible in the Indian market – though today, with the rapid rise of smartphones and cashless payments, things would be very 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 US by offering lower-cost gyms that cut out premium features, an approach that was tested and refined in its first few sites.

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% of those initiatives delivered 90% of the cumulative value.

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, seeing a job to be done that required a new business model, 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 direct 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.

Take the first step

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

Take South Korea, one of the many countries today with an ageing population, where over-65s now account for 14% of the total population and rising. Human longevity is creating lots of new jobs to be done and one that I observed is the desire of senior citizens to record their life experiences in a book. They might only print 50 copies, but in a culture that strongly respects older people, an interviewing and writing service could be hugely popular. While we decided not to pursue the opportunity, it could yet be a success for a small entrepreneurial firm.

You cannot find opportunities like that in 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.

Hari Nair is a fellow of the Advanced Leadership Initiative at Harvard University, senior advisor at New Markets Advisors, and an instructor in Duke Corporate Education’s new Building Strategic Agility online course.  An adapted version of this article appeared on the Dialogue Review website.