Monthly Archives: January 2009

Customer-driven Innovation Requires a Shift in Mindset

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The emerging disciplines of customer-driven innovation and
value co-creation don’t enjoy a natural fit with existing mental maps of
managers. 

Most marketing
executives equate involving customers in the innovation process as ceding
control.  They perceive customers’
demands for co-creation as a threat, wrongly believing that it weakens and
undermines a company’s need for controlling transactions with consumers.  Other authors like Charlene Li and Josh
Bernoff in Groundswell and C.K. Prahlad and V. Ramaswamy in The Future of
Competition have also recognized this reluctance and anxiety on the part of
companies.  

Consequently, developing and
implementing a customer collaboration capability is not merely a matter of
implementing a recipe; it also requires a shift in mindset. The three
prerequisites for a new mindset that encourage managers to look beyond
traditional models of markets, where markets are disjointed from the value
creation process to newer models, where markets are isomorphic with the value
creation process, are:

    • Authenticity
    • Flexibility
    • Conviction

Authenticity

Companies have agendas and
consumers have agendas.   The
difference is that consumer agendas are for the most part transparent.  For example, consumers want safe toys,
easy to use plug-and-play products, and hassle free customer service.   Company agendas, on the other
hand, are not always unambiguous or easy to understand.

Authenticity, as I conceptualize
it, is part ethics, part transparency, and part trust.   It is an orientation, or intent,
that a company brings to its collaboration and value creation efforts with
consumers.   Over time, if
reinforced by right action, it gets transformed into being perceived as a
company trait.  It is a heart
response on the part of the consumer towards a company, not a head
response. 

Few companies wear the badge of authenticity as well as
Johnson & Johnson.  Ask the
millions of moms who visit its award winning global community BabyCenter.   Somehow, they are convinced that J&J will not
compromise their interests.

Flexibility

Today’s consumers have a definite
point-of-view on a number of issues, ranging from t-shirt designs (Threadless),
nutritional value of various foods (Acai fruit berry), appropriateness of diets
(South Beach Diet), to issues related to child labor and living conditions of
workers in Nike and Levi’s factories in Asia.

 Flexibility speaks to a greater willingness on the part of
the company to accommodate opposing points of view.  There is no rule that says that companies and customers have
to agree all the time.   What
is absolutely essential is clear communication about what the company has paid
attention to and how it has adjusted its own stand as a result of the
customer’s opposing point-of-view.

It was the activists who first brought Nike to its
knees, drawing attention to child labor in its Asian shoe producing factories.
Nike admitted its blunder acknowledging that it blew it.  The company did not close down its Asian factories, but
instituted significantly more stringent age monitoring and hiring controls,
which it broadcast widely in its corporate responsibility reports.   The activists have yet to give
Nike a passing grade, though consumers seem to have accepted Nike’s
accommodation and self-policing. 
Nike boasts of some of the most successful customer-driven innovation
programs; just ask the world’s football (soccer) fanatics – customer-driven
innovation programs have been implemented for shoes, t-shirts, and other
team/country related merchandise.

Conviction



Companies have a choice.  They can either treat emerging
customer-driven innovation initiatives as a substantively new way of shaking
hands with the market, or as a way of keeping up with the powerhouses – Apple,
Samsung, P&G, Nike, and Nokia. 
Symbolism is likely to be penalized.   

Wal-Mart‘s
attempt at engaging teens in their community The Hub lasted only ten weeks.   The problem was not with Wal-Mart’s intentions; they
probably meant well and wanted to build a safe environment for teens to
interact.   However, whether
Wal-Mart was convinced that this was the way of the future is seriously
debatable.

Contrast
this case with the example of WePC.com,
the first community-designed laptop.   A joint venture between ASUS and Intel – it
demonstrates that positive outcomes occur when companies approach the new model
of customer-driven innovation and value co-creation with conviction.  Even when companies operate outside
their zone of comfort!  Intel is a
chip company, not a builder of laptops.   

Companies
need to recognize that in the absence of a shift in mindset, efforts at
implementing customer-driven innovation programs are likely to stall.  It would be far too easy to shoot the
messenger, or fault the recommended solution. 

However,
as the good bard reminds us – the fault dear Brutus lies in us, not in our
stars. 

It is not just a simple
matter of adopting newer models of open innovation.  Adoption and implementation of these newer models must also
be accompanied by a new and different way of thinking of the relative roles of
companies and customers in creating future value.

Marietta Baba: On Ethnography and Customer-Driven Innovation

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Anthropology-based thinking first made its appearance in the business and marketing world in the early ’70s.  In the last decade, this thinking and its variants – ethnography, netnography, consumer anthropology – has gained momentum and become increasingly acceptable among business professionals, marketing in particular.  Today, most companies practicing cutting edge marketing, like P&G, Nike, Nokia, Tesco, and Samsung consider investments in ethnography as essential in launching customer-driven innovation programs. 

However, experience teaches us that when an idea or a business practice starts bordering on the fashionable – a must do – tensions start arising between the classicists and the johnny-come-latelys; the former wanting to preserve the essence of the discipline, the latter wanting to adapt and mutate.  
To understand the challenges facing anthropology and ethnographers in today’s business environment, I decided to have an extended conversation with a colleague and good friend Marietta Baba.  Marietta’s diverse background – Academics (she is the Dean at MSU) and Business Consulting (most notably with Motorola and with government agencies in DC) is invaluable in providing us with a big picture perspective on where the field is today and the challenges ahead. 

baba.jpg

Key snippets from our conversation follow.
Roots – in the early days ethnographers were brought in to play the role of intelligent probes/sensors.  They would be dropped into a business environment to figure out why things aren’t working the way they were supposed to.  Marietta gave the example of Detroit – wanting to reduce time to market but not being able to do it; Toyota was taking between 2-3 years from design to market; Detroit was taking more than 5 years.  So they brought in the ethnographers to figure out what was blocking the implementation.
I asked her if she and her colleagues were successful in helping solve the problem.  No, she answered.  Main reason – management unwilling to change, as they never saw themselves as part of the problem!
Essence – I asked Marietta to explain in every day language the essence of ethnography as she understood it.  Her answer:
    • a different set of eyes and ears – different, not necessarily better, but different
    • looking, exploring, and hearing from within – always from within.  She was quite chafed at the increasing reliance on observation, at the expense of participation – definitely not the same view; what you see and hear when you are participating is different than when you are observing.
    • the mind-set and orientation of a playful child – always exploring, always questioning.  She felt that there should be more emphasis on true exploration and playfulness.
    • deep understanding – not mechanistic attempts at sorting, classifying, and labeling

Dominant driving force – I asked Marietta if ethnography had a dominant driving force?  The search for the exotic was her answer.  In the colonial era, when the original thinkers laid the foundations of anthropology, people jumped on ships and went sailing looking for the exotic.  In Marietta’s opinion, this may be the single biggest challenge facing ethnographers today.  Earlier, differences were apparent and anthropologists went digging for similarities.  Today, similarities are apparent, and ethnographers go digging to unearth differences.  Resonates well with consumer anthropologists, like A.G. Lafley (see my previous post), dangling their feet watching a Mexican woman and her daughter washing clothes in the river.

Marietta identified several key challenges for ethnography and ethnographers while discussing the road ahead.  As always, her responses were crisp and provocative.
    • Ethnographers have typically done very well when dealing with low power actors who are easily manipulated.  Today’s consumer is significantly more powerful, is not afraid to use her power, and is not easily manipulated.  This may place a greater emphasis on experimentation, rather than prescription.
    • Ethnographers will find maintaining their playful inquisitive childlike disposition more difficult as their clients press them for more definitive and concrete solutions.  Much like a film maker who finds it difficult to pay homage to art, while bowing to the demands of box office receipts.
    • Flying solo is one thing – working in collaborative inter-disciplinary teams is another.  In Marietta’s opinion, working collaboratively will be the norm in the future, and she was not sure how many practicing ethnographers are comfortable doing that.  She was very complimentary of Lucy Suchman and her collaborative efforts with industrial designers and technologists during her tenure at Xerox PARC.
    • The thin edge of the wedge is how Marietta referred to the migration from knowledge to implementation.  She feels that in the coming years ethnographers will have to get more involved with implementation – not just knowledge, but action science as well.  She feels this is going to be brand new territory for ethnographers.

On a more playful note Marietta reminds me that true ethnographers don’t age, because they have insatiable curiosity, always asking why like little children, and they can’t be found at home much, since they are always sailing around in search of new and exciting meaning!

Fortunately for us we have Marietta’s itinerary and we will catch her again soon, when she stops to stock up and reflect.