Innovators, Customers and Things Between

Six months ago, in the beginning of Michaelmas term, my housemate once commented when I told him that I study Entrepreneurship and Innovation. “Innovation? What are you studying about? Something like—how to innovate?” I just laughed to that sarcasm, though deep down, yes, it got me thinking. He’s studying Finance, something very clear and concrete to understand. But innovation? It is an abstract notion. You can solve finance equation with one clear single answer, but there will never be one single answer to this unpredictable subject called “innovation”.

Now, after two terms studying Innovation in Practice (IIP), apparently my opinion is still pretty much the same. Innovation is somewhat a mystery. Whether or not a new product is going to be successful and whether or not a change in company’s business model will turn it into profitability are still riddles that business executives keep trying to find the answer. If innovation is an exact science, thing that is perfectly controllable and manageable, all companies in the world would have succeeded. All new products launch would be successful and all new business model would become more profitable. The thing is, it never is.

We can, of course, manage the innovation process. Tools like Osterwalder business model canvas, Kesselring evaluation matrix, project management charts, are all managers’ weapon to control innovation process into desirable result. But still, even though a company has painstakingly applied those tools, it doesn’t guarantee 100% successful innovation. As Clayton Christensen described in his phenomenal book, The Innovator’s Dilemma (1997), even giant corporations who applied sophisticated business management style, failed when dealing with something he called disruptive innovation. He bravely stated that “good management was the most powerful reason they failed.”

In IIP 1, we were told the difference between invention and innovation. Invention is new original thing we create, while innovation is the new thing that is succesfully utilised by society, market, or what we call customers. Therefore, there is a single factor distinguish innovation from a mere invention: innovation is accepted by customers; while invention never find its way to the customers—they still silently sit in innovators’ laboratory.

The prominent stakeholders are clear here. Innovators and customers. Invention will become innovation only if the two stakeholders are connected—what innovators create match with what customers need (or want). There is clearly a gap between what innovators perceive and what customers actually think. The question then, how can we fill in the gap?

The same question has been, I believe, asked by entrepreneurs, innovators, and innovation scholars over the world. Through my observation, it seems that there are two approaches used by innovators to answer that. The first group think that innovators should stay close to their customers, ask feedback, listen to what they want, develop product as they request, and become customer-driven company overall. The second group argue that innovators do not need to ask customers, since innovation is inevitable result of technology advancement and customers will eventually adapt to it.

Whether to listen or ignore the customers has been lifetime discussion topic among innovators. Dave Power (2013) wrapped it up by saying; entrepreneurs today debate whether innovation comes from technology breakthroughs or customer needs.

  1. Innovation comes from customer needs

This group is the casual giant corporations who always repeat their slogan “we listen to our customers”, “we are customer-driven company”, and other similar expressions. They are huge corporations with clever managers that apply great business management practice. They keep asking, “what do customers want?” as a base for their next innovation. They have gone through all the pain of marketing research, analysis of customers feedback and review, only to answer this single question.

  1. Innovation comes from technology breakthroughs

Contrastingly, the second group is those who never really listen to their customers. If the question “what do customers want?” is thrown to them, they will rhetorically answer, “Do they even really know what they want?”

Henry Ford, in his legendary quote, simply said, “If I asked customers what they wanted they’d have said faster horses.” In line with Ford, modern genius Steve Jobs stated in 1997 interview with Business Week, ““It’s really hard to design products by focus groups. A lot of times, people don’t know what they want until you show it to them.

 

Among all the things I’ve learnt in IIP course, I found that this debate about innovators and customers ‘relationship’ is the most interesting topic. I think it is the base of understanding how innovation works. Discussing this matter will cover other concepts too, therefore I will peel it off further in this essay.

Innovator vs Customer

Innovator vs Customer

Perspective 1: Innovators Should Listen to Their Customers

One great example of this kind of innovator is Lego. I still remember the Lego Case Study we’re given for preparation of IIP 1 exam. User-led innovation is something very important in Lego. They have released smart innovation like Lego Mosaic and Lego Factory (Lego Design byME) based heavily on lead customers’ input. They adopt ‘open innovation’ approach, recognise that ‘not all the smart guys work for us’.

Jorgen Knudstorp, the CEO of Lego, even indicated that somehow too many innovations negatively affect his company. In 2003, the disappointing year when Lego failed to perform financially well, there were lots of new products but no profitability. He then decided to take Chris Zook advise that “profits arise when companies focus on core products for clearly defined customer groups.” After that, Lego started implementing “back to basic” strategy, developing products with end user customer orientation. Lego clearly segmented their customers, such as kids, teenagers, AFOLs (Adult Fans of Lego), and then using focus groups to each segment in order to test new product ideas during product development process. As John Ashcroft (2014) stated in his Lego case study, close to the customer became a Knudstorp mantra.

In this case, probably listen to customers was the correct thing because Lego was in the state of ‘lost focus’—they somehow look for ‘help’ from customers in effort of deciding what to do. But see what happened with that user-led innovation several years later? After running for 6 years, Lego Design byME was discontinued on 16 January 2012 due to its “struggle to live up to the quality standards for a LEGO service”. Lego quibbled that Design byME was “too complex for children”, but many of Lego fans believed the real reason was, of course, that it wasn’t profitable anymore.

The same thing happened with Lego Universe. It was multiplayer online game that released on 26 October 2010, but shut down on 30 January 2012 due to ‘unsatisfactory revenue’. Lego Universe was also the result of ‘stay-close-listen-to-customers’ approach, but what happened was, it failed.

The failure may be well explained by using Ulwick (2002) study. He stated that there is a danger in the common practice of listening to recommendations of a narrow group of customers called “lead users”—customers who have an advanced understanding of a product and are experts in its use. He argued that lead users can offer product ideas, but since they are not average users, the products that emerge from their recommendations may have limited appeal or too sophisticated for common users. I think this is what exactly happened to Lego Design ByME and Lego Universe. User-led innovation may not be completely right action to take.

This case of ‘listen-to-customers’ but remained fail I think also applied to the case of Dvorak keyboard. It once became discussion topic in IIP 1 class about ‘dominant design’. The current standard QWERTY keyboard that was developed by Remington was in fact inefficient. In effort of accomodating customers’ need, Dvorak then developed keyboard that was specifically designed for increased typing speed and accuracy. This keyboard was made through careful research in customers’ typing behaviour, but still, it couldn’t replace QWERTY keyboard leader position in the market. Again, why?

Of course there are many other examples of succesful customers-led innovation. Other Lego products like Lego Duplo also based on customer needs and they remain succesful. However, some of this failed ‘listen-to-customers’ approach got me thinking that, probably, Henry Ford and Steve Jobs were right—we should not (completely) listen to our customers…

Perspective 2: Innovators Should Not Listen to Their Customers

Once upon a time, a young man with his dark hair and black suit, stood ahead in a hall of audiences. Spoke confidently, he walked on the stage and took out something, apparently a kind of ‘box’, from his bag. When the ‘box’ was turned on, moving letters soon appeared and created the words “insanely great”. Loud applause suddenly filled in the hall. All people were surprisingly amazed. And after that, the world had never been the same again.

That day was 24th January 1984, that man was Steve Jobs, and that ‘box’ was the first Apple Macintosh computer.

Steve Jobs has always been portrayed as a classic example of successful innovator—that didn’t listen to customers. His Apple creatures are for sure one of the world greatest phenomenon in recent decades. And as any other major trends, sometimes it is difficult to tell exactly, how and why that innovation becomes such an epidemic trend.

Honestly, I myself have never been one of those ‘Apple fanboys’. MacBook, iPad, iPod, iPhone, and their fellow Apple siblings for me are imperious ‘aristocratic creatures’ that refuse to connect with ‘common people’ gadget tools. They don’t compatible with certain softwares. They do complicated file transfer via iTunes. They do not have certain input/output ports. Aren’t those facts just making things more complicated? I can’t understand why people keep buying Apple with all those difficulties. For me, I prefer usual Windows laptop and Android phone that much more flexible with the same, sometimes more superior, quality.

Jobs has never listened to his customers. Yet he manage to create phenomenal innovation and bring the world under his feet. If only Jobs asked customers like me, “Do you want a mixture gadget between laptop and mobile phone? It can’t be used to work properly, may be too big to call someone, but you can use it only for playing games and read e-book.” Of course I would say no—and iPad would never been born. But Jobs never asked that kind of question. So iPad was born, and it was huge success that other electronic companies trying to copy.

Similar case happened to Instagram, a social media created by Kevin Systrom and Mike Krieger. If people were asked, do you want new social media? They will be more likely to say no. I already have Facebook, Twitter, blog, why should I create another online account? Especially when this social media only allows you to upload no more than pictures (and 15 seconds videos).

However, out of curiosity I created Instagram account in 2012, though I never use it. It was actually a very simple thing. You took a picture, alter it with some effect, and then post it. What’s so special? I just didn’t find anything interesting about Instagram. I can share my pictures on Facebook and get better respond. However, just recently few weeks ago I re-activate my Instagram account and…voila! I found new pleasure. I realised that it’s more comfortable to share my photos on Instagram since it won’t be ‘spamming’ my friends’ timeline—as I may do on Facebook with over posted pictures. Instagram also offer ‘hashtag’ that allows my pictures be discovered by other people looking for the same hashtag. Most importantly, the pictures posted look a lot more sophisticated that you feel like ‘professional photographer’.

The interesting part is, after actively engaging on Instagram, I found that somehow it changes myself. It influences my style of taking photos. I would prefer taking photos with my phone rather than (even a DSLR) camera, since it can be instantly uploaded on Instagram. I also tend to take shot of objects in such a way that it will be ‘instagrammable’, fit with the square-crop requirement and prettify it with ‘professional-look’ image editor. Systrom and Krieger didn’t even ask something beforehand about ‘what kind of social media I wanted’. Instead, they just made up things and pushed it on to me—which surprisingly I accept. It even dictates me. It gets me addicted. Seems that it wasn’t because they knew that I liked taking pictures so then they create Instagram. It’s because they create Instagram that I turned to like taking pictures.

Now that the approach of ‘not-listen-to-customers’ happened to be successful with Apple and Instagram, what about something like Segway? It is nevertheless one of the most original invention in history, yet it failed to be successful breakthrough innovation in the market. When I saw Segway failures video in IIP 1 class, I thought that it’s actually a cool product. I mean, I would rather try that than an iPad. But why it didn’t become a huge trend? What makes it different with Apple?

The answer is, I guess, pretty much explained by Malcolm Gladwell in his bestseller book, The Tipping Point (2000). Gladwell described how ideas, products, messages, and behaviours spread like viruses do. Tipping point, in my understanding, is an event of change when something that previously nothing suddenly become popular trend. In Everett Rogers (1962) Diffusion of Innovations graph, tipping point may be the critical mass or ‘breakeven’ point when an innovation cross the border from ‘early adopters’ category into ‘early majority’.

Gladwell proposed three rules of tipping point, which are the law of the few, the stickiness factor, and the power of context. From all those three, I think the difference between Apple and Segway lays heavily on the first factor: the law of the few. Gladwell stated that “the success of any kind of social epidemic is heavily dependent on the involvement of people with a particular and rare set of social gifts.” He named this kind of people into 3 categories: connectors, mavens, and salesmen. Connectors are people who have large numbers of friends and acquaintances. Mavens are people that become main source of information. Salesmen are people with highly persuasive skills.

Apple has Steve Jobs, which apparently, a man with combination of those three powerful personality traits. He’s a connector, a maven, and a salesman all at once. Probably that’s why he can turn all his (or Steve Wozniak’s) inventions into phenomenal innovations. He can make cutting board-shape gadget like iPad looks cool. Unfortunately, those kind of traits may not be possessed by Segway’s inventor Dean Kamen. No matter how brilliant his invention was, apparently it ended up looks ridiculous…

Regarding this exceptional charisma of Steve Jobs, people uniquely called it ‘reality distortion field’ (RDF). This sarcastic term was coined by Bud Tribble at Apple Computer in 1981, to describe Steve Jobscharisma and its effects on the developers working on the Macintosh project. He said that the term came from Star Trek. Andy Hertzfeld (1981) described it to be Steve Jobs’ ability to convince himself and others to believe almost anything with a mix of charm, charisma, bravado, hyperbole, marketing, appeasement and persistence. RDF was said to distort an audience’s sense of proportion and scales of difficulties and made them believe that the task at hand was possible.

In the case of Apple customers, I think this term reflects the ability of Steve Jobs and his fellow Apple warriors to convince (or hypnotise) customers to buy the product they may not need in expect of labeled as ‘fashionable technology trendsetters’. Somehow it creates delusion to its devoted customers that Apple products are the most original, innovative, and high-tech futuristic gadgets one could have now. Anything other than Apple is simply unworthy. Steve Jobs was, probably, in the stage of almost becoming new prophet, with Apple as his bible. I may sound too cynical but that was my reflection through all innovation theories I have learnt until now.

 

Finally, from those two perspectives of relationship between innovators and customers, I think none of them can serve as single truth—as it will never happen in subject like Innovation. My conclusion would be pretty much similar with what Christensen (1997) said, “there are times at which it is right not to listen to customers.” It means that sometimes you should listen to customers, sometimes you should not.

The first approach of ‘listen-to-customers’ will be applicable in the case of sustained innovation. Customers are of course a great source of information in terms of refining and developing existing products. If an innovator want to conduct incremental innovation toward his/her product, then it is right (and a must) to listen to customers.

However, when it comes to disruptive innovation, it isn’t proper to ask customers about what they want. If an innovator feel that the invention is something completely new, he/she can’t fully trust customers’ feedback since they never knew and experience that new product. Nevertheless, it doesn’t mean that innovators should completely ignore customers. There is an art for innovators to capture true message from customers.

An article by Anthony Ulwick (2002) in Harvard Business Review perfectly illustrate how innovators can take the essence of customers’ input to create proper innovation. He said that there is significant difference between asking customers about solutions of their problem with asking about outcomes they actually expect. Instead of taking customers’ feedback “I’d like a picture or video phone”, innovators should dig deeper until they get an answer like “I want to feel a closer bond to people when talking on the phone.” Picture or video phone is a solution, while closer bond is an outcome. It is not customers’ job to come up with solutions, it is the innovators’ job. Therefore, as Ulwick perfectly said, “when desired outcomes become the focus of customer research, innovation is no longer a matter of wish fulfillment or serendipity; it is instead a manageable, predictable discipline.”

I believe that the key to understand innovation, to predict whether a mere invention will turn into breakthrough innovation, lies in bridging the gap between customers and innovators. Innovators should master the art of knowing when they should listen to customers, and when they should ignore them.

***

This article was submitted as reflective essay assignment of Innovation in Practice 1 & 2

23 April 2015