“Above
all, we know that an entrepreneurial strategy has more chance of
success the more it starts with the users – their utilities, their
values, their realities … the test of an innovation is always what it
does for the user…it is by no means hunch or gamble. But it is also
not precisely science. Rather, it is judgment.” – Peter Drucker,
Innovation and Entrepreneurship

Just because a company is
spending money on research (such as markets, customers, or new
technologies) and development doesn’t mean they will get innovation.
Innovation, as with advertising, training, or many other organization
investments, depends on the quality of the investment as much as the
quantity of resources put in it. A high proportion of innovative new
products, services, and companies flop. That’s often because managers
build better mousetraps without first making sure there are any mice out
there. Or that people still want to catch them.

Many innovations
come from a deeper level of customer and market understanding. They go
beyond what current customers say they need. They solve problems that
customers either don’t realize they have or didn’t know could be solved.
These innovations create needs and performance gaps only once customers
start using them and get turned on to the possibilities.

Every
product and service we now take for granted was once silly, interesting,
or just an odd curiosity. What would we have said to a market
researcher asking about a video machine for our TV when there were few
movies to rent? How about CD players when there were no CDs to buy? What
about a bankcard to withdraw cash from an ATM? How about a personal
computer? In the fifties, how highly would we have rated the need for
jet planes when our business was conducted within a few hundred-mile
radius of our office?

These are a few examples of the thousands of
innovations that customer or market research and competitive
benchmarking would never have identified a need for. The companies who
pioneered these sorts of innovative breakthroughs had years of
spectacular revenue growth and market leadership.

Walking in Our Customer’s Shoes

“The
need for innovation on an unprecedented scale is a given. The question
is how. It seems that giving the market free rein, inside and outside
the firm, is the best – perhaps the only – satisfactory answer.” – Tom
Peters, Liberation Management: Necessary Disorganization for the
Nanosecond Nineties

Innovation is a hands-on issue. It calls
for an intimate understanding of our current customers and markets,
potential new customers or markets, team and organization competencies
and improvement opportunities, vision, values, and mission. We can’t
develop that intimacy from a distance. Studies, reports, surveys,
graphs, and measurements wouldn’t do it.

Effective innovation
depends on disciplined management systems and processes. But it starts
with people. People searching for creative ways to do things better,
different, or more effectively. People trying to understand how other
people use, or could use, the products or services their organization
could produce. That makes innovation a leadership issue.

Beyond
the management tools of surveys, focus groups, and the like, innovation
leaders find a multitude of ways to live in their customers’ world.
They’re learning how to learn from the market, not just market research.
Innovation leaders look for ways to align the organization’s product
and service development competencies with latent or unexpressed market
and customer needs. Since customers don’t know what’s possible, they
often can’t identify innovations that break with familiar patterns.

At
the other extreme, leaders recognize that their organizations are
constantly in danger of developing products and services with little or
no market appeal. So many new (or extended) products and services come
from empathic innovation. These are innovations that flow from a deep
empathy and understanding of the intended customers’ problems and
aspirations.

Through living in and empathizing with their
customers’ world, innovation leaders focus their organization’s
development capabilities on solving problems or meeting needs that
customers may not realize could be done.

As my first consulting
company, The Achieve Group, was working with current and prospective
Clients to move beyond the training field to organization improvement,
we stumbled across the need for senior management education, strategy
formulation, and implementation planning sessions. This came from
working closely with Clients struggling to get people in their
organization trained and using new approaches to customer service,
quality improvement, and teams. It became clear that how the senior
management group pulled everything together and led the effort was the
key stumbling block or stepping stone to the whole effort. After
experiments, pilots, and few failures, Achieve’s highly successful
executive retreat process evolved and developed to meet a need no one
had anticipated.