Trevor Booth, a Consultant in our UK Marketing, Sales and Service practice writes about the importance of customer focused innovation.
It seems that every couple of months an innovative new product is announced, whether it be the iPad or watching 3D football at your local pub. These inventions are changing the way we go about our daily lives, how we access information and indeed the way we socialise with each other. We are also seeing companies operate in non-traditional markets, such as McClaren who are renowned for creating supercars upwards of £300,000 are now moving into a range of areas far removed from motorsport such as consumer goods, healthcare, software and sports technology. In this fast paced environment companies need to be extremely agile and adapt to changing market conditions as well as build on their strengths to open new market opportunities. Innovation is central to this success, but as I explore today this must be customer centric innovation.
Perhaps one of the fastest growing areas of innovation is new media with the advent of social media platforms, smart phones and TVs (which offer internet and on demand entertainment). These innovations mean a single product can deliver all media channels. Sony has taken this a step further with its Qriosty service which signals the beginning of their online sales arena.
Qriocity will offer live streaming SD and HD to consumers who can watch them on other web-enabled Sony devices, including its TVs, laptops and digital music players. They also plan to expand into music placing the service in direct competition with Apples iTunes. Sony have looked at the customers and developed a service that they believe help make their lives easier by making their favourite entertainment on demand from anSy Sony product.
Sony, regarded as a leader in new technology innovation has not always been successful. In the late 70’s Sony launched a breakthrough technology for video recording with its Betamax. Sonys Betamax was arguably better than rival VHS from a technology perspective but issues related to licensing and inferior marketing meant VHS emerged as the winner and Betamax leaving a rather large blip in Sonys successful product history. This example demonstrates the need to innovate across all areas of the business from marketing to product design. Had Sony listened to their customers and distributors then a different licensing strategy could have been employed which may have resulted in Betamax as the industry standard rather than VHS.
Apple too has news of its own with the possibility its new iTunes 9 will venture into social media by integrating Facebook and Twitter. Users of iTunes will have the ability to broadcast to their social network what they are listening to, song purchases, ratings and reviews. Status updates will include links to music which can be directly purchased from the iTunes store which will provide significant new revenue opportunities for Apple. Apple have traditionally been anti-social media but they have recognised that their target market are amongst the highest users of this technology and by incorporating these features into their product design they have demonstrated their willingness to put their customers at the core of new product innovations.
Whilst Apple is regarded as a leader in technology innovation, this has not always proved a successful strategy. Some of you may remember Apples first foray into the mobile phone market with its “Apple Newton” which was the world’s first PDA. The Newton was intended to be a complete reinvention of personal computing. This innovation was ahead of its time and sales failed to live up to expectation. A number of reasons contributed to this, high entry price point, inconsistent marketing messages that promised functionality it could not deliver and launch timing. Apple have learned from these mistakes by developing products that capture very well everything consumers desire in a product and more, an example is the exceptionally successful iPad which enabled Apple to sell 3 milliion units in its first 80 days.
There are many examples of companies that have had meteoric failures trying to develop innovative technologies and entering new markets unsuccessfully. A memorable example is Motorola’s satelite phone “Iridium” which aimed to revolutionise mobile communication. The theory was simple, a mobile network which meant you could contact someone no matter where they were in the world, whether it’s the top of Everest or 100 miles from land in the middle of the pacific ocean. Motorola built a standalone satellite network which came at an enormous cost, this meant an entry level price that was out of reach of most of the population. The technology itself also meant that handsets had to have a clear line of sight with the satelite like as many GPS units do today in order to work which made it impractical. The handsets themselves were large and clunky harping back to the brick phones of the mid 80’s. As a result just 20,000 customers signed up globally leading to Motorolas satelite business filing for bankruptcy soon after. There are many lessons to be learnt from this failure but none more important than understand the customer and what they view as the important features of the product.
Customers are more savvy than they have ever been before and they also interact with companies and each other more than ever before. This means that news travels fast leading to significant success or failure, therefore paying attention to social media and other channels for customer feedback is important to prevent investing in new products that are doomed to fail. Taking this a step further this feedback can be used to help in the product design so customers feel they have been a part of its creation leading to loyalty and greater sales potential. A recent study by Forrester suggests that 83% of those surveyed indicate that their company uses social media to engage with consumers in some way, but fewer than half of those surveyed indicated that their product teams are currently using social media to influence product design, creation, or strategy. Therefore social media is no longer the realm of marketers only, all aspects of the business should adopt a social media strategy to deliver a service that is driven by customers. Adobe offers a website called “Adobe Labs Ideas” where the public can visit and post ideas on ways to improve each of their products. This feedback is provided directly to the product development teams who incorporate this feedback into the design.
There is no doubt companies who consistently innovate will become the leaders of the future however there has to be a logical strategy and more importantly a market for the technology. Companies should carefully assess their existing capabilities and offerings to help identify new opportunities both in terms of product and new customer segments. More importantly however, these organisations need to invest in understanding the customer journeys and needs and apply insights into new opportunities. Without this additional step there will be more catastrophic failures such as those mentioned in this article. Additionally, providing social media platforms for customers to become involved in the product design such as Adobe Labs will enhance the chance of products delivered being a success.