Three Models for Applying Customer Feedback to Innovation

Customers have always been core to companies’ existence. An obvious statement for sure. Customers are the source of cash flow, and have historically been thought of in marketing and transactional contexts.

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But in recent years, we’ve seen the rise of a new way to consider customers. As vital influencers of company activities and strategies. Two popular ways this is taking form are the social CRM movement, and the emergence of open innovation.

If you follow discussions in these developing strategies, you see that there are differing views as to the value of customer feedback. Understanding the different use cases of customer feedback helps organizations to set objectives and expectations appropriately, and to create effective frameworks for engaging customers.

Let’s look at three models for applying customer feedback to innovation.

Customer Feedback and Innovation Objectives

The graph below highlights the three models:

The three objectives on the graph are:

  • Features – product or service requests
  • Product’s “job” – understand the deeper purpose your product fulfills
  • Proposal – putting a new concept in front of customers to understand its key value drivers

The X-axis measures the difficulty of getting feedback relevant to a particular objective. The Y-axis measures the impact on company results for the different objectives.

Some notes on the three models follow. For context, I’m including some ideas proposed by Starbucks customers on the My Starbucks Idea site.

Features

Customers – hundreds, thousands, millions of them – are constantly using your products and services. This makes them well-positioned to suggest future product features and service enhancements. As a customer, you become intimately familiar with a product’s utility, and what else you want to see.

You can see this on the My Starbucks Idea site. Some examples of customer product and service ideas:

  • Use dark chocolate in espresso drinks #
  • More milk substitute options #
  • Healthy food items #
  • Mobile QR codes with payment info and drink order (scan-n-pay) #
  • Separate lines for drip coffee buyers (during morning rush hour) #

Often, I see this type of innovation pooh-poohed, as if it is not worth the effort. I fundamentally disagree with that position. This is the important, block-and-tackle work of serving a large market.

As the graph shows, these individual innovations won’t dramatically change a company’s fortunes. But in aggregate, they become a vital part of the product strategy for companies. Soliciting useful ideas for features is relatively easy.

It is important to remember that no company will blindly follow whatever ideas are suggested.  Innovation here is customer-centered, but not majority centered.

Product’s “Job”

The notion that customers hire your product to do a “job” is one I learned from Clayton Christensen. He stresses thinking of what customers need to accomplish, as opposed to thinking of product features or customer demographic segments. This frees your mind to address products differently than as a collection of features.

The challenge is to go deeper on what the customers are requesting. This is where customer feedback is not the final answer. Rather, it’s an important clue as to what “job” your customers are hiring for. Take a look at these five ideas from the Starbucks ideas site:

  • I need a 24 hour Starbucks #
  • Have late night locations near hospitals #
  • Later Weekend Hours #
  • More comfortable seating and extended hours #
  • New/additional 24hr locations #
  • Open late #

Now as features go, the ideas above are pretty basic. Keep Starbucks open later. But rather than look at them that way, are they providing clues about the “job” customers hire Starbucks to do?

It’s obvious customers are hiring Starbucks for more than a cup of coffee. Starbucks has consciously built out a more lifestyle-based experience. These requests for nighttime hours are indicators that Starbucks has an opportunity to address a new “job”. Here’s my interpretation of the “job” (yours may be different):

People want the solo intellectual pursuits of reading a book, creative writing, researching or getting projects done on a computer. They could do this at home with their own coffee brew or tea. But there’s something social about being around others, even if you’re not engaging with them. You’re connected to the world, as you view it through the periphery of your mind’s focus.

People want to pursue their individual interests, but do it in a way that let’s them feel connected to larger society, be around kindred types and keep tabs on what is happening.

If you accept that as the “job” that customers hire Starbucks to do at nighttime, then the next activity in customer-centric innovation is to come up with other features of the experience that address the “job”.

This is where Starbucks can suggest new features to customers, based on a better understanding of the “job”. The new features can be put out to the customer community for their feedback.

Proposal

Roberto Verganti describes a “proposal” in his book, Design Driven Innovation. A proposal is a product that is not a linear change in your offering, but represents a radical change in meaning. Many purchases – such as a Starbucks coffee – have meaning beyond the coffee. In fact, I’d argue Starbucks has successfully performed a radical change in meaning with its coffee varieties, “baristas” and lifestyle experience. Much different than say, a Dunkin Donuts or McDonalds coffee.

Verganti also takes a fairly dogmatic position against customer-centric innovation. Rather, he argues for vision-centered innovation. The inspiration and sources for vision comes via learning from networks at the edge of societal change, within your industry and outside it. But it’s not without a role for customers after all. As he wrote recently on the Harvard Business Review:

They need to propose new unsolicited products and services that are both attractive, sustainable, and profitable. It is only within the framework of a vision-centered process that users can provide precious insights.

In this model, customers cannot tell you the new, unimagined things they want. Would anyone have suggested a need for Adobe Acrobat, Turbotax, Facebook or Twitter? But once a company has a new proposal for customers, they can become part of the development process. As Russell Ackoff and Herbert Addison wrote in the Little Book of f-Laws (pdf):

There is no point in asking consumers – who do not know what they want – to say what they want. Many new product and service introductions have been disastrous despite the extensive surveys conducted to show that there is consumer interest in, and intention to buy, such a product or service. These surveys have incorrectly assumed that most consumers know what they want.

Consumers can discover what they want in products and services by designing them. It is in design that people find what they want. Furthermore, consumer involvement in product/service design almost always gets creative results.

Engaging customers to get their ideas for something radically different holds great value here. This is not an exercise in determining market interest – although that might be a side outcome. Rather, it’s a process of getting ideas to flesh out this proposal. Let customers help determine the radical innovation of meaning for a new concept.

Progress on the Open Innovation and Social CRM Fronts

The graph above is really more a spectrum, not a series of discrete models. For example, where feature requests leave off and become input about a product’s “job” isn’t a step function. More part of a continuum. But it’s helpful for discussion purposes to describe three models, because there are differences at different points of the spectrum.

As both open innovation and social CRM progress, think about the implications of these approaches on integrating customer feedback into innovation.

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My Ten Favorite Tweets – Week Ending 021210

From the home office in Vancouver, where I’m preparing to compete in the snow blogging competition…

#1: Twitter’s location information would come in handy during the Olympics. Choose to follow tweets of only those in your time zone.

#2: Foursquare founder Dennis Crowley (@dens) describes the future of participating in location-based social applications http://post.ly/Mft6

#3: Fascinating study of Twitter spammers, and how they compare to legitimate users http://bit.ly/bFkd6l > Hard to tell difference

#4: The Importance of Managing Your Online Reputation http://bit.ly/a7i5mx by @VenessaMiemis > Strong, comprehensive post

#5: Goal Setting Stimulates Employee Innovation (via Spigit blog) http://bit.ly/cuKC9u #innovation #e20

#6: RT @mvandall MIT-Sloan 4 keys to driving innovation: Measurement, experimentation, sharing & replication. http://bit.ly/cH9khC. Spigit got it right!

#7: In light of Toyota’s quality issues, do you think they abandoned the “million employee ideas” somewhere along the line? http://bit.ly/a3iX9K

#8: RT @SmartStorming You can’t wait for inspiration, you have to go after it with a club. Jack London #innovation #creativity

#9: Nice word: “heterarchy” a formal structure, represented by a diagram of connected nodes, without any single permanent uppermost node

#10: Chocolate chili recipe http://bit.ly/aXn4kd > Hearty chili with an exotic quality. @cflanagan @justinmwhitaker @cubba #superbowl

Why Ideas Are Core to Enterprise 2.0

Brian Solis spoke recently on what the future of social networks will be. Ideas, it turns out. As I wrote on another blog post:

Solis, leading thinker in the integration of social media and PR, recently spoke on an intriguing concept: ideas connect us more than relationships. The premise of his argument is that ideas are what elicit passion in people. They animate us, and if we find someone with a similar interest in a given idea, we connect.

Then there was this observation by Intel’s Enterprise 2.0 lead Laurie Buczek on the only quantifiable value they found in their Enterprise 2.0 efforts:

Where we did quickly find quantifiable business value during an ideation proof of concept.  Ideas that are discovered and turned into action have produced dollarized return of business value.

Both Brian and Laurie are pointing to the unique nature of ideas. Brian talks of ideas as connectors. Laurie talks of ideas being “discovered”. If Enterprise 2.0 rests on delivering value through collaborative, emergent and social means, ideas are the top basis for leveraging these qualities.

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Of course, from a pragmatic, what-do-businesses-care-about perspective, innovation is a top priority.

The top-down, Board-level importance of innovation is not a surprise. As I’ve seen repeatedly with our enterprise innovation work at Spigit, ideas are an excellent bottom-up basis for Enterprise 2.0.

Ideas Are Me

Credit: -: pranav :-

Perhaps the most important aspect of social is the ability to express what you’re thinking. Ideas fit this dynamic quite well. Ideas are…

Expressions of my creativity, ingenuity and problem-solving

Inside companies, we see things that we know can be improved. We see opportunities that need to be explored. We know a good answer for a particular challenge put forth by managers.

Every time you have an idea, a bit of you bonds to it. Your way of thinking, your understanding of context, the experiences you’ve had, the expertise you bring to bear, the work aspirations you have.

Ideas can be small, giving you satisfaction in fixing something obvious to you. They can be big, offering the possibility of work that elicits your passions.

This is powerful stuff. It is a unique intersection of something that helps the company with something that personally satisfies you.

Ideas Are the Basis for Finding Like-Minded Colleagues

When I post an idea, I create the basis for finding others. That because when I post an idea, I’m making…

Credit: cauchisavona

A call for your interest

Think about that. The act of publishing an idea is a broadcast across the organization. It’s a tentative query to see who else feels the same way. Or if not the same way, who has an interest that overlaps mine.

This is unique to ideas. Ideas are potential. They are a change from the status quo. There are others who share at least some aspect of your idea. In large, distributed organizations, where are these people?!!

My idea is my call to form my own virtual team, to see who can help me accomplish something of value to me and the organization. I contrast this with other types of activities one might do under the Enterprise 2.0 umbrella: status updates, project tasks, writing a common  document, adding content to knowledge wiki. Those aren’t calls to form virtual teams.

Ideas have a unique quality in team and community forming, consistent with the emergent nature of Enterprise 2.0.

Ideas Are Social Objects

A key consideration of any framework for interaction is, “what are we going to talk about?” Within the enterprise

Credit: Akshay

environment, an idea is…

A social object for our interaction

The concept of social objects is powerful. It illuminates the core basis for why two or more people interact. They share an interest in some thing. We are complex beings, with multiple different interests. We won’t ever match up  with someone else exactly in terms of what animates. But social objects allow a sort of miniature Venn Diagram of our common interests to flourish.

Hugh MacLeod pragmatically notes, “The Social Object, in a nutshell, is the reason two people are talking to each other, as opposed to talking to somebody else.”

Leading designer Joshua Porter, also known as Bokardo. In his post, Finding Innovation in Design, he describes the AOF method of social experience design:

  • A = activity you want to support
  • O = social objects that define the activity
  • F = features are actions people take upon social objects

You build social-oriented sites around a core set of objects and activities which attract people.

Ideas, because they represent something new, something that can affect your daily work, are terrific social objects. An idea is a proposal, and a natural basis for interacting. Contrast this with posting a document, or a page of knowledge, or a status update. Those are lower wattage, more ephemeral social objects.

Ideas Become Projects

Ideas get attention. They propose to change things, and they will need work. An idea is…

The basis of a future project for us

Credit: The National Guard

What makes ideas so powerful is they are changes to the status quo. This means:

  • They’re going to affect people’s daily work
  • They require some work to make happen

This imbue ideas with a certain vitality. It gives them a power not seen with with other types of social computing activities, save projects themselves.

Another important aspect is that ideas will elicit passion in certain users, those we talked about earlier. If there is a chance to become part of a project team working on the idea, that is exciting. Consider times in your life you got to be part of a team, working on something that excited you.

Ideas have these qualities: possibilities, change to work routines, chance to be part of an exciting initiative. Projects have a certain aspirational quality for us employees, and ideas tap this aspect well.

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There are many types of content and activities – social objects – that are part of a social computing initiative. I’d argue ideas, for a host of reasons, should be considered top amongst those social objects.

Noted: Innovation Management races past Enterprise 2.0

I belong to two groups on FriendFeed, Enterprise 2.0 and Innovation Management. These groups track tweets and Delicious bookmarks related to their respective topics. The Enterprise 2.0 Group was set up in June 2008, meaning it’s about 15 months old.  The Innovation Management Group was set up July 24, 2009, meaning it’s  about 1 1/2 months old.

So the Enterprise 2.0 Group has a 13 1/2 month head start in terms of attracting members.

Which makes this all the more remarkable:

Innovation Mgt vs E2.0 - FriendFeed GroupsThe Innovation Management Group tied the Enterprise 2.0 Group in membership last Friday (9/4/09). It now has 607 subscribers vs. 590 in the Enterprise 2.0 Group.

Noted.

Gartner Hype Cycle for Emerging Technologies 2009: What’s Peaking, What’s Troughing?

Gartner maintains something called hype cycles for various technologies. What’s a hype cycle? The hype cycle provides a cross-industry perspective on the technologies and trends IT managers should consider in developing emerging-technology portfolios.

UPDATE: Link to Gartner’s 2010 Emerging Technologies Hype Cycle

Here are the five stages of the hype cycle:

1. Technology Trigger
The first phase of a Hype Cycle is the “technology trigger” or breakthrough, product launch or other event that generates significant press and interest. A “technology trigger” is breakthrough, public demonstration, product launch or other event generates significant press and industry interest.

2. Peak of Inflated Expectations
In the next phase, a frenzy of publicity typically generates over-enthusiasm and unrealistic expectations. There may be some successful applications of a technology, but there are typically more failures.

3. Trough of Disillusionment
Technologies enter the “trough of disillusionment” because they fail to meet expectations and quickly become unfashionable. Consequently, the press usually abandons the topic and the technology.

4. Slope of Enlightenment
Although the press may have stopped covering the technology, some businesses continue through the “slope of enlightenment” and experiment to understand the benefits and practical application of the technology.

5. Plateau of Productivity
A technology reaches the “plateau of productivity” as the benefits of it become widely demonstrated and accepted. The technology becomes increasingly stable and evolves in second and third generations.

On July 21, Gartner released its omnibus Hype Cycle for Emerging Technologies, 2009. This report covers a wide range of industries, from flat panel displays to home health providers to cloud computing.

Honestly, it’s fascinating to see how Gartner positions the various industries along the cycle. Here is 2009’s hype cycle for emerging technologies:

Gartner Emerging Technologies Hype Cycle 2009

Boy, that’s a full hype cycle isn’t it? The report itself is chock full of analysis and forecasts for the various technologies. Here are a few notes of mine from reading it.

Social Software Suites: It’s clear that the market is moving toward more applications bundled into Enterprise 2.0 offerings. As Nikos Drakos and Anthony Bradley write, “we expect that successful products will continue to assimilate new functionality.” The report notes that Social Software Suites have tipped past the peak of inflated expectations.

One observation made by Drakos and Bradley resonates with me:

In the longer term, many companies will have social software technology supplied by their strategic workplace vendor, perhaps augmented with additional third-party products. Accordingly, industry is starting to move from general-purpose suites to more targeted products, concentrating on “horizontal” social business challenges, such as idea engines, prediction markets and answer marketplaces.

Putting Enterprise 2.0 to work on specific problems was something I wrote about as well recently in Enterprise 2.0: Culture Is as Culture Does. If you’re not addressing specific problems as a social software vendor, you’re basically angling to replace the company intranet or portal.

Finally, note that standalone wikis and corporate blogging are in the Slope of Enlightenment. Those apps are also part of social software suites.

You can see the Gartner Social Software Hype Cycle 2009 graph on the Spigit blog.

Idea Management: Idea management is further along the curve, knocking on the door of the Slope of enlightenment. What’s interesting to me is how much the idea management space is really overlapping the social software space. Indeed, read the quote above. According to my interpretation, this means that social software is moving more toward tackling horizontal challenges, “such as idea engines.”

Speaking from my own Spigit experience, this quote rings true:

Industries that emphasize new product development were early adopters of idea management tools. In 2009, service industries and government are increasingly adopting innovation and idea management practices.

Microblogging: With Twitter’s rapid ascension in the public consciousness, it’s no surprise that the Enterprise 2.0 vendors are rapidly adding microblogging to their suites. Analyst Jeffrey Mann predicts that “by 2011, enterprise microblogging will be a standard feature in 80% of the social software platforms on the market.”

I like Mann’s advice to corporate clients reading this report:

Adopt social media sooner rather than later, because the greatest risk lies in failure to engage and being left mute in a debate in which your voice must be heard.

Cloud Computing: Cloud computing is at the top of the Peak of Inflated Expectations. It’s hot. I’ve seen bloggers debate what constitutes “cloud computing”. This definition by David Mitchell Smith seems as good as any:

Gartner defines “cloud computing” as a style of computing where scalable and elastic IT-enabled capabilities are delivered as a service to external customers using Internet technologies.

Smith notes that cloud computing is actually quite varied, and “that one dot on a Hype Cycle cannot adequately represent all that is cloud computing.” The report does say that cloud computing will be transformational. Yup.

E-Book Readers: So, have ya heard of e-book readers? When they debuted, I personally didn’t think much of them. I mean, what’s wrong with books? Turns out, there’s a great market for them. I still haven’t bought one, but that doesn’t mean much.

And this report is illustrative of the unexpected success of e-book readers. Here’s what the Gartner analysts said for the appearance of e-book readers at the top of the Peak of Inflated Expectations:

This positioning has been reassessed from the prior year’s Hype Cycle. E-book readers saw serious hype in the early days. These largely failed to capture the attention of the consumer and fell into the trough never to emerge.

Those are a few notes from the report. It’s 55 pages, and there are technology-specific versions of them as well. Gartner always has an interesting take.

I’m @bhc3 on Twitter.

Build it and they will come: Innovation Management FriendFeed Room

friendfeed-logoOn this blog, I’ve talked previously about the value of using FriendFeed for tracking topics from around the web (here, here, here). For instance, the Enterprise 2.0 Group, with 508 members, is a great place to track the latest in enterprise social software.

When I joined Spigit, I wanted to get up-to-speed fast on the topics and people driving the energy in innovation management. So I set up another FriendFeed Group, called Innovation Management. This one I set up as a “private, invite only”. I just wanted a nice place where I could learn and keep up with happenings in the field. I was tracking tweets with the hash tag #innovation, the words “innovation management” and Delicious bookmarks tagged with innovation. I also have the tweets of as number of people in the field captured in the Group as well. My own little private news service.

But a funny thing happened. People found my “private” Group. I had 17 different people requesting to join the Group. How’d they find it? I don’t know. FriendFeed Group search says “Find public groups“. It wasn’t public.

Regardless, there were 17 people who requested to join my little Group of 1. What to do?

I opened it up. What the hell, why not? So if you’re interested in tracking what’s happening in the world of innovation management, go ahead and click the link below:

Innovation Management FriendFeed Group

40 people are members already. See you there.