Putting Customers at the Center of Product Development
Fostering customer-centricity and product innovation is fundamental to maintaining competitiveness. In theory, these strategies are simple to understand and write into a strategic plan. However, in practice this vision is tough to realize. For most companies, challenges are rooted in structure, culture and implementation. For example, firms tend to be organized around product, regional or divisional silos not by customer. These structural and process silos are not designed to easily and quickly access, synthesize and utilize customer insights. How can companies drive customer-centricity and unlock product innovation without turning their organizations inside out?
According to the NY Times, one strategy is to situate product development, brand management and sales assets within new customer innovation centers. These structures integrate customers and channel partners directly into the product development process, empowering and enabling customers to drive product innovation while reducing time to market, development costs and risks.
A number of firms are effectively using innovation centers:
3M is a pioneer in the development of customer innovation centers. So far, 22 centers are in operation, typically situated near the company’s research facilities. These places provide a forum for meeting and inputting key customers directly into the innovation process. One of 3M’s innovation and product development strategies is to uncover new synergies between their platform technologies and their customer’s needs by vertical. So far, 3M has leveraged its wide-ranging technical expertise to a portfolio of products including transportation systems, dental & medical devices and electronics.
Successful innovation centers are not just about making customers and senior internal managers feel good. This strategy has helped 3M establish productive, long-term customer relationships and generate valuable insights while improving product development and marketing effectiveness. “Being customer-driven doesn’t mean asking customers what they want and then giving it to them,” says Ranjay Gulati, a professor at the Harvard Business School. “It’s about building a deep awareness of how the customer uses your product.”
Hershey opened its first retailer-focused customer innovation center in 2006. The center features a tasting room, where corporate scientists discuss trends and retailers can sample products under development and offer feedback. Another part of the center includes a mock store where Hershey tests new merchandising ideas. One of the germinated concepts is to organize the candy aisle by how the products are used (candy dish, gift-giving or family movie night) instead of by product line. By walking retailers through the sample merchandising set-up, Hershey can better communicate the concept, solicit feedback and secure earlyinterest as opposed to traditional research and presentation tools.
PB uses its innovation center in many unique ways, one of which is to expand their application footprint in mail management. For example, the company allows customers to integrate their applications into PB’s new IntelliJet color printing system. Customers are encouraged to load their applications onto the system and to experiment with different tasks. “We’re hoping to get at things they wouldn’t have thought about,” says Leslie Abi-Karam, an executive vice president with the Company. “In the long run, we expect that working with customers in our innovation center will alter our development trajectory.”
Innovation centers are growing in popularity and (so far) seem to be an effective method of closing the innovation strategy-execution gap. Likely, there are multiple ways to deploy and leverage these new structures, depending on organizational circumstance and strategies.
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