Customer understanding is key to innovation

Customer understanding is key to innovation

Innovation and GrowthStagnation and lack of growth in many industries has increased the interest for innovation as a way to bypass the challenge and increase productivity – even on a national level. With 573 million hits on Google, innovation is indeed a hot topic in business today. Several new books are also hitting the bookshelves, many preaching the new and revitalized approach of lean innovation while putting the customer in the center: –’We need to understand the customer’ today seem to be the newfound mantra for the traditional (engineering) innovation community.

Understanding the customer is probably more interesting than ever, as at least 80 percent of new products fail to succeed in the market place. Sadly often because no one has bothered to truly understand the job the product is supposed to do to the relevant customer segment, or the pains and gains of the customer segment in that specific situation. Instead, project leaders, product managers and development engineers often fall in love with their own product ideas and business cases and pursue them instead of the real business opportunities in solving real customer problems.

Often the innovation team also has their hands tied, as there are no or only limited resources budgeted for relevant customer insight. They may even have a senior management that doesn’t believe understanding the customer is necessary at all: -”Look at Steve Jobs, he didn’t bother to ask the customer”, is something I have heard myself a few times now from colleagues on executive level.

Products are increasingly commoditized…

Products are however more and more often perceived as commodities, with little differentiation between competitors. And technical features are today most often not the main reason a consumer chooses to buy a product. Instead, businesses of all industries and sizes are looking to identify new ways to connect with their consumers: through understanding their customers, developing a clarified brand identity, increase their digital and social media presence, improve customer service, focus on service innovation and more.

The bad news is that – when asked – customers don’t always know what they want, meaning you actually need to walk in their shoes to really understand their related ’pains’ and ’gains’. And you cannot stop on the surface: you need to understand the customer segment from a psychological and sociological perspective as well – e.g. with regards to identity, values, needs and social environment. Even more so, you cannot completely rely on findings you do today since technology and behavior evolve over time. Hence, you need to find out what trends are affecting your target segment’s situation and behaviors – today and tomorrow – as input to the innovation process.

The good news is that businesses that actually succeed in getting closer to their customer – and truly understand relevant needs and trends – can start to innovate, design and produce the kind of solutions that the relevant target group actually desires… 

Hence, customer understanding can definitely help guide an innovation project in the right direction. But it cannot eliminate risk, e.g. since your competition also continues to evolve. Your chances of success are however substantially higher if you have done your homework.





About the author

Elisabet Lagerstedt

Elisabet Lagerstedt

Elisabet Lagerstedt is the founder and director of Future Navigators. As a trusted advisor, consultant, and Executive Coach, she helps business leaders navigate beyond business as usual to build Better Business and co-create a better future - through insight, strategy, innovation, and transformation. Elisabet is also the author of Better Business, Better Future (2022) and Navigera in i Framtiden (2018).