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Advanced GuideHow to Develop a Customer-Driven Model for Innovation



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INTRODUCTION. The best ideas don’t always happen in a conference room; they often come from your customer. 2

PART ONE: LEARN FROM THE LEADING INNOVATORS 3

Framework. Seven Models of Customer-Driven Innovation 4

Role Models. How Organizations Achieve Customer-Driven Innovation 5

PART TWO: DEVELOP A CUSTOMER-DRIVEN INNOVATION MODEL FOR YOUR ORGANIZATION 11

“Customer-Driven Model Selection” Tool. How You Can Select a Model for Customer-Driven Innovation 12

Jump-starts. How Can You Bring Customer-Driven Innovation to Life in Your Organization 15

Blind Spots. Insights to Combat Naysayers When Building Customer-Driven Innovation 24

Signs of Success. Hard and Soft Metrics to Know if You’re Being Effective 25

Suggested Roadmap. How to Roll Out a Program for Customer-Driven Innovation 26

PART THREE: RESOURCES TO LEARN MORE 27

Google This. Search Terms to Help You Learn More 27

What’s Inside…

1IBM CEO Study “Leading Through Connections: Insights from the Global CEO Study” (2013) 2GE Global Innovation Barometer (2013)

IntroductionThe best ideas don’t always happen in a conference room; they often come from your customer.



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Customer-driven innovation is going beyond focus groups. It’s turning the innovation model upside down—or rather—outside in.

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STATSHOT

More than 70 percent of CEOs are seeking a better understanding of individual customer needs.1

In a recent survey, 91 percent of respon-dents agreed that understanding customers and anticipating market evolutions is key for successful innovation.2

There’s a new model for innovation today in which the role of the customer is dramatically changing. They’re playing a central role in organizations’ innovation efforts and getting deeply involved in product and service development. No longer are customers tapped late in the process as a soundboard to test reactions to previously developed ideas. Increasingly, they’re partnering with companies early on to jointly generate ideas, develop concepts, and work together on innovations. In fact, the word “customer” is a misnomer. Today, they’ve become “collaborators.” This model of customer-driven innovation is becoming an integral part of how leading organizations function.

Adapt to the new marketplace. Businesses are facing higher development costs, increased competition, and faster commoditization of their products and services. The traditional development approach costs too much, takes too long, and the penalty for having a bad idea is too high. It’s become extremely critical to understand and meet customer needs.

Meet today’s empowered customer. Gone are the days when customers were passive recipients of products and services. Today, they’re active, opinionated, and impassioned. They have increasingly complex requirements. It’s important to develop an inclusive approach and make them feel heard.

The fuel for this trend: the growth of technology. The spread of technology and the Internet is fostering conversations, relationships, and communities that we couldn’t have imagined even 10 years ago. This has become the foundation from which many customer-driven innovations have sprung.

Get the inside look on customer-driven innovation. This guide will show you some real-life examples of how other companies—from diverse industries—have adopted customer-driven models of innovation. We’ll arm you with practical advice so that your organization can make this approach part of your innovation efforts.



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Companies like 3M, Starbucks, and Cadbury are more than just inspiring—they provide valuable insights that can be used in your organization. This section of the guide focuses on real-life examples of how these organizations adopt customer-driven models for innovation.

What will you learn from these case studies? You’ll see how these organizations actively partner with their customers in a number of ways to generate ideas and insights, and work together to develop more successful innovations in the marketplace.

PART ONELearn from the Leading Innovators



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1 OPEN PLATFORMSUse the Internet to involve customers in the innovation process

2 ADVISORY BOARDSCreate an exclusive and handpicked group of “collaborative” customers

3 SUBMISSION BOXESInspire customers to submit innovative ideas

4 ETHNOGRAPHIC RESEARCHGet under customer’s skin and discover new customer needs

5 ONLINE COMMUNITIESDrop in on conversations with like-minded and passionate customers

6 SOCIAL MEDIAEngage and communicate with customers on social media

7 FRONT-LINE FEEDBACKTap into those employees who know your customers best

FrameworkSeven Models of Customer-Driven Innovation

Leading innovators use these seven models in different ways. In the following pages, you’ll read about the specific ways in which customer-driven innovation is adopted.

There are seven models that organizations use to involve customers in their innovation efforts:



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Role ModelsHow Organizations Achieve Customer-Driven Innovation

1. OPEN PLATFORMS Use the Internet to involve customers in the innovation process

Creating an open platform allows for individuals outside of your organization to be involved in various parts of the innovation process. Crowdsourcing is a popular form of doing this— companies can obtain ideas or solutions by posting challenges or problems on the Internet for the public to solve. Any type of stakeholder can be involved in the innovation process—including customers, who may have rich insights and ideas into ways a company can innovate on their products or services.

Kraft Collaboration Kitchen (kfcollaborationkitchen.com): Kraft’s Collaboration Kitchen is an initiative that allows for external stakeholders to be involved in identifying new and emerging ingredients that can improve their products and processes. Ingredients that deliver natural food preservation or better shelf life are just some of the areas of interest.

Heineken Ideas Brewery (ideasbrewery.com): Heineken believes “that great ideas and innovative solutions can come from anywhere. They come from within an organization and from outside.” Ideas Brewery is a platform where challenges are put up for the public to solve that can help shape the future of the company. An example of a past challenge was to create a new beer concept for the 60+ generation that would fit their needs and lifestyle.

Unilever (oiportal.yet2.com): Unilever has a list of “wants” that will create a better future for society and have used open innovation platform yet2 to allow for external stakeholders such as customers to submit ideas. Examples of challenges include creating an environmentally friendly detergent, sugar-reduced drinks, and a sustainable shower.

There has been a proliferation in the methods and techniques that companies use to partner with customers in their innovation efforts. We’ve handpicked a few shining examples across the seven models.



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2. ADVISORY BOARDS Create an exclusive and handpicked group of “collaborative” customers

Some companies create “customer advisory boards” (exclusive groups that consist of a small, handpicked list of customers.) This group gets a first look at initial designs or concepts, provides feedback on a continual basis, and gets to feel like they’re part of an exclusive community. The relationship-building aspect of this method is critical to its success.

Tumi: Trust this luggage company to make their customers feel a little special. Tumi created an “invitation-only” advisory board. It’s a panel of experts that offers Tumi advice on its products, advertising campaigns, and marketing programs. In return, customers get exclusive discounts at Tumi stores. More than 15,000 Tumi customers have joined the advisory board since its inception.

Honeywell: Honeywell is a great example of a company that uses advisory boards with their business-to-business customers. Honeywell involves some of its strategic customers in developing new solutions and enhancing their current products, services, and applications. Honeywell has created multiple advisory boards organized by industry, for example: Oil and Gas, Technology, Safety, and Service.

3M: 3M has had a long history of success with their “lead user” program. Lead users are a small group of carefully selected customers who share certain characteristics. They’re early adopters, vocal, opinionated, and creative.

3. SUBMISSION BOXES Inspire customers to submit innovative ideas

The problem with regular suggestion boxes is that they tend to only capture customer complaints. Companies are now using the same technique to turn the frown upside down. They’ve created open and accessible idea-submission mechanisms to invite ideas from the public. More importantly, these are not positioned as a typical suggestion box, but as an “innovation box” for new and groundbreaking ideas.

Virgin: The Got a Big Idea? website offers individuals the opportunity to submit ideas to any of Virgin’s many business units. Visit www.virgin.com/Contact/GotABigIdea.aspx to see how it openly invites ideas from customers. One of the company’s successes was creating an online competition to redesign their air sickness bags (www.designforchunks.com).

Starbucks: Starbucks has a website (mystarbucksidea.force.com) that allows for its customers to suggest ideas. It also allows for the public to vote and discuss improvements to other people’s ideas.

Target: In 2013, Target created a Simplicity Challenge, a nationwide search for innovative ideas to simplify healthcare. Both experts and individuals such as customers were invited to suggest their ideas.



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4. ETHNOGRAPHIC RESEARCH Get under customer’s skin and discover new customer needs

Ethnographic or observational research is becoming an increasingly popular tool among organizations today. This research eschews the traditional focus group setting. Instead, specialized corporate anthropologists observe customers in a natural setting (at home, work, or while shopping). The goal is to let customers interact in an environment that they’re comfortable in. This helps to uncover new, unmet, or latent needs.

Philips: The Philips “HomeLab” is a simulated, but fully functional, home laboratory built to study how people interact with prototypes of intelligent technology in a real-world environment. Through HomeLab, Philips researchers can better understand their needs and motivations to use technology, and bring better products to market in the shortest possible timeframe.

Procter & Gamble (P&G): P&G executives traveled around the world to watch people clean their bathrooms. On one of their visits, they met a retired hotel housekeeper in Puerto Rico who used a flat broom to reach for the high corners in her shower. This led to the development of the Mr. Clean Magic Reach—a bathroom-cleaning product that has an extendable, telescoping pole.

Bank of America: To uncover new customer needs, Bank of America executives adopted an ethnographic approach. They shadowed a dozen families for weeks and went along with them as they shopped at stores, dined at restaurants, and made deposits at ATMs. They noticed that people rounded up transactions because it was quicker and more convenient to balance their checkbooks. This led to the idea for

“Keep the Change.” When a customer signs up for this program, all purchases made on a credit card are automatically rounded up, and the “extra change” is transferred to a savings account.

5. ONLINE COMMUNITIES Drop in on conversations with like-minded and passionate customers

Companies that are lucky enough to have customers who are passionate about their offerings use the power of online communities. These online message and discussion boards bring like-minded customers together to share their experiences, voice their frustrations, and occasionally have wonderful ideas. Remember, these are mostly independent communities not run by the organizations—instead, they watch, listen, and learn about their customers’ needs, likes, and dislikes.

Mini Cooper: This small car has drivers with large hearts. www.mini2.com is an online community where they find virtual friendships and share common concerns about the car.

Apple: If you love Apple products such as the iPhone, iPod, or iPad, you have the choice of hundreds of online communities that have brought people with similar inter-ests together. One of the biggest online communities is iLounge (www.iLounge.com).

IKEA: IKEAFANS is an independently run online community of people who are passionate about the Swedish retailer. At www.ikeafans.com, you can see users rave, rant, and praise their favorite brand and its products. It’s a rich source of consumer insight for IKEA.



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6. SOCIAL MEDIA Engage and communicate with customers on social media

Facebook, Twitter, and LinkedIn are examples of growing social media channels where people can interact with each other and with brands. A recent IBM Global CEO survey revealed that over 50 percent of CEOs expect social channels to be a primary way of engaging customers within the next 5 years. Social media can be a quick and efficient way to get customer ideas and feedback.

Dell: Dell uses multiple social media channels such as Pinterest, Facebook, Twitter, YouTube, LinkedIn, Flickr, and Google Plus to listen, learn, and engage with customers. Dell believes that their customers “have the best ideas and insights” and therefore take part in over 25,000 conversations with their customers each day.

Cadbury: This British chocolate company uses Google Hangouts, a video chat platform, as a way to get customers to try new products and give them feedback. Google Hangouts allow for Cadbury to speak and engage with 10 customers at each

“hangout” to get in-depth feedback and ideas on their products.

Johnson & Johnson: Pharmaceutical companies recognize the huge potential of using social media to gather patient/customer feedback but have to carefully navigate the legal system to ensure care and vigilance in how information is collected. J&J use Facebook, Twitter, and health advocacy blogs to listen in on how patients are using their products. Social media allows for them to get real-time information and customer sentiment on their offerings.

Sanofi: Sanofi is another pharmaceutical company that has successfully used social media to interact with their patients whilst complying to the complex laws and regulations in the industry. They have an online community called “Discuss Diabetes” as well as Facebook, Twitter, and an active blog. Through these channels, Sanofi listens in for unmet needs in the diabetes community to help them improve their product offerings.

Ford: Ford uses social media to get their community to share ideas in important areas like “Safety” and “Personalization.” They like to involve their fans and customers in their company’s innovation process by encouraging ideas and feedback from their community, such as on new vehicle features.

Magazine Luiza: Magazine Luiza is the second largest department store chain in Brazil. On their website, they have a virtual assistant named Lu who communicates and interacts with customers through tweets, blogs, videos, and podcasts.



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7. FRONT-LINE FEEDBACK Tap into those employees who know your customers best

If getting directly in touch with customers is not your cup of tea, then tap into your second line of attack. Employees who work with customers every day tend to know their needs the best. Tapping into these employees is an invaluable way to gain insight into the frustrations facing customers and possible solutions to better serve them.

TD Bank: This retail bank has a program called “Kill a Stupid Rule” that rewards employees (tellers and customer service representatives) who submit ideas on how to change an existing banking convention to better meet customer needs. TD Bank has a comprehensive, easy-to-use intranet system that empowers employees to submit feedback and ideas on how the bank can do better.

Best Buy: Electronics company Best Buy asked its women employees from all levels, such as store cashiers to senior executives, to discuss how to make their stores more attractive to female customers. They identified women as an underserved market segment and sought out ideas from its female employees to grow this market. As an added benefit, not only did they get new ideas, these women-focused forums led to less turnover among women employees.

3M: 3M uses an internal social networking platform to foster creativity and collaboration among its 88,000 employees in the world. In the first two weeks that the tool was open, employees generated over 700 new ideas, which resulted in nine new markets for the company to explore.

LinkedIn: Professional social networking site LinkedIn encourages employees to come up with a new idea each quarter and pitch their idea to the executive team. If their idea is approved, they are able to spend up to three months’ time dedicated to turning the idea into a reality.



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Why Adopt Customer-Driven Innovation?

So, which of the seven models will you choose for your company? The following section will address your organization’s specific needs.

Customer-driven innovation is a critical tool in your “ideation toolbox,” and it is being increasingly adopted by corporations with successful results. By adopting a formalized effort, your organization can realize some of these broad-based benefits:

Make your customers feel heard and included. Loyalty spikes with companies that include customers and build ideas based on their needs.

Uncover new uses. Involving customers in the innovation process unearths not just blatant, but latent, needs. Many companies discover new uses for their products—or entirely new products—they could never have imagined by brainstorming in a conference room or watching a focus group through a one-way mirror.

Make your R&D spending more effective. By getting a better handle on your customer needs fast and early, you won’t fall into the trap of fully developing solutions and going back to the drawing board because of bad feedback. You’ll be able to avoid this traditional and inefficient “dramatic reveal” approach. Instead, you’ll adopt a method of rapid prototyping. You’ll take small development steps, test with customers, and refine works-in-progress. You’ll have the ability to focus on the right features, develop offerings faster, and use R&D resources more efficiently.

The bottom line: Your competitors are probably already doing it. If none of these reasons are compelling enough, be warned that your competition might already be driving innovation from the outside in, and developing fresh, meaningful relationships with their customers.



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If you’re considering implementing multiple models of customer-driven innovation, it’s important to understand the factors that go behind the success of each. This section of the guide will help you narrow down the list of models that are appropriate for your organization.

PART TWODevelop a Customer-Driven Innovation Model for Your Organization



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“Customer-Driven Model Selection” ToolHow You Can Select a Model for Customer-Driven Innovation

In this tool, we offer a decision tree to help you select the customer-driven models of innovation that are most appropriate for your company. It lays out the factors you’ll need to consider when making a decision.

Why use the tool?

The tool will help you:• Pick a customer-driven model for innovation based on

your organization’s needs and resources.• Get management on the same page. • Create a document for sharing your findings and

building consensus among stakeholders.

How to use the tool.

We recommend that this tool be used by a small team that’s in charge of igniting innovation efforts within your organization. Once you’ve made an initial decision, share the tool with a larger group (including senior management), to validate and gain consensus.



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“Customer-Driven Model Selection” Tool

This tool contains some important factors to consider as you choose the model for customer-driven innovation in your organization. Use the questions included as a guide. Depending on your answers, you’ll be able to shortlist the model that could move your innovation efforts forward.

What is your primary reason to develop a customer-driven model for innovation?

What kind of development model will your organiza-tion be com-fortable with?

Closed (private)

Tapping into a small group

Open (public)

Tapping into a large audience

Direct interaction

Tapping external audiences (outside of organization)

Improve the front end

Improve the back end

How would you describe your current relationship/understanding of customers?

What kind of development model will your organization be comfortable with?

ONLINE COMMUNITY

INNOVATION SUBMISSION BOX

ETHNO-GRAPHIC RESEARCH

FRONT-LINE FEEDBACK

ADVISORY BOARD

OPENPLATFORMS

Does your organization need:> A better quality of ideas?> More ideas?> A better understanding of customer needs?

Does your organization need:> Better feedback from customers during development?> More ef�cient testing mechanisms?

Strong Moderate Weak

SOCIALMEDIA

Indirect interaction

Tapping internal audiences (organization-wideprogram)



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What is your primary reason to develop a customer-driven model for innovation?

What kind of development model will your organiza-tion be com-fortable with?

Closed (private)

Tapping into a small group

Open (public)

Tapping into a large audience

Direct interaction

Tapping external audiences (outside of organization)

Improve the front end

Improve the back end

How would you describe your current relationship/understanding of customers?

What kind of development model will your organization be comfortable with?

ONLINE COMMUNITY

INNOVATION SUBMISSION BOX

ETHNO-GRAPHIC RESEARCH

FRONT-LINE FEEDBACK

ADVISORY BOARD

OPENPLATFORMS

Does your organization need:> A better quality of ideas?> More ideas?> A better understanding of customer needs?

Does your organization need:> Better feedback from customers during development?> More ef�cient testing mechanisms?

Strong Moderate Weak

SOCIALMEDIA

Indirect interaction

Tapping internal audiences (organization-wideprogram)

1The first issue you need to identify is the primary reason to develop a customer-driven model. Is it to get more ideas and improve your “front-end”? Or do you need to move faster, more efficiently on the back-end (during the development of ideas)?

2If your primary concern is to improve the back end, think about the commitment you want to put behind a customer-driven effort. An Advisory Board is a good option if you’re testing sensitive and proprietary information. Open platforms, on the other hand, give you the ability to tap into a large audience with quicker results.

3Online communities are best for those companies that have extremely strong relationships with their customers. Only customers who are passionate about the company and the brand organically develop online communities.

If your current relationship with customers is weak, you need to think about the level of interaction you’re willing to commit to. Ethnographic research is “direct-to-customer,” whereas front-line feedback is an internal program. Front-line feedback is also a great motivation technique that innovators use.

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Instructions How to Use This Tool



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Jump-startsHow You Can Bring Customer-Driven Innovation to Life in Your Organization

Some of the jump-starts are immediate tactics that can be executed with limited resources. Others are broad-based and require a more substantial investment. The right choice of jump-starts will depend on your needs and the resources available.

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By now, you’ve identified the models of customer-driven innovation that are most suited to your organization. On the following pages, we outline some “jump-starts”—smart ways to spark innovation in your organization.

What’s in it for your customer?

If you want your customers to be involved in your innovation efforts, it must be based on mutual benefit. Ask yourself questions like, “What’s in it for them?” or “What can I do to make it attractive for them?” Some of the methods we’ve outlined offer overt incentives and promotions; others simply make customers feel part of an ultra-exclusive group.

Don’t make it a marketing tool.

The key thing to remember is to make your efforts transparent and honest. If customers sniff a little self-serving interest (if they feel marketed or advertised to), you’ll be worse off than when you started. As in life, customer relationships are based on trust. They can become extremely fragile and delicate if that trust is broken.

Watch your language.

The tone for communication you adopt will be critical to the success of the program. For an advisory board, it’s important to outline what you expect from members, and why they are such a critical voice in your development efforts. For an innovation submission box, the goal is to inspire and excite customers.



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How broad do you want your net to be?

The methods we’ve discussed differ in terms of how broad-based you want to be. Online programs (open platforms, innovation suggestion box) entail a mass audience, while the Advisory Board approach typically involves a small group of customers. So, think about how big your audience needs to be in order to make your innovation development effective.

Don’t drop the ball.

Regardless of which model you select, customer-driven innovation requires a strong commitment on your part—it can’t be turned on and off on a whim. Customers need to be cajoled, convinced, and encouraged. So, don’t consider kicking off a program unless you have strong internal buy-in.

Don’t leave it all in the hands of the customer.

We’re not suggesting that you shift your entire innovation focus on customers—they can only help you up to a certain point. The companies we’ve showcased balance their customer-driven efforts with a strong internal innovation program. Customer-driven innovation is no excuse to get sloppy or lazy about inspiration, ideas, and curiosity within the confines of your organization.

On the following pages you’ll get specific tips on each of the models of customer-driven innovation.



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1. OP

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Set your goal.What’s the primary reason you’re developing an open platform? Is it for:

• Testing rough concepts?

• Getting customers and other stakeholders to help with solving challenges?

• Obtaining ideas and feedback for future products or services?

Design the platform.In order for people to submit their ideas and feedback, you need a robust and easy-to-use platform to capture them. You can develop this internally or use the below service providers that host open innovation platforms.

• Yet2 (www.yet2.com) is an open innovation service provider that has hosted platforms for companies such as Unilever

• Innocentive (www.innocentive.com) is a cloud-based innovation management platform that has worked with Eli Lilly, NASA, and Procter & Gamble

• NineSigma (www.ninesigma.com)

Create the right environment.It’s important to design the environment of the platform in the manner that you think is most effective. Do you want to create a futuristic environment? Or do you want visitors to feel like they’re getting an exclusive “inside look”? The visual cues will set the tone and experience for your open platform.

Set guidelines and rules.If you pitch a problem or challenge for the public to solve, you need to set guidelines or rules on what they can submit. Are there parameters to the types of ideas people can submit? For example, Kraft Foods specifies that they are looking for ideas in the following categories: ingredients, packaging, technology, and business processes and systems. Are there steps or instructions on the idea submission process? Are there legal agreements participants have to sign?

Reward for participation—or a thank you?Some people will participate in submitting ideas for the fun of it, but others will need more substantial incentives to reward them for their efforts. Here are some ideas to consider when you’re rewarding people for their ideas and feedback.

• Cash prizes. Unilever offers cash prizes for people who submit winning ideas that solve their challenges.

• Mentorship. Companies can offer their expertise to mentor individuals with winning ideas to help develop them further.

• Recognition. Companies can recognize and promote ideas of talented individuals.



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2. A

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Consider different types of boards.Depending on your goals, you can establish one or a few types of boards:

• Power User Boards (comprised of your lead, expert, or deeply loyal customers)

• Vendor/Supplier/Partner Boards

• Leadership Boards (leaders from other companies or specialist backgrounds)

• Employee Advisory Boards (positioned as a reward for top employees)

Make the board diverse.The key to success in an advisory board is to get many diverse minds on board. Consider the following attributes/backgrounds when inviting members to participate:

• Do they represent a variety of industries (related to your business and completely unrelated)?

• Are there specialists that can speak to trends or other larger issues? (Do you need a psychologist on board? A certain technology specialist?)

• Are they from diverse backgrounds (different skill-sets, perspectives, functions)?

• Are they spread geographically (Across regions, specific countries of importance, new market presence)?

Make it important.People participate in advisory boards to feel like they are a part of something unique and special. Ensure that they feel that way. Feature your advisory board on your website or other communications, introduce them to each other for networking, welcome them with a gift, or give them first preview to all your news or product/service launches.

Size matters.The goal of advisory boards is to receive rich and qualitative feedback. Boards with eight to 15 people are ideal.

Respect their time.Be thoughtful when you ask for your advisory board’s time. They shouldn’t feel overwhelmed. Consider a formalized calendar that is shared with them so they’re aware of the time commitment you’re asking for them. For example, establish quarterly or semi-annual in-person meetings or set monthly meetings via phone call or online survey for feedback.

Create a discussion board.Another way to create a community aspect with your advisory board is to create an online discussion board. This way, members are allowed to interact with each other, and it gives you a convenient way to communicate with every member.



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Proactively call for ideas.Just putting up a submission box won’t fill your pipeline with breakthrough ideas. Post a call for specific types of idea themes to give people more inspiration and direction around what you’re looking for. Set an idea editorial calendar that ties in with your efforts so you’re linking the suggestion box with current strategic initiatives.

Set a submission structure.Consider creating a template for how you want ideas submitted. This will make it easier to organize and evaluate ideas using apples to apples and ensure you receive the information critical to making decisions. Be careful to not over-engineer the form—this will dissuade submitters.

Post results.Consider adding a ticker or ‘ideas submitted’ next to the submission box so people get a feel for how active the suggestion box is. The more activity people see, the more they will be incentivized to participate.

Encourage voting.Adding a voting element where people can vote for good ideas will help you get a gauge on popular ideas. To increase the number of people participating, link this to social media so people can share their ideas and votes for their networks to see.



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Uncover needs, don’t get feedback.Ethnographic research is fundamentally about discovering new, hidden, or latent needs from customers. It’s a qualitative research approach that is unstructured and exploratory. If you have specific questions to ask customers, or need specific feedback on your concepts, try a focus group instead.

What question are you specifically trying to answer?Spend some time articulating what it is that you’re trying to understand about your customers. This can drive whom you speak with and how you approach your research. For example, when P&G used ethnographic research to discover new uses for Mr. Clean in the bathroom, the original question was, “How do we help people more effectively clean their bathrooms?” However, they realized that the more fundamental question was, “How do we give people their Saturday mornings back?”

Observe, don’t intrude.Ethnographic research typically tries to uncover what people do in their ‘natural habitat.’ Sometimes you need to ask questions around usage, emotions, and related uses that are sensitive to participants. To get the best answers, be sure to create an environment in which people feel comfortable. Respect the customer when you’re conducting research like this; you cannot be an overzealous investigative reporter.

Tips for better ethnographic research.Here are some pointers to help you get more results from ethnographic studies.

• Observe “extreme” users. Which people do not use your products/services at all? Who are your “power” (expert andloyal) users? It’s important to observe both ends of the spectrum to uncover insights.

• Use multiple media. Take copious notes, take pictures, and get an audio interview. The combination of these multimedia approaches will help generate better ideas.

• See, don’t judge. It’s easy to start letting your opinions color your observations. It’s important to be as neutral and unbiased as you can as you’re conducting ethnographic research. Leave opinions for later.

• Leave close-ended questions out. Ethnographic research is the art of asking open-ended, qualitative and exploratoryquestions. Closed-ended questions like scoring and Likert scales do not belong in this type of study.

• Learn more. There are many insightful articles about ethnographic research on the web. Google the term “ethnographicresearch” and look for academic notes on the subject (all those URLs that end with “.edu”). Here are some links to get you started:

• www-rcf.usc.edu/~genzuk/Ethnographic_Research.html

• http://psych.csufresno.edu/psy144/Content/Design/Nonexperimental/observation.html



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Drop in on existing communities.The most effective online communities are those that are run independently of a company. In these organic communities, people feel like they have a safe environment (without an agenda) to voice their opinions. In fact, you might be surprised to find existing communities that may be relevant to your organization. Try some of these Google search terms and see what you find (XYZ refers to your brand/product/industry name):

“XYZ forums”

“XYZ users”

“XYZ enthusiasts”

“XYZ communities”

What’s in it for them?If you’re considering building an online community, you need to tread with caution. Here are some factors you need to take into consideration.

• Establish a purpose. Why would people want to join your community? Do they have a passion for your products (e.g., Lego’s Lugnet) or are they part of an affinity group that share similar interests your products happen to serve (e.g., Tremor from P&G)? This can help you decide what type of community to establish. Passionate users will associate directly with your brand name; the affinity group puts your brand in the backseat.

• Let it flow. Don’t try to control the conversation of your community. Let participants interact openly and honestly. A BigBrother approach is the quickest way to kill the authenticity of discussion.

• Keep it fresh. Make sure that you’re updating the community on a regular basis. Keep posts fresh, ask intriguing questions, offer new incentives, or announce special features.



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Decide which social media channels to use.There are multiple social media channels you can use to engage your customers, so careful decisions must be made on which channels would best suit the needs of your company and brand.

• Facebook (www.facebook.com). This is a popular social network where individuals can “like” your company page and contribute comments and “likes” to posts from your company.

• Twitter (www.twitter.com). Twitter allows for people to communicate with your brand in 140 characters or less.• YouTube (www.youtube.com). If your company has video content, YouTube is a platform you can use for your

community to view and comment on your videos.• Instagram (www.instagram.com). Instagram is an app where photos can be posted for people to “like”.• Pinterest (www.pinterest.com). Pinterest is a virtual pinboard that allows for images and videos to be “pinned” to your

pinboard for people to see.• Flickr (www.flickr.com). Flickr is a platform that allows for photos to be shared with the public.• Google Plus (www.plus.google.com). Google Plus is a social networking platform where people can engage with your

brand via Circles, Events, and Hangouts.• LinkedIn (www.linkedin.com). This is a social networking site for professionals. Company pages can be created for

individuals to follow and comment on ideas, news, and questions from your company.

Regularly engage.Once you set your company up on social media, you need to regularly interact with your community. If you don’t interact with them, this will be damaging to your brand as people will think you’re ignoring their thoughts and ideas. Dell engages in 25,000 conversations per day with their customers using various social media channels. Being responsive will help build a strong online community for your brand and make them feel appreciated and heard. You might be surprised with the insights and ideas customers can give by using these channels.



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Make it part of your employees’ jobs.Remember that your employees have regular day jobs. It’s important to be considerate when it comes to their participation. For example, you might limit the number of times you ask for feedback. Is it twice a year? Is it once a quarter? Is it during their lunch breaks?

Ensure accessibility.The goal is to get ideas from the right people, not just from people who have access. Could you leverage your company In-tranet to make this accessible to employees?

Be short and specific.When you’re getting ideas from the front-line, they’re actually doing you a favor. Try to be as concise as possible when you’re asking for ideas. Limit it to two to three questions They’ll appreciate your focus.

Consider a reward/recognition program.Think about how you can motivate (in a continuous manner) employees who submit ideas. It’s important to ensure that people aren’t purely driven by the reward—because if you take the reward away, the ideas will stop coming. Will you reward all submitters? Or only those whose ideas you consider as “good ideas”? Is it a financial reward or will recognition (e.g., show-casing them on the Intranet) suffice?

Some tactics to get you started.Here are some methods you can consider while involving the front-line.

• Intranet submission

• Monthly topic that drives ideas in a particular direction

• Online survey

• A contest or promotion

• Targeted interviews/front-line forums

• If you don’t have a company Intranet system, use Yammer (www.yammer.com) to get employees to interact with each other and submit ideas

Create a discussion board.Another way to create a community aspect with your advisory board is to create an online discussion board. This way, members are allowed to interact with each other, and it gives you a convenient way to communicate to every member.



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Blind SpotsInsights to Combat Naysayers When Building Customer-Driven Innovation

When it comes to developing a customer-driven approach to innovation, companies make some common mistakes. These errors are a result of misconceptions that can make the task seem daunting for managers. You should be aware of these blind spots from the onset.

Blind Spot Insight

“Customer-driven innovation? We do plenty of focus groups.”

Customer-driven innovation is about going beyond the regular methods you’ve used in the past to interact with customers. It’s about making collaborators out of customers.

“We shouldn’t let the cat out of the bag. If we partner with customers, we might be giving away too much.”

There are many ways to tap into customers without giving away sensitive information. Some innovators are very comfortable with sharing information (Google); others use techniques like advisory boards (Honeywell) to protect their innovation from prying eyes.

“We’ve always been driven by customers. Our core strategy is to be focused on customers.”

Being customer-driven means more than just saying it on a PowerPoint slide. It means rolling up your sleeves, making a real commitment, and getting eye-to-eye with customers.



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Signs of Success Hard and Soft Metrics to Know if You’re Being Effective

Use this table to understand if you’re getting the results you need and to demonstrate effectiveness to management. This list of metrics is by no means exhaustive, but it offers guidance as you formulate your own measures for how you will evaluate the effectiveness of your customer-driven efforts. We list two types of measurement methods. The first set is soft and qualitative, the second set is hard and quantifiable. We recommend that you choose only a handful of metrics for your program. A small set of metrics helps you effectively measure your performance, and makes it easy to manage. Remember that the frequency of measurement (weekly, monthly, quarterly, annually) will depend upon the metrics you select.

Soft Signs Hard Metrics

• Teams talk more from the customer’s point of view

• You begin to get a better handle of what customers want—and more importantly—what they do not want

• Number of disruptive/radical innovations

• Increase in identification of specific customer needs

• Number of ideas generated by customers

• Increased success rate of innovations (meeting revenue, market share goals)

• Shorter time-to-market cycles

• Number of people who engage with your company on social media



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SELECT

Use the tool included in this guide to narrow down the models of customer-driven innovation for your organization. Ensure that key stakeholders are involved and in agreement.

DEFINE

Develop a “customer-driven innovation” strategy brief that lays out the fundamentals of the program. Ensure that key members of senior management have agreed to the brief.

ROLLOUT

Implement the plan as laid out in the previous step.

REVIEW

Check progress on a frequent basis to see if it’s meeting or falling behind expectations.

Suggested RoadmapHow to Roll Out a Program for Customer-Driven Innovation

An agreement on which models to adopt, with an understanding of the factors that have gone behind your decision.

Decisions made on the following:

> Goals/objectives of the program

> Success metrics

> Timeline (including milestones)

> Key success factors

> Key personnel involved in the program

> Communication/technology plan (if needed)

> Budget requirements

A team tasked with implementing the plan.

Specific activities conducted as laid out in the plan.

An analysis of the program—what’s working, and what needs to be done in order to fix those elements that are not working. An understanding based on some of these metrics:> Number of

disruptive/radical innovations

> Increase in identification of specific customer needs

> Number of ideas generated by customers

> Increased success rate of innovations

> Shorter time-to-market cycles

AC

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If you’re looking to successfully implement your customer-driven model for innovation, you’ll need a methodical approach that focuses on execution. This roadmap will help you as you roll out your efforts to focus on customers.



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Want to learn more about customer-driven innovation? There is a lot of public information that can provide more insight. Here, we provide some direction to make your search easier.

You can always get more practical advice and a clear approach to all your innovation needs at www.futurethink.com.

PART THREEResources to Learn More

Google ThisSearch Terms to Help You Learn More

Here are some Web search terms that can get you better results:

collaborating with customerscustomer advisory boardcustomer driven innovationcustomer-focused developmentvoice of customerethnographic researchconsumer anthropologyuser-centered designopen innovationcrowdsourcing



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Notes

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