The 5 Types Of Innovation For The Future Of Work, Pt. 2: Customer Innovation
31 July, 2015 / Articles
As the world of work continues to evolve at a rapid pace, innovation continues to become both a top priority and a top challenge. For most companies, innovation is handled behind closed doors in a secluded part of the company that only a few have access to. This type of innovation is no longer practical, scalable or effective when thinking about the future of work. In order to succeed and thrive in this rapidly changing world, organizations must adapt by implementing five innovation models, all five of these are crucial and are part of a broader innovation ecosystem. The five innovation models are:
- Employee innovation
- Customer innovation
- Partner/supplier innovation
- Competitor innovation
- Public innovation
This will be a six part post that will provide a high level overview of all five of these models followed by sixth post that will be a summary and exploration of innovation ecosystems. In part one I will explore employee innovation. The concepts and ideas in this post are taken from my best-selling book, The Future of Work: Attract New Talent, Build Better Leaders, and Create a Competitive Organization.
I’m a firm believer in “employees first, customers second” which is why part 1 of this series focused on starting off with employee innovation. Only then can effective programs be developed to bring in your customers. Customers interact with your brand on a daily basis. They experience your outages, they taste your products, they shop at your stores, they speak with your customer services representatives, and they interact with and buy your products. Every single one of you reading this post has at one point thought, “I wish company XYX would this,” or “If company XYZ did this I’d really shop there more.” The challenge with most forms of corporate innovation is that they never leave the four walls of the organization, this means that the people responsible for innovation oftentimes aren’t the ones who are actually interacting with the products and services, they aren’t the customers.
“My Starbucks Idea” is perhaps the most famous example of customer innovation and you can see it in action live by clicking the link. Thus far they have received 45,221 ideas for coffee and espresso drinks, 22,080 ideas around atmosphere and location, 11,143 ideas around social responsibility, and 23,101 ideas around their Starbucks Card. The amazing thing is these are only just a small fraction of the ideas that have been received. If you were to add all the ideas up you’d get around 200,000 ideas that came directly from customers. As a result Starbucks has implemented many of the ideas that customers ask for including teaming up with Postmates to deliver Starucks beverages, using LED lighting to save energy in stores, introducing lunch wraps, and many many other ideas. If you were to take a look at how many of these ideas are actually being implemented the percentage is quite low, I’d estimate around 3-5% of all ideas actually see the light of day. The company is transparent with the platform and tells customers which ideas are being reviewed, which ones are being launched, and which ones have been tested but didn’t work. This site has been an absolutely crucial component to the success of the company and many of the ideas that Starbucks roles out actually come directly from customers. Free wifi? Cake pops? Splash sticks? New coffee flavors? Yep, all of this came from customers.
FedEx is another company I’m sure you heard of. In addition to delivering your Amazon packages FedEx also delivers lots of precious cargo in the form of living tissue and organs for donors and patients. As you can imagine when you get a lung or heart delivered, it better be in perfect condition without any defects. Now in this case the customers of FedEx were surgeons, patients, and medical device suppliers (unlike the Starbucks example which was open to any customers). So the challenge for FedEx was, how can they make sure that the tissue and organs being delivered arrived in perfect condition without actually opening the box to check on them during transport? The answer is a product called Sensaware which tracks the package’s location, barometric pressure, temperature, light exposure, and humidity. This gives customers complete confidence in knowing that their cargo will arrive in tact. This product idea came as a result of customer feedback and ideas and has now been rolled out into other industries such as aerospace.
Again, these are just two of many examples of customer innovation. The clear benefit here is being able to create or improve on something based on the information that customers are providing. It’s crucial for organizations to extend beyond their four walls when looking at innovation and the remaining posts in this series all look at extending innovation outside of the company. Usually, when opening up to customer innovation the organization received more ideas, comments, and feedback, than with employee innovation programs. This is why it’s crucial to start with employee innovation to build out the proper infrastructure to receive, management, implement, and communicate ideas to a customer base. It’s crucial for organizations to realize that not every customer idea needs to be acted upon. Starbucks gets hundreds of thousands of ideas and they have only implemented a few hundred of them based on an voting system where customers can vouch for the ideas they want to see. Many organizations here also struggle with trust, openness, and transparency which is why it’s so crucial for senior level management to step in to help create that type of a culture which again, starts with employees and internal innovation.
When looking at the examples mentioned above, organizations should be asking themselves, can they really afford to not bring their customers into the innovation process? I don’t think so.
