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Close 2 Gaps to Increase Customer-Focused Innovation

April 2, 2019

Customer-focused innovation

Customer focus has always been an important source of business success, but it creates special advantages in today’s environment of disruption. Research indicates that highly customer-focused organizations adapt successfully to rapid (often technology-driven) shifts in customer requirements and in competitor innovation. The bottom line is that customer focus leads to improved revenue, service satisfaction, and operational efficiency.

Customer needs are rapidly evolving. In fact, PwC, in its Pulse interview of CEOs that was summed up in “The disruptors: how five key factors can make or break your business,” observed that customers may be edging out competitors as the biggest source of marketplace disruption. Customers now require their suppliers to provide them with innovative products and services.

To increase customer-focused innovation, we must close two gaps: First, clarify what customer focus is in our situation. And second, balance customer focus with other critical organizational priorities.

Clarify what “customer focus” means

Managers need to be on the lookout for and overcome three common obstacles to a customer-focus mindset. They are:

  • The “customer” is too narrowly defined. A chief marketing officer who specializes in turnarounds has observed that many organizations struggle to grow because they do not invest in cultivating relationships with new customers for whom a company’s current products are well suited. Prospecting for new customers is a challenging process—even for experienced salespeople—but is key to success.
  • Organizations can be too focused on their biggest current customers and not on the broader set of customers for whom their products and services solve important problems. While prioritizing current customers is a practice that protects one’s current business, it threatens future growth. Within organizations, the same principle applies. Focusing narrowly on one or a few favorite internal customers can limit one’s impact and future.
  • Many well-intentioned managers and organizations rely solely on sales or other internal experts to define customer needs. They fail to collect and analyze other critical information about shifting needs, including customer surveys, interviews, and observations, as well as market data. Without surveilling how needs are evolving with data from outside the organization, managers risk overlooking important trends and become less valuable to customers.

Balance organizational priorities

We have all been frustrated when we hear the following kind of statement from service personnel: “That’s how we do things here—that’s our procedure.” This statement is a legitimate stance to take. Standardization promotes reliability and reduces costs.

Unfortunately, when it’s overdone, operational efficiency weakens customer focus. In a global consulting firm, the company’s leadership prioritized execution of standards for client deliverables over understanding customer needs. At one moment, leadership discontinued customer interviews about customer requirements to focus more attention on implementing standards. This decision was made when the industry analysts observed that global consulting was experiencing disruption.

Customer-focused organizations break through the imitations of a narrow view of operational efficiency—they achieve the right balance between customer focus, innovation, and operational efficiency. In fact, the best implementations of design thinking, Lean work methods, and Agile work methods systematically integrate customer focus, operational efficiency, and innovation.

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Leaders of disruptive innovation help their business capitalize on new opportunities and safeguard it against stagnation and obsolescence.
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About The Author

Tom Rose is an outcome-oriented HR leader who drives for the achievement of business objectives by leveraging talent management and organizational effectiveness. He is the author Managing at the Leading Edge (McGraw-Hill, 2017).

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