The CMO Council (www.cmocouncil.org) recently released a report entitled Greater Innovation through Closer Collaboration. The report builds on a survey of executive opinion on the topic of collaboration and partner networks. The conclusion is that firms are more and more relying on external networks of partners and suppliers to help them deliver innovation. However, what struck me was the frequent use of the two words customer insight, in quotes from firms like Best Buy and Pepsico. No quarrel with that as a good step to take for any firm that wants to innovate but I think you have to be careful about what customer insight means and how you go about getting good ones. The word insight has several meanings but the one I think comes closest to what we need here is ‘a clear understanding of a complex situation.’ That is because creating an innovation that changes the customer’s thinking, and thus reshapes the market, is not a simple task. It requires a deep understanding of the customer’s goals and needs. That understanding includes both stated and latent needs, and building the ladder from the potential features of the new product or service to customer benefits and then to customer needs. And it requires an understanding of customer differences, especially as they drive the market dynamics that will come into play once the firm launches the innovation. The most important differences are those between the innovators and the mainstream customers.
So good consumer insights do not come from running a few focus groups, neither do they come from looking at the results of quick web survey. Nor do they come from brainstorming up a bunch of questions over lunch and asking them of whichever customers you can quickly get hold of. In fact getting good customer insights is a science, needing rigour, system and sound theory. Although it is an old point, ‘garbage in’ does equal ‘garbage out’. In contrast there are sound theories and methods that managers can use to get good insights, some of which I list in Chapter Five of the Innovation Manual. Unfortunately they require a significant investment of time and money. One paradox of the financial crisis has been that while R&D spending has increased, there has been a clear tendency of firms to cut costs on professionally conducted market research (Rockhopper Research 2009). I only hope that does not bite the firms involved too hard. For if you have poor insights it is difficult to see how your increased R&D will result in anything valuable to the customer.
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