Download The role of marketing in successful innovation

The role of marketing in
successful innovation
Dr. Wim G. Biemans
University of Groningen, The Netherlands
Title
How do you develop and launch a $3 million RV camper?
….or a top of the line electric sports car?
….or a bendable smartphone?
….or a new imaging system for hospitals?
Whether you are developing a new fast
moving consumer good…
…or a complex B2B product
The innovation process (i.e. the road to success)
is the same!
The Stage-Gate Model depicts the ideal innovation process
and guides the way to success
– series of activities
– go/no go decisions
– in practice not always this linear
“Using the analogy of North American football, Stage-Gate is the playbook that the team uses to
drive the ball down the field to a touchdown; the stages are the plays, and the gates are the
huddles.”
- Robert Cooper (2009)
Research shows that key success
factors are related to market(ing)
– synergy with existing markets
– quality of market research
– quality of product launch
No. 1 success factor:
does the product offer a
unique superior product
advantage that is valued
by customers?
Central question: what is the role of
marketing in innovation?
Answer depends on your perspective:
– Marketing as a central organizational
philosophy
– Marketing as a series of activities
– Marketing as a department
Marketing as a central philosophy
The entire organization must be focused on customers
Customer needs are the guiding principle for all decisions
Marketing as a series of activities
Marketing activities must be performed during the entire innovation process
These activities may be performed by the marketing department, other departments or
even partners or customers
Marketing as a department
The Marketing department must represent the voice of the customer in the organization
The Marketing department may be involved during the entire innovation process
Organizations must be designed
outside-in instead of inside out
– customer needs should guide organizational
design and organizational decisions
– focus on what makes sense for the customer,
instead of what is efficient and expecting the
customer to adapt to you
As a marketeer you must:
…develop deep insights about your customers
…be an expert on their needs
…be more aware of what they need than they are themselves
Do you really understand your customer?
– do you know what job they are trying to do?
– do you understand their key success factors?
– do you know how your product or service
creates value for them?
– can you explain (or better: demonstrate) to
them why they should do business with you?
Marketers make three critical mistakes:
1. They collect a lot of factual information (customers prefer X) instead
of explanations why customers behave the way they do
2. They think that they understand customers because they have
collected a huge amount of customer data
3. They focus on only a limited part of the customer experience
(functional features instead of emotions)
Marketers
Customers
conscious processes
unconscious processes
“At least 95% of all cognition occurs below awareness in the shadows of the mind.”
- Gerald Zaltman (2003)
“It is not the
customer’s job
to know what
they want”
“Nearly 100% of
innovation – from
business to politics
– is inspired not by
‘market analysis’
but by people who
are supremely
pissed off by the
way things are”
Tom Peters
How do you figure out what your
customers want?
Simply asking your customers does not always work
– many customers don’t know what they want
– many customers don’t want to tell you
– many customers say one thing but then do something else
You need other methods to really understand your customer
so that you can develop mind-blowing new products
– ask lots of ‘why’ questions
– observe the customer in his natural environment
– get a complete picture of your customer
“People will say they want sodium-free or low-carb foods. Then they leave the focus group and
go to McDonald’s and supersize everything.”
- Vince Melchiorre, Senior Vice President Tasty Baking
Customers cannot always tell you
what they need. To develop
successful new products, you
need to know:
1. what job the customer is trying
to get done
2. what the customer is trying to
achieve when performing the
job
3. what might keep a customer
from using the new product
What the customer thought he wanted…
What the customer really wants
Clearly, the
customer is key
to successful
innovation…
But, which
customer?
Perhaps lead users because they
perceive new customer needs before
the rest of the market does
“Lead users face needs that will be general in a marketplace – but face them months or years
before the bulk of that marketplace encounters them, and lead users are positioned to benefit
significantly by obtaining a solution to those needs.”
- Eric von Hippel (1986)
Lead users are ahead of
the trend in the general
market
Lead users have a high
incentive to solve their
problem
Because a solution
doesn’t exist, lead users
create their own solution
Equipment for extreme
sports is often developed
by enthusiastic users
New medical equipment
is invented by innovative
physicians
Tim Berners-Lee invented
the World Wide Web
because he needed it
Be aware of innovative customers!
– they may be an interesting source of new
product ideas
– but they are often not representative of the
rest of the market
– always test their ideas on ‘regular’ customers
– make sure that a real market for the product
exists; if not, see if the product can be
adapted somehow
Lead users provide new product ideas,
but customers may contribute to all stages
of the innovation process
Biemans (2010)
For instance, during launch: launch customers
After three years of delays, Boeing delivered the first 787 (Dreamliner) to All Nippon Airlines
– first commercial flight in November 2011
– total costs of the 787 program: $32 billion; no profits before 2020 (“if at all…”)
– United Airlines will get the first 787 in North America, 8 years after it was ordered…
Selection of customers as innovation
partners also depends on the nature of
your value chain
Series of key questions:
1.
What type of customers should we cooperate with?
– which level of the value chain?
– direct or downstream customers?
2.
Which customers at that level are most appropriate to
cooperate with?
–
–
–
–
3.
the largest customers?
the customers with the biggest problems?
the most willing customers?
the no. 2 customer (who wants to become no. 1)?
How do we interact with them?
–
–
–
do we already have an existing relationship?
which individuals should we approach?
how should we communicate with them?
So, what does
all this mean
for marketers?
Develop deep insights into your
customers
–
–
–
–
your current customers
your prospective customers
your competitor’s customers
peripheral customers
• lead customers
• young customers
• customers facing extreme conditions
There is no excuse for not understanding your customer;
TALK to your customers, OBSERVE how they use your product!
Focus on the total customer
experience
– customers do not care about your product,
but about how it will help them do a job
– develop a total customer experience
– deliver a consistent customer experience,
also if you cooperate with partners
– do not communicate product features, but
• B2C: communicate lifestyle
• B2B: tell the customer how you improve his business
Don’t fall in love with your own product; what matters is the
customer’s opinion
Be the expert on the customer
– develop relationships with key customers
– represent the voice of the customer in your
innovation team
– maintain and develop the firm’s marketing
capability and skills
– encourage a customer-oriented culture
– ensure that market-related innovation
activities are performed
Marketers must take the leading role, but they should make
sure that the rest of the organization is also strongly focused
on the customer
Use the behaviors of successful
innovators
– question: ask your customers lots of (why)
questions
– network: establish relationships with key
customers
– observe: look closely at how customers use
products to solve problems
– experiment: test new prototypes to obtain fast
market response
Get customer feedback often, early and continuously!
Ask, observe, partipate, question, involve…
Make sure your partners perform
as well
– your customer’s experience may depend
very much on your partners’ performance
– it makes no sense to be innovative if your
partners lag behind
• Philips launched HDTV where cameras and
transmission standards were lacking
• Sony launched e-reader when customers lacked
easy access to e-books
Marketers must make sure that the total innovation ecosystem
is in place in order to create a compelling customer experience
Innovation is not a science,
dare to experiment,
dare to fail!
“If you’re not failing every now and again, it’s a sign you’re not doing anything very innovative.”
- Woody Allen