Growth? Innovation? They come from Customers.

Here’s an interview with a marketing professor (Tim Calkins) at Kellogg/Northwestern where he’s discussing innovation and products and revenue growth and all that good stuff. Here’s a money quote:

It’s not enough just to look for opportunities and innovations and new ideas, you’ve got to find the ones that are going to turn into profitable opportunities and, ultimately, into cash flow and growth coming from those. Growth is really about the customer. If you’re going to grow, you’ve got to find ways to get out there, connect with customer needs, to deliver against their needs and wants.

Here’s Ridiculous True Story No. 1 of this post: I once had a job and was leaving around 5:30pm. I heard the CEO on the phone as I walked by his area. This was a successful, growth, etc.-type company. They were making money and keeping people happy. On the phone, I heard him bellow “I’m looking for a $27 million value play!” I told a bunch of my co-workers that. Absolutely no one had a clue what he possibly could have been discussing.

That’s the whole thing: growth (which most companies covet) is really all about the customer and their wants/needs. It’s not about the margins, the KPIs, the revenue play, the CAGR, the innovation mindset, the Type-A personality, the elite sales guys, etc. All that maybe factors in a little bit, but growth and innovation start with the customer.

That has a lot of ramifications, though.

Here’s probably No. 1:

Customers don’t always know what they need

From the same Kellogg article above:

A lot of the great innovations that come into the world, a lot of the great growth opportunities that develop, are products and services that nobody really asked for. You think about something like Uber. Nobody asked for Uber. Taxis were taxis; they were fine. If you’d asked people what was wrong with taxis, I guess they’re dirty and you sometimes can’t find them when you want them, and maybe they’re too expensive. If you had than some research, that’s what people would have told you.

“Nobody asked for Uber.”

Here’s Ridiculous True Story No. 2: Ever seen this quote anywhere?

I used to work with a guy who put that in every PowerPoint he did. Now listen — it’s a good quote, and it’s impactful. But at Time No. 1 of seeing it, it’s very impactful. It gradually declines from there. At Time No. 17 of seeing it, you want to punch your co-worker in the mouth.

Thing is, even with PPT Overkill, it’s a true quote. Customers don’t know what they want in advance, per se. Think about the really big ‘product pops’ of the last few years:

  • iPhone/iPad
  • Facebook
  • Tesla
  • Amazon
  • Uber
  • Google
  • Netflix

Theoretically, we had no idea we needed any of that stuff. Sure, once the Internet became a commonplace thing, we needed a search engine to rise above and help us organize info. You can argue that.

But a thing like Facebook? We were doing OK with landlines and address books and some letters and meet-ups and Christmas letters for about 50+ years in terms of connectivity with our actual friends, right? We didn’t know we needed Facebook, per se.

How do you get a product customers need if they don’t know what they need?

Here, Chris Sacca — who’s made a bunch of money investing in concepts and ideas — argues that it’s all about being different, because it’s very hard for industry-disrupting change to come from within an industry. Could a 20-year taxi executive have come up with Uber? Probably not, because he’d view the taxi and transportation verticals in a much different way than someone with a totally fresh set of eyes on the problem at hand.

To wit:

The role of organizations with innovation

This is a big thing people miss all the time: organizations themselves (i.e. businesses) are not set up to foster or create innovation. The purpose of a company, or a brand, or an organization — or whatever word you want to use — is basically to:

  • Make money
  • Have processes around products and services
  • Reduce liability
  • Make certain people rich
  • Hit targets at scale

People throw a lot of pie into the sky about the purpose of an org being to “change the world!” In most cases, it’s not. It’s typically the stuff above.

The source of innovation, then, isn’t the business or organization that produces it. The source of innovation and growth is customer need. That’s the exact same reason why ‘brand’ is declining in power and ‘customer relationship’ is increasing.

Basically, then, what you need to do is:

  • Identify a problem
  • Get together some people to riff on that problem
  • Come up with some potential solutions
  • Think about how those solutions could ever be monetized
  • Go forth

That’s a massively simplified version of ‘how to make money and grow a company,’ but sometimes simplicity is the greatest thing, right?

My name’s Ted Bauer; I blog here regularly and you can learn about hiring me for freelance and contract gigs as well. You can also subscribe to my newsletter.

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