Innovation’s Secret Sauce: People or Process?

Andrea Ovans recently wrote an article for the Harvard Business Review regarding innovation titled “Is Innovation More About People Or Process?” and resolves that:

In the end, the answer to the people or process question is probably “both”:  people matter; process matters. Talented people can be hobbled by poor processes; hesitant people can be uplifted by smart processes. In the best of all possible worlds, extraordinary people pursue innovative ideas through processes that are perfectly suited to their talents. In the real world, less-than-perfect people are wise to use all the help they can get.

In my own previous post “What is Innovation?” I highlighted a story that in turn highlighted another observation that innovation was born from many ideas from many people rubbing off one another until the best idea was formed. That in itself is a process. Bringing people with different perspectives together so they can contribute different ideas or views on an initial idea until it is pollinated into the flower it can be. The more creative the people are the more diverse the contributions to that melting pot will be.

Baggage Collection…A Moment of Truth

An often annoying, sometimes painful,  ‘Moment of Truth’ for airline customers (with checked baggage) along their customer journey, is collecting their bags on arrival. WestJet accented this Moment of Truth brilliantly to deliver a ‘Moment of Magic’ with their famous 2013 Christmas Miracle marketing stunt.

More recently Delta Air Lines and British Airways are trialing or implementing real operational improvements – not just a marketing stunt – for this Moment of Truth.

At this stage Delta’s “Bags on Time” initiative appears to be a trial running only for a limited time with plenty of exclusions and only applicable to frequent flyers. No doubt if they believe its a promise they can keep ongoing, expect to see it return in the future with more permanency and less restrictions.

BA on the other hand, has already conducted a trial of its ‘Carousel Collection’ service at London City airport and is now rolling the service out to “all passengers arriving at London City Airport on domestic flights”. This service means customers don’t even have to collect their bags on arrival, can go straight to the office and have their bags shipped to an address of their choice.

Segment Customers By Their Needs

Traditional market segmentation methods, including those I was taught when studying an MBA, focus on segmenting (a.k.a pigeonholing) customers based on criteria such as:

  • demographics (age, sex, marital status, income),
  • geographic (country, post code),
  • behavioral (attitude towards, usage of ) and
  • psychographics (activities, interests, opinions).

But as pointed out by Clayton M. Christensen, Scott Cook and Taddy Hall in the Harvard Business Review, “the methods that most of us learned to segment markets, build brands, and understand customers—are broken.”

Companies who don’t really know who their customers are, use traditional market segmentation to pigeonhole the general population into boxes, then measure which ‘boxes’ or pigeonholes are buying what they are marketfraudselling and which are not. They then look at the pigeonholes not buying and, again using the same criteria as input, devise ways to advertise to that pigeonhole. This isn’t very scientific and is one of the reasons behind the jibes often directed at marketing departments.

On the other hand, BMW – an Outside In / Customer Centric company – knows and understands that you should categorise customers based on their needs. In the BMW advertisement below, BMW is signalling to a particular category of customer, that this car has been built to cater for their needs. Watching the video, you might as I did, question whether you can go to BMW’s web site and ‘build your own car’. But you can’t (not more than usual anyway) and there is no need. BMW has already built this particular category of customers’ needs into this 3 Series model.

You may have also noticed the different types of people in the advertisement. They were from different countries, spoke different languages, both male and female, both young and old and varied employment situations. Yet they all had the same/similar needs in regards to the experience they needed to have.

Clayton Christensen describes this a similar way. What job are the customers hiring the product to do?

“The aim of marketing is to know and understand the customer so well the product or service fits him and sells itself.” Peter Drucker

“Get closer than ever to your customers. So close that you tell them what they need well before they realise it themselves.” Steve Jobs

What is Innovation?

lightbulb (640x640)I am currently reading The Innovators by Walter Isaacson (also Author of Steve Jobs Biography). In his book Isaacson states:

“Most of us have been involved in group brainstorming sessions that produced creative ideas. Even a few days later, there may be different recollections of who suggested what first, and we realise that the formation of ideas was shaped more by the iterative interplay within the group than by an individual tossing in a wholly original concept. The sparks come from ideas rubbing against each other rather than bolts out of the blue.”

This reminds me of a story I was once told about innovation at an American power company, Pacific Power and Light, slightly abbreviated here…

“Ice storms in the Winter would result in ice accumulating on the power lines to the point the lines would break under the weight. To prevent this happening, immediately after each storm, Linesman would be sent out to climb up the poles and shake the lines to remove the ice. This was unpleasant and dangerous work and they needed a better solution.

PP&L had, in the past, conducted a number of “brainstorming” sessions with no positive results. They then turned to a professional resource to organize still another session. He suggested that a diverse group be assembled to look at this problem. Rather than assembling just linemen and their supervisors, the resource insisted that people with a large variety of job functions be convened to look for a more creative way to get the ice off the power lines. In the “brainstorming” session that followed, were linemen, supervisors, accountants, secretaries, and people from the mail room.

Several hours into the meeting the professional resource was beginning to become concerned that this effort would be as unproductive as previous ones. Then, during one of the coffee breaks, he overheard two of the linemen talking.

“I hope we can finally figure out a better way to skin this cat.” said one. “I really hate this job. Why, just last week, I was coming down from a pole, and, when I hit the ground, I was looking eye to eye at one of the biggest, meanest black bears I’ve ever seen. That bear, apparently, was not happy that I had invaded his territory, and chased me for well over a mile before he was satisfied that I would not return.”

Trying to stimulate the group, the resource retold this tale to the rest of the session.

“Why don’t we train the bears to climb the poles. They are so big and so heavy that their weight would probably be enough to shake the wires and knock the ice off.” quipped one of the linemen.

After the laughter died down, the group thought of hundreds of reasons why that was a silly idea.

Then another of the linemen suggested that although training the bears seemed foolish, perhaps by placing honey pots on top of the poles, the bears would naturally climb the poles to get the honey and, in the process, shake the poles sufficiently to knock the ice off the lines.

After another period of laughter followed by more objections, one of the more senior, more sarcastic linemen said, “You know all those fancy helicopters those fat cats in the front office fly around in all the time? Why don’t we grab one of those and fly from pole to pole placing the honey pots on top just after an ice storm.”

Still another period of laughter followed. Then one of the secretaries spoke for the first time. “I was a nurse’s aide in Vietnam. I saw many injured soldiers arrive at the field hospital by helicopter. The down wash from the helicopter blades was amazing. Dust would fly everywhere. If we flew the helicopter over the power lines at low altitude, would the down wash be sufficient to knock the ice off?”

This time there was no laughter – just silence. She had come up with an answer. By valuing diversity and by encouraging divergent thinking, the resource had enabled the group to come up with a possible solution to a problem all wanted solved.”

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Definition of Customer Centricity

Customer-CentricJames Dodkins, Chief Customer Officer at the BP Group, recently posed the question “What do YOU define customer centricity to be? What qualifies as a customer centric organisation?

My ‘off-the-cuff’ response was “One where a customer’s needs are consistently met. And if, on the rare occasion they are not, recovery is swift and sincere.”

A couple of days later Maz Iqbal questioned whether being Customer Centric was necessarily a good thing in a very personal and thought provoking post. In my eyes Maz makes a similar argument to that of whether Hitler was a Leader or not. A question that has been argued for and against by Leadership theorists for decades generally on the basis of principle that a true Leader can only lead for good and not evil or it does not matter either way – a Leader is a Leader.

Yes organisations can be focused or centered on customers for the wrong reasons – for example they may have no intention of creating value for customers and are simply chasing “bad profits”. But  proponents of Outside In or Customer Centricity would argue this is fundamentally against the principles of Outside In / Customer Centricity.

At the end of the day, its all about the definition of terms, just agree yours with those you interact with and move forward.

The Age of The Customer?

A little over a year ago in late 2013, Forrester Research proclaimed “We have begun a 20-year business cycle in which the most successful enterprises will reinvent themselves to systematically understand and serve increasingly powerful customers.”

If this is so, what was Jan Carlzon, former President of Scandinavian Airlines, articulating in his 1987 book Moments of Truth, when he said “We are at an historic crossroad where the age of the customer orientation has arrived”?

And what did the famed business management guru Peter Drucker mean when, in his 1954 book The Practice of Management, he stated “There is only one valid definition of a business purpose: to create a customer.”?

Of course, the most successful companies throughout human history, are the ones whom have understood that customers are their most important asset. After all, they pay the salary of everyone from the board, to the CEO, to the back office and the front line. Without customers to repeatably buy what you are selling, you have no company.

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