By Lawrence Ganti, President of SiO2 Materials Science
There was a time when companies stayed in place for decades. They had a great product, stable revenues, brand recognition and growth – a great Fortune 500 candidate. But a quick comparison of Fortune 500 the list from sixty years ago shows that almost 90% of those who were the kings of their industry are gone, due to market disruption and creative destruction.
What these companies didn’t have was innovation, and without innovation – especially customer-driven innovation – nothing else is going to stop you from failing.
Companies never want to be another story of a successful brand that failed to adapt and got stuck – and gone – in the past, like Kodak and Blockbuster who failed to innovate , to recognize the changes in his industry and not to exploit the changing needs of the consumer. That’s why you need to make customer-driven innovation the basis of your mission, the execution of your products, and your day-to-day thinking.
What is customer-driven innovation?
Industries can innovate, design new initiatives and roll out new products, without providing their customers with usable solutions. This is because many companies innovate based on what they think is best for the market, but not what their customers actually need. They jump on industry trends without listening to what their customers are talking about, or only bring customers to the testing phase of the product and not at the start of idea creation. Or they don’t innovate at all and rely on the status quo, not realizing that by ignoring customer needs and innovation, they become ripe for disruption.
This has happened in my industry. The major player in pharmaceutical glass started over 100 years ago and has recently innovated. They didn’t think they needed it because they had a monopoly on the industry and customers had to buy from them. It has also forced pharmaceutical companies to come up with shortcuts and workarounds to alleviate the problems caused by traditional glass vials. Glass companies did not listen to the needs of their customers, which was a safer alternative to glass.
But we have listened to our customers. We have spent ten years listening to their concerns about traditional glass vials and knowing their weak points. We didn’t want to solve just some of their issues, but we wanted to find a way to eliminate all of their concerns. So we created a new material that merges the advantages of glass with the advantages of plastic, making it safer and less breakable, thus solving customers’ problems with design and innovation. Because we had focused on what the customer needed rather than what the big players were doing for years, when the Covid-19 pandemic hit and, with it, a shortage of glass for vaccine vials, we were able to intervene.
Customer-driven innovation doesn’t just make good business sense. This can lead to the disruption of an industry because the incumbents are not focused on the customers. According to KPMG, “Companies that focus on the customer experience may have the best chance of supporting their customers and protecting their business, while laying the groundwork for future growth.”
Customer-driven innovation is the future of the business
Shifting attention away from innovations driven by your business and focusing it on customers and their needs is a smart business strategy. Especially since 84% of consumers want to buy from an innovative company. Here are a few reasons why it makes sense to focus on solving your customer’s issues and problems.
Customers are in control
There was a time when customers only had one or two choices of products or services because that was what was available. Yet today the options are endless, which means customers won’t settle for something that doesn’t meet their needs and look for companies and products that do. We have found that customers are really concerned about broken glass vials and drug contamination, and not only want a better product, but a product that will help them stay healthy and safe. Customers are also willing to pay more for innovative products.
Customers want personalization
Customers want and will seek personalization, and companies that don’t innovate to meet the needs of their different audiences will find their customers turning to companies that do. It’s a good return on investment, too: McKinsey reports that companies that invest well in personalization have seen an increase in revenue of over 15% and up to 30% in ad spend efficiency.
If you don’t innovate you will die
Companies that do not innovate may be able to profit from their brand awareness for a while, but they will not be able to survive, especially in the face of competition that focuses on customer-driven innovation. According to an innovation specialist at Gartner, “You can’t afford to stand still – business is an escalator. The world is moving around you – customer expectations are changing, competitors are always catching up and threatening to rob you of your business. “
Create a customer-centric organization
If you want to build a business that puts customers first, here’s where to start.
Listen: Find out what your customers are talking about, what problems they are trying to solve, and what options they have available to them. Listening to their stories and gaining their perspective can help shape your innovation.
Partnership: Innovation begins with the engagement of your customers as partners. Solicit and implement their feedback, have them show you industry shortcomings, and provide excellent customer service.
Flexibility: Focusing on solving customer problems can mean changing or letting go of your previous ideas. Being flexible and adaptable will help you put the customer first.
Culture: Innovation begins with a mission that is inherently customer-centric. Embed customer interaction and partnership at the heart of your business.
Don’t be a statistic
If you are already innovating but doing it through the lens of the business, focus on your customers so that you can offer them new, creative and non-traditional solutions to their problems. But don’t stand still, neglect innovation and assume that your business will last, because it won’t.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.