Involving customers in the innovation process can add value to new product designs.
One company that understands this is the networking giant Cisco Systems Inc. “We’ve found that when we share our tools with customers rather than just demonstrate how much we’ve improved our technologies, we learn a lot more,” Randy Pond, Cisco senior vice president of operations, processes, and systems, told a Cisco CIO customer workshop in 2004. “Several of you have become true partners in design with us.”
Procter & Gamble has begun to share some of its computer modeling and market research techniques with Wal-Mart, Tesco, and other distribution channels. This includes the celebrated P&G “moment of truth” research, which tracks consumer attitudes at two critical times: when the product is chosen and when it is used. To be sure, many of P&G’s biggest distributors are also rivals that offer their own private labels, so there are risks to sharing this type of proprietary innovation platform with them. But the rewards are even greater: They include ongoing close ties with retailers, who often share their own innovative tools for analyzing (for example) how store layout, shelf space, and signage influence purchase decisions. Together, these manufacturers and retailers can develop a relationship that transcends any particular innovation tool or technique.
To externalize innovation, organizations must add value to tools they’ve already designed, developed, and deployed. To do this, companies need to audit the very tools they most take for granted and see how — or whether — they should be externalized. That kind of introspection may be the most customer-oriented innovation a company can make.
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