Customer requirements and service innovation in fast-moving markets

Innovation

Henry Ford

Innovation of products and services:

'If I asked people what they wanted, they would have said faster horses' -- Henry Ford

Knowing the customer is critical when introducing innovative customer requirements. While conventionally-minded companies may survey customers, asking them what they think they want and need, ground-breaking companies try to anticipate consumer desire. That is what Henry Ford meant when he said: 'If I asked people what they wanted, they would have said faster horses'. Steve Jobs has also been praised for leading rather than following consumer's technological tastes, such as when he created smaller, portable music devices that could be easily carried when working out and did not 'skip' like old-fashioned CDs. The Apple iPad was much mocked, yet consumers lined up to buy this device that was smaller than a laptop yet larger than a PDA. When creating all of his devices Jobs famously distained market research (Barry 2011). Steve Jobs was a master of so-called lateral thinking and was an innovator who learned from his (few) mistakes (Chang 2010: 120). Combining different elements of different products like Jobs did (the smallness of a PDA with the capabilities of a laptop in the case of an iPad) can create new, synergistic thinking.

The example of both Ford and Jobs is illuminating because there are many parallels between the two innovative entrepreneurs. Neither 'reinvented the wheel' (no pun intended). Ford did not invent cars; Ford invented a way to make cars affordable to ordinary consumers. Jobs did not invent the personal computer, but he did create a computer that was uniquely intuitive in its operating system -- and he created a business model where the style of his computers was just as important as the substance and functionality offered by the Mac.

Instead of focus groups asking 'what do you want,' observing how users interact with the product is often more useful in establishing customer requirements that the customers themselves may not be aware of at present. Customers are simply that -- they may be able to critique the design of the product or service they are currently using, but they are not entrepreneurs and designers, and they may lack self-consciousnesses about their own habits. For example, Ray Kroc of McDonald's is reputed to have noticed how customers eating at his franchise were cleaning the bags of fries with their fingers. Thus, the idea for different sized fries was born, since he realized consumers didn't want to seem like 'pigs' asking for two bags of fries. Customers themselves would probably not say: "I would like more fries," in a focus group, for fear of seeming like overeaters. However, through observed interactions between customer and product, Kroc was able to gain a better sense of what customers really wanted.

This discrepancy is often particularly noteworthy in food services. For example, because the media tells them so frequently that they must eat more healthfully, consumers often say they want calorie counts on menus, and more healthy menu offerings. But when they walk into a restaurant, what they really order are burgers and fries. By keeping track of actual ordering patterns, some fast food chains and comfort food restaurants have been offering more rather than less decadent burgers and menu items. Although consumer groups might not publically ask for such menu items, they may order the burger with extra bacon, and thus it makes sense from a profit-generating perspective not simply to take articulated demands for healthy food at face value.

The need for truly 'unique' innovation is more acute than ever, given the increased competitiveness of the modern marketplace. 'More of the same' will get lost in the noise of currently crowded information environment. Additionally, most of the 'big box' or value stores can offer cheaper goods, based on economies of scale. Only by carving out a unique market niche can a smaller enterprise thrive. A good example of this is Whole Foods. Whole Foods, long before organic food was trendy, began as a relatively small Texas-based grocery store. It was determined to convince customers of the value of sustainable and healthy foods. From a very small consumer base, the chain has slowly grown and expanded. Customers discovered they liked the way Whole Food's offerings tasted, which 'busted' the stereotype of the supposedly bland, typical offerings of most health food stores. Additionally, concern about the safety and ethics of conventionally-raised agriculture has grown in the mass media since the founding of Whole Foods in the 1970s. If Whole Foods' concept, when it was founded, had been based upon a survey of consumers alone, it would never have become so successful. Demand was generated rather than followed -- conventional wisdom suggests that consumers are price-responsive regarding food. Whole Foods 'bucked' such conventional wisdom.