Shifting focus from product to customer
Michael Schrage, a research fellow at MIT’s Sloan School’s Center for Digital Business and author of "Serious Play" and "Shared Minds: The New Technologies of Collaboration," is considered to be one of the world’s most innovative thought leaders on innovation. His newest – and first - eBook, "Who Do You Want Your Customers to Become?," argues that “Innovation is not just an investment in product enhancement or customer experience; innovation is an investment in your customer’s future, a human capital investment in who your customers really want or need to become.”
We recently spoke to Schrage about his eBook and his innovative ideas about innovation. Citing examples of everything from Henry Ford to luxury brand marketing, Schrage explained how a focus on investing in customers completely changes - and drastically improves - the ways in which organizations innovate.
Imaginatik: How did you start exploring the idea that innovation should be seen as an investment in customers?
Schrage: Well, it really emerged out of two things. In a non-academic context, I was doing advisory and consulting work to help organizations become more innovative. We were thinking about innovation in the traditional sense, looking for the ‘faster, better, richer’ solution to problems. I realized then that these goals weren’t aligned with where our customers were going. They overwhelmingly focused on what customers wanted now, not what they would want or need in the future. It struck me that we were too “in the moment,” and that haunted me. I kept thinking of Gretzky’s famous saying “A good hockey player plays where the puck is. A great hockey player plays where the puck is going to be.” I thought: Why not design the customer too? Why not use innovation to shape what the customer will be in the future?
Why not design the customer too? Why not use innovation to shape what the customer will be in the future?
Secondly, I’ve always been interested in history, human history, world history, technological history, everything. I immediately back-test anything that I find interesting in historical contexts.
It turns out that this notion of ‘designing customers’ works historically.
Think about Henry Ford. Sure, he mass-produced automobiles, but, more importantly, he mass-produced drivers. This was pure disruptive innovation. Whenever you find disruptive innovation, you find an innovator who is trying to change the customer.
Whenever you find disruptive innovation, you find an innovator who is trying to change the customer.
Imaginatik: How do you implement this kind of innovative thinking organization-wide? And how can you apply it to a widely diverse customer base?
Schrage: What my book proposes is a way of rethinking of what segmentation should mean. The classic notion dictates that you look at a suite of products and do a mapping, asking how you can customize per consumer segment. Let’s invert that: Instead of asking how we can shape the product to the customer, we ask how we can use the product to create the customer. We move away from the traditional approach in which we shape products and services to fit our customer base, and towards a culture where we shape our customers using our product and service innovations.
Instead of asking how we can shape the product to the customer, we ask how we can use the product to create the customer.
Just by asking the simple question, “Who do we want our customers to become?” we dramatically change our innovation conversation. As you see different demographics and psychographics flowing by, you ask, “What do we want to do with them? How can we shape them? Where do we want them to go? How can our innovations transform them?”
Imaginatik: Why is “The Ask” so important?
Schrage: To clarify, The Ask doesn’t have to be the most important innovation question. But it makes all the other innovation questions you’re asking more valuable. It sharpens thinking around products so you can develop and shape the customer rather than just the product.
For example, you run into major problems with copying and trying to improve something just for the sake of improvement: diminishing returns kick in much more quickly. Innovation is not about interface; it’s about how changes add value to the customers themselves. How does it increase their time, capability, and human capital? How does it make their lives easier and more productive? When you lose sight of the customer, diminishing returns hit much more quickly.
When you lose sight of the customer, diminishing returns hit much more quickly.
Imaginatik: In your book, you focused on luxury brands and how they sell a lifestyle, rather than just a product. Can you explain a little bit further how this can be applied to innovation?
Schrage: Outside of education, which industries are most concerned with transforming their customers? Luxury brands. They don’t just sell fine objects or haute couture; they sell the lifestyle, aspirations, and goals associated with them as well. Ask yourself: “If I were a luxury brand, which aspects of the lifestyle would I be focusing on? How would I make it resonate with my customers and potential customers?” It’s a thought experiment to create innovation empathy.
(The Ask) becomes a challenge that requires everyone in the organization to collaborate and think together about this question of who they want their customers to become.
One of the reasons that this is so important is that The Ask, “Who do you want your customers to become?” forces collaboration between your marketing team, R&D, brand managers, and others. It becomes a challenge that requires everyone in the organization to collaborate and think together about this question of who they want their customers to become. In an era when that alignment is becoming increasingly important, coming up with questions that forces an alliance is a big deal. This is not just for innovators; this is for everyone.