>New ways to engage customers in co-designing your company’s future – a weblog to
New ways to engage customers in co-designing your company’s future – a weblog to
New ways to engage customers in co-designing your company’s future – a weblog to complement the book, Outside Innovation, by Patty Seybold
What is Outside Innovation?It’s when customers lead the design of your business processes, products, services, and business models. It’s when customers roll up their sleeves to co-design their products and your business. It’s when customers attract other customers to build a vital customer-centric ecosystem around your products and services. The good news is that customer-led innovation is one of the most predictably successful innovation processes. The bad news is that many managers and executives don’t yet believe in it. Today, that’s their loss. Ultimately, it may be their downfall.
LEAD USERSEric von Hippel coined the term “lead users” to describe a group of both customers and non-customers who are passionate about getting certain things accomplished. They may not know or care about the products or services you offer. But they do care about their project or need. Lead users have already explored innovative ways to get things done. They’re usually willing to share their approaches with others.
LEAD CUSTOMERSI use the term “lead customers” to describe the small percentage of your current customers who are truly innovative. These may not be your most vocal customers, your most profitable customers, or your largest customers. But they are the customers who care deeply about the way in which your products or services could help them achieve something they care about.
LEAD CUSTOMERS AND LEAD USERSWe’ve spent the last 25 years identifying, interviewing, selecting, and grouping customers together to participate in our Customer Scenario® Mapping sessions. Over the years, we’ve learned how to identify the people who will contribute the most to a customer co-design session. These are the same kinds of people you should be recruiting when you set out to harness customer-led innovation.
HOW DO YOU WIN IN INNOVATION?You no longer win by having the smartest engineers and scientists; you win by having the smartest customers!
CUSTOMER CO-DESIGNIn more than 25 years of business strategy consulting, we’ve found that customer co-design is a woefully under-used capability.
Like most of you, I was bummed when I heard the news that Microsoft was buying Skype. I always have a sinking feeling in the pit of my stomach when a beloved tool/brand is swallowed by Microsoft. (Or even a person—remember Ray Ozzie? He was a rock star before he joined MS! I’m glad he’s no longer there.) I wrote off Microsoft as strategically relevant years ago. Loyal readers will notice that we rarely analyze Microsoft’s moves. Most of our clients just aren’t that interested either.
In the enterprise, MS software is a necessary evil. The MS Office franchise/lock-in has been remarkably successful for almost two decades. Enterprise IT execs have to take Microsoft’s enterprise strategy into account—as they do the strategies of Oracle and SAP—and of HP and IBM. But there’s no innovation involved. Just evolution.
Most of MS’s interesting innovations, IMHO, have been in the consumer gaming area—Xbox and Kinect—for example. In fact, it’s in the consumer world where Microsoft’s brand is actually popular, rather than tolerated.
Microsoft HAS to “Own” a Large Share of Mobile/Wireless Interactions
Finally, there’s Microsoft’s more current public strategic struggle to become a major player in the mobile/wireless field. Now that the majority of information consumption and interaction are taking place on mobile devices, Microsoft can’t afford NOT to be a major platform player in the mobile/wireless world. Microsoft has invested years in mobile OS skirmishes and attempts to woo handset suppliers and telcos alike to a MS-centric mobile ecosystem. Now the company is taking a more heavy-handed and direct approach: buying its way in. First, by mounting a coup at Nokia. Second, by injecting money and support into RIM in exchange for the Bing search franchise. And, now, the real land grab: buying Skype. Notice that Microsoft’s current strategy doesn’t presume that Microsoft owns the mobile OS. It’s playing higher up the stack in the Internet services space (search and real-time interaction).
Skype is a really useful tool because it’s not tied to any “platform” — you can access it anywhere there’s Internet reach and/or, by paying more, reach people with “regular” phones or mobile phones. Professionally, I have used Skype for audio and video interviews, for international consulting projects, and for teaching remote courses. Personally, I have used it just to stay in touch with friends and colleagues. It’s not hard to install or use on any platform on which I’ve tried it. That’s what makes it easy. The fact that Skype offers “free” long distance and international calls and video-conferencing via the Internet has always seemed to me to be a perk of living in the Internet age. I was puzzled when Skype sold out to eBay and relieved when they went back out on their own. I used to wonder about their business model, but decided long ago that offering a free service you can upgrade to a higher level of “professional” quality is a really seductive and winning model—particularly so when your customer base is in the 100s of millions, and the costs of your infrastructure are largely born by the distributed investment model of the Internet itself: each of us invests in deploying computers and bandwidth to meet our own needs—which adds to the common pool of networked resources.
Can Skype Become the Tool for Microsoft’s Mobile Imperialism?
Steve Ballmer’s plan is for Skype—a much-loved and useful brand—to lead Microsoft’s imperialistic take-over of mobile platforms. Skype is a seductive and innocuous application that consumers welcome onto their mobile devices (as long as it’s free to do so). They will want it on Android phones, iPhones, and other mobile OS’s—including, but not limited to, Microsoft’s.
I doubt that Microsoft will sully the Skype brand by adding advertising overhead onto free Skype. That would cause millions of satisfied users to become dissatisfied users. There’s a lot more at stake for Microsoft than near-term ad revenues.
Having given up on owning the mobile operating system (for now), Microsoft wants to own mobile internet communications and capture a strong foothold in mobile search.