Take, for instance, home appliance manufacturer GE Appliances. “In the past, we made internal decisions about our products and services and then hoped that the results appealed to customers,” says Rick Hasselbeck, the company’s COO. But things are different now. The company has, says Mr Hasselbeck, shifted to a customer-first, “outside-in” mindset that concentrates on the needs, preferences and motivations of the people who buy and own the company’s products.
It seems to be working. Last year GE Appliances increased its market share by three percentage points, despite a downturn in the market; parent company Haier attributes this significant growth to the firm’s customer-first philosophy.
Co-creation is perhaps the ultimate form of the “outside-in” customer-centric philosophy, and more companies are embracing it. Toy maker Lego’s Ideas platform lets fans post new designs, handing over one percent of net sales for any that go into production.
BMW’s Co-Creation lab functions in a similar way, although its community of members are not given a share of revenue. And if you happen to spot a drone in the red and yellow livery of logistics company DHL, you’ll be seeing one of the results of the company inviting customers to contribute at its innovation centres.
According to the EIU’s research, more than four in five companies believe that businesses that are not including customers in their innovation processes will fall behind. “We owe so much of our success to our fanbase and their ideas,” says Wang Xiang, Senior Vice President of Xiaomi, a Chinese electronics company. He adds that Xiaomi monitors its feedback forums on a daily basis and incorporates the ideas receiving the most upvotes into Products.
The key to co-creation is a mindset that embraces collaboration and sees customers as potential partners rather than potential problems. But there are risks in the co-creation model. Are firms limiting their potential for innovation by restricting it to selected consumers? Are customers more likely to serve up improvements on familiar products rather than something radically new? What if the customer doesn’t know best? (As Steve Jobs once remarked, “A lot of times, people don’t know what they want until you show it to them.”)
The answer seems to lie in maintaining a balance. By inviting customers in, businesses can demonstrate that they listen, allowing them to build brand trust while crowdsourcing good ideas from their most valuable demographic. At the same time, firms must ensure that they remain in control of their own identity. Put it this way: you might seek advice on improving your home, but that doesn’t mean you have to hand over the keys.
To learn more about the changing nature of Sales and Service, and what the Economist discovered in their recent research, download the PDF.
“By inviting customers in, businesses can demonstrate that they listen, allowing them to build brand trust while crowdsourcing good ideas from their most valuable demographic.”