Down with sentiment, up with entrants

Why is the customer not always right? Because focusing on customers is only one of several ways to compete, and product innovation sometimes means not listening to them.

Apple, Groupon, Twitter, Facebook, Dyson. Amid today’s hype about social media, some product-focused innovators enter the market with radically new ideas to gain more value than incumbents listening to customers. Groupon, founded in November 2008, is on its way to be the fastest company to make $1 billion in sales — for making coupons scalable on the Internet. Apple hit an all-time earnings high by moving glass touchscreens to phones and computers. Facebook has scaled rapidly by making email — what it has replaced — more connected with less friction. Dyson revolutionized vacuum design after going solo with an idea that bag-selling incumbents thought no consumer would want.

Michael Treacy and Fred Wiersema wrote in 1997’s “The Discipline of Market Leaders” that there are three ways to compete — customer intimacy, or production innovation, or operational excellence. Each strategy is very different, but one must be picked, because no company can be all things to all people. Customer-focused companies tend to build feedback loops and provide total solutions (ad agencies follow this model, which is why ad gurus on panels typically say customer engagement is everything). Operations focus is what makes FedEx and Walmart shine, delivery goods at extreme efficiency, with minimal customer interaction. And product innovation is what makes Apple produce glittering new toys you didn’t expect, but somehow desire.

This is not to say that companies can ignore customers — every product needs a consumption market, and every operation has inputs and outputs touching buyers. But success requires focus, and you can’t lead in a product category while answering every customer call. The Zappos intense customer care model is brilliant, but would never work for USPS, which must send pieces of paper 3,000 miles for less than 50 cents. In our age where customers are more connected than ever before, people seem to hunger for the new-new thing, and product entrants get the buzz. Google found this out the hard way, when Groupon rejected its buyout offer … and we’ll see if Google’s late entry to local business couponing, Google Offers, catches on.

If Apple launches a 3D screen display in 2012 for its next gen iPad, will you want it? And if its antenna doesn’t work if you hold it the wrong way, will you care? Sometimes what gets talked about most is the radical innovation that customers asked for the least.

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