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Driving Innovation by Embracing Risk—and Changing Our Customers

Nov 28, 2013
Sarah Dimick
Sarah Dimick
Research Associate
Technology and Innovation

Conventional wisdom suggests that innovators should look to their customers for ideas on developing new and improved products. But what about innovations that are radically new? Should an innovation change the consumer?

At a joint session of our Council on Innovation and Commercialization and Council for Information Technology Executives last month at the Massachusetts Institute of Technology, MIT Research Fellow Michael Schrage suggested that innovators should be focusing on the question: “Who do you want your customers to become?”

This flips the traditional viewpoint of identifying customer needs on its head. If we shift the focus instead to changing customers and creating new needs, how does that change the innovation landscape?

Henry Ford, for example, not only revolutionized assembly line production, but arguably also created a new class of consumers that hadn’t existed before—the automobile driver. Schrage argued that truly successful innovators transform the human capital and capabilities of their customers. He pointed to a range of newer innovations such as mobile technologies that ask customers to become connected, impulsive, and dependant. The Siri app by Apple Inc. is intended to make users so dependant that they prefer to call Siri rather than friends when looking for restaurant recommendations!

Truly revolutionary innovations change how customers behave by changing their capabilities. However, do we really know better than our customers what their needs might be? Would it be presumptuous for us to decide how we think customer needs should change and then try to drive such changes? Is it possible that radical innovations that have had profound impacts on their customers weren’t necessarily intended to have that effect?

As Schrage observed, the cost of digital experimentation has effectively collapsed with the rapid adoption of mobile technology. He therefore advocates shifting organizational culture away from comprehensive top-down planning and toward quick, simple, and cheap experiments. Experimentation allows an organization to test multiple innovations as it searches for a revolutionary product that would change its customers.

A culture of experimentation comes with additional risk. The recent Conference Board briefing The New CIO Value Proposition: Leading Innovation for Business Value and Growth identified cultural challenges within organizations in the way they assess risk. Innovation is inherently risky. Organizations able to create room for risk, experimentation, and “failing fast” approaches have found ways to embrace uncertainty without jeopardizing corporate stability.

Schrage provided us with a different viewpoint on the innovation process. However, whether an organization’s innovation goals are revolutionary or more incremental, they still need to embrace—and explore—experimentation.

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