Customer Needs Should Drive Innovation

In the middle ages, theologians debated the number of angels that could dance on the head of a pin. In the modern era, entrepreneurs debate whether innovation comes from technology breakthroughs or customer needs.

In both cases, it’s the wrong argument.

Those who argue that technology drives innovation will cite Henry Ford or Steve Jobs—two guys with a lot of credibility. Ford once said, “If I asked customers what they wanted they’d have said faster horses.” And Steve Jobs was famous for saying, “It isn’t the customer’s job to know what they want.”

Understanding the Customer’s Problem

The middle ground—which too many companies miss—is the enormous advantage of understanding what problem the customer needs to solve.

In fact, Henry Ford made a big bet that customers wanted an automobile. The problem was that few could afford one.

Steve Jobs believed that music fans wanted to bring their music with them, but none of the available options were attractive. Watch the public launch of the iPod and you’ll see Steve Jobs going through great pains to describe what consumers were lacking in the available choices: CD player, MP3 player, and flash drive.

If you understand the customer problem you dramatically improve your odds of successful innovation. Clayton Christensen, author of The Innovator’s Dilemma, underscores this point when he encourages innovators to understand the jobs a customer needs to get done. When Apple launched its ill-fated Newton device, no one understood what problem it was supposed to solve. Later, when Apple launched the iPhone we all understood that this was the way to carry one digital device instead of a separate phone, music player, and organizer.

What’s Missing: An Understanding of the Customer’s Changing Needs

Companies don’t spend enough time understanding the changing needs of their customers. They spend too much time on product development and not enough time on what Steve Blank calls customer development.

Ask any executive how many customers they talked with last month—not including sales situations and service problems. You may be surprised at the answer. One of the first things Lou Gerstner did when he joined IBM was to require his top executives to visit a certain number of customers per week and send him a write-up by end of day Friday. Most people got the message.

How did Amazon get into the cloud computing business? Someone in the company observed that Amazon’s retail customers, the thousands of small businesses that use Amazon’s eCommerce platform, were not sophisticated enough to take advantage of cheap computing and storage in the cloud. This Amazon renegade pitched Jeff Bezos on the idea of creating a new business that would make it easy for small retailers to lower their IT costs using a simple cloud computing service from Amazon. Today Amazon is the market leader in cloud computing—bigger than IBM, HP, Google, Microsoft, and other tech giants.

If innovation is your goal, by all means look to technology for opportunities to disrupt the current playing field.

But if business success is also your goal, make sure your innovation lines up with a critical customer problem that no one has solved.

And if you’re wondering what that problem is, ask your customers.

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