Archive for the ‘Nintendo’ Category

Follow-my-customer

Sunday, December 9th, 2007

The idea of creating products with customers is one that seems to polarize opinion. There are those who won’t touch it, and there are those who painstakingly design processes to incorporate customer-led innovation into their organizations. Then, there are companies that seem to do it effortlessly. What is their secret? I reckon I’ve cracked it. As with every good consultant, I am going to bring it down to a 2-by-2 matrix (click to expand):

Follow-my-customer matrix

  1. For developing new products for your existing markets (extension), your most loyal customers (in terms of customer tenure) are crucial as they have the passion for your products. It is among this group of customers that you are likely to find ideas for new products that you could offer. This could be from the customers taking the product and adapting it for alternative uses, such as in the case of Lego Mindstorms. Lego found that universities (such as MIT) were using their bricks as part of robotics experiments. By working with them on this, they created Lego Mindstorms – a robotics-based product that was popular for play and for academic uses. An alternative is customers who would like to see you offer a new product within the market. The most passionate (or proactive) of these customers may already be writing suggestions about products that you can offer, such as Detective Marketing’s Stefan Engeseth who suggested to Apple that they make an apple-shaped projector. In both cases, these customers should be given free licence to innovate with your products – even giving them resources to do so if needed. And, of course, they should be rewarded for successful ideas.
  2. When it is new markets for existing products (expansion), you need to enlist the help of non-customers, those customers who are choosing against your market. This is where Blue Ocean strategy – ‘the idea of reconstructing market boundaries and rendering the competition irrelevant’ – comes in to play. Understanding why people reject
    the market is very powerful and is an activity that frequently sits at odds with competitor-focused strategy. Exploring the reasons that these non-customers have for choosing against your market means understanding their alternatives. Consider the Nintendo Wii: Nintendo had all but lost the games console market, but it has destroyed the competition with the Wii, outselling the Playstation 3 by 4:1 and the Xbox 360 by 2:1. It is also the only one of the three that makes a profit on the base unit – the other two are both loss-making and recover that loss through games and accessories. Nintendo approached this by looking at how people who were not interested in consoles spent their time. They found that those people preferred to do sociable activities and/or physical exercise, so they created a physical interface that requires a lot of exercise to play it. I can vouch for this personally – I am in no way interested in the video-games market but I have bought myself a Wii and I enjoy it immensely. These customers should be consulted and given opportunities to explore and use the product, and their reactions carefully recorded. That way you will understand why they reject the offering and it will allow you to redesign the offering to become a viable alternative for them.
  3. New markets and new product lines (transformation) need the involvement of your biggest brand-fans. These are likely to be two groups of people: those who have the most interaction with you and also your earliest adopters. These people are close to your brand and will understand how you can make transformational moves that fit in with your core brand – that is, how to make sure that it is a coherent transformation that customers will find credible rather than just a shot in the dark. One such example of this is Tony Fadell, who suggested to Apple that they should create the iPod. This was a new product line and a new market for Apple, and they were reluctant to do it. At first they ignored him, so he got a job at the company in order to persuade them internally. This is an extreme example, but every brand has customers who believe in it enough to want to do business with it in other areas of their lives. Building up a good relationship with these customers will allow you to capture their suggestions, and more crucially bringing them close so that you can test new products and markets with them.

This is a segmented approach to customer-led innovation that involves different types of customer for different contexts. The key to using it successfully lies in communication. Understanding who rejects your market and why will prove valuable for expansion-based innovation products. For the extension and transformation segments, relationship outside of the sales context is key. Giving customers the ability to interact with you as a brand, rather than a business, will provide opportunities to bring those customers close, but to get the most value out of this it is crucial that each customer can lead and define their communications with you. That is a very cheap way of finding out what your brand means to your customers because in the end it is their brand.