What the Customer Cannot Tell You

Last Updated Jun 17, 2008 6:52 AM EDT

Most companies say that being customer-led is at the heart of their growth strategy. Yet market leaders achieve success by being distinctive -- they lead customers, not vice-versa.

Take Apple. A columnist who has interviewed Steve Jobs several times told me that, in all his sessions with Apple's CEO, Jobs has not once used the term 'market research' or 'focus group'.

Instead, as with last week's launch of the second generation of its iPhone, Apple's success lies in its ability to be truly distinctive and to offer customers benefits they never knew they needed.

In their book, Blue Ocean Strategy, W. Chan Kim and Renee Mauborgne studied over 100 business launches. They found that truly distinctive companies accounted for just 14 per cent of the launches but delivered over 60 per cent of the profits generated by the organisations studied.

The problem with being customer-led is that customers can't predict the next big thing -- you can't give focus groups a blank sheet of paper and ask them to create a groundbreaking idea. If you do, you will only discover incremental improvements, not breakthrough growth.

Customers don't notice incremental changes -- most are too busy, and already have too much choice, to notice most new products, even when they're an improvement on the current offer.

So how do you become ideas-led? Here are three practical strategies for success:

  • Change the rules of the game. Ryanair started out life in 1985 as a smaller version of BA and Aer Lingus on routes between Ireland and London. It was only in the early 1990s, when it changed its mission to be Europe's premier low-fare carrier, that it became one of the most profitable airlines in the world.
  • Focus on early adopters. It is unlikely that, 10 years ago, a focus group of lorry drivers would have agreed to pay £2.50 for a frothy coffee. Now they happily shop at Starbucks. Instead of asking busy, satisfied customers about a new offer, focus on customer groups looking for change. It is these early adopters who will sell the idea to the majority, not you.
  • Create a stream of ideas, not a one-off win. Apple's product strategy is to launch a series of product upgrades that deliver better features at a lower price. Gillette, similarly, has consistently grown through a stream of innovations. As an ex-Gillette chairman once put it, "We have never launched a major new product without having its successor in development. You have to steer the market."
  • Stuart Cross

    Stuart Cross is a founder of Morgan Cross Consulting, which helps companies find new ways to drive substantial, profitable growth. His clients include Alliance Boots, Avon and PricewaterhouseCoopers.