Reflections on Customer-centric Innovation

In 2017, Sweden was the most innovative country in the European Union, according to the EU’s yearly ranking. In second and third place on the list were our Nordic neighbors Denmark and Finland. The Nordic countries’ top positions were also confirmed in the “Bloomberg Innovation Index” from 2017.

When looking at innovative regions in the world, the EU report states that the most innovative region in the EU is Stockholm in Sweden, followed by Hovedstaden in Denmark. When looking at all countries in Europe, Oslo & Akershus in Norway is also ranked as one of the leading innovative regions.

When the US business magazine Red Herring 2017 presented its list of Europe’s most innovative companies last year, Sweden was the leader in the Nordics, with seven young tech companies on the list, such as Vendemore, Wittra, and Bambwa.

So, what are the success factors? The World Economic Forum (WEF) suggests that high quality education at universities and rigorous recruitment – with highly educated employees – are key drivers for innovation in the Nordics.

Investments in research and development are also fundamental. Some experts say that focus on individual progress is crucial – people with good ideas will nurture innovations in an encouraging environment. Economic conditions, investments and ease of doing business are factors that matter as well.

Where to put the innovation focus?

According to McKinsey, at least 10% of a company’s resources should be spent on transformative growth activities. They also suggest that 20 % should be spent on expanding existing products and services. The first 10%, targeting transformative growth, is about innovation that could make a real difference. It is challenging, it takes courage, but it could actually change a company’s market position in a very short time span.

My view is that the customer, and customer experience, should be at the top of the list when ranking innovation areas. In today’s competitive environment, human centricity and customer experience is a corner stone for survival. B2C and B2B companies need to see the actual end user – the customer and the customers’ customer – and make sure that all activities bring value to them.

As an example; we know that a more attractive online offering is often just a few clicks away. We also know how easy it is to browse different news channels online, or visit several online shops in just a few minutes. This is also true when it comes to banks and financial services, energy providers and much more.

If the customer does not see the expected value in the services or products, or the actual experience when interacting with the company, they will most likely go somewhere else – and tell others to do the same, through public ratings and social media. On the other hand, when the experience meets the expectations and brings value, the customer will stay loyal to the company and its products/services and recommend them to others.

Lean and agile innovation

So how do you ensure that customer experience is on top, and continuously changing to adapt to new needs and expectations? And how do you manage this without overspending, ensuring that the allocated time and budget is used in an optimal way? Traditional innovation tends to engage large teams that spend a lot of resources to develop the perfect solution. A failure then becomes very costly.

One way forward that has shown to be very effective is to apply lean principles in the innovation process. Lean principles are straightforward and easy to implement. The lean approach does not let perfection hinder progress and allows you to make mistakes during the process without putting too many resources at stake.

You develop a version rapidly and test it with customers, preferably in the actual environment where the service or product is supposed to be used. This process is repeated and the products/services are enhanced until they meet expectations, are competitive, or you have enough knowledge to know that it does not have what it takes – instead you start a new process, using the same principles. This is what is often referred to as agile development.

Learning is another key to improvements and innovation. You need to learn both from successes and failures. That is why it is important to hold both informal and formal debriefs about success and failure following the launch of new services or products. Often it is valuable to use external partners for this debriefing process, and of course the results should be captured and handled in a knowledge management system.

Leveraging existing knowledge for innovation

Innovations are often “born” in the interface between a company and its customers, and then developed through co-creation between different groups of people. One key group throughout this process are the employees that interact with customers on a daily basis.

Let’s have a look at the retail sector: It is a fast-changing industry, which needs to be highly adaptive to consumer behaviors and where the customer experience is – without doubt – crucial. Physical stores are currently being challenged by new channels and online retailers.

As a retail company, you need to have the ability continuously to transform to keep up with the competition. So where do you get the input for the innovation and the transformation? By using the knowledge and experience from those working in the frontline and interacting with the end customer on a daily basis – the staff in- and behind the stores!

At Fujitsu Sweden, we have started to use Run My Process as a tool for collecting ideas from our staff, both those working on the frontline and those behind the scenes. It supports a streamlined, “lean” process where ideas are immediately being captured, processed and shared with the stakeholders.

It helps to manage ideas in an efficient way and ensures that no improvement opportunities are discarded or diminished. In addition to helping improve our business and operations, it also fosters an innovative culture and provides our staff with a channel where they can be part of building a better future.

One final thought: Remember that innovation needs to be a continuous, ongoing process. It is not something you do just once or twice. The market is changing and we all need to keep up with the changes and be responsive.

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