Do Needs Lead Innovation?
Where do innovations come from? Do consumers play a vital role in fostering innovation within companies? There are two interesting articles trying to answer those questions. The first comes from the Fast Company blog and is titled “Innovation: Start with the Customer?”. The second, “The Role of Customer Feedback in Innovation”, comes from the Emergence Marketing blog.
One of the articles states that “there are two opposing views on the role of the customer in innovation. One school holds that all innovations start with conversation, observation, and understanding of the customer (current or potential) with the goal of surfacing and then filling an unmet need. The other school says that customers don’t know what they need, at least until they see it, and sometimes a need doesn’t even exist until a solution is available to fill it. There are compelling arguments for both positions, and both have their advocates”.
In my opinion those two theories are not mutually exclusive but rather complementary. Innovations do start with the observation and understanding of customer needs, and the fact that customers will not always know what they need until they see it will only reinforce the idea that a company needs to “observe” the customers and not “ask directly” to them.
As I wrote some time ago companies can not create needs out of nothing, and the Walkman innovation illustrates the point. Before the appearance of such device people were used to the idea that listening to music would involve sitting in their living room, and they accepted that constraint because the alternative would be not listening to music at all. If a market research was conducted by that time with people that had a stereo music system in their house it is very probable that none of them would mention an interest or a need for a portable music system. The users would not be able to articulate the values of “music” and “mobility” together, and they did not know what technology was capable of by that time. Sony did not created the need, but managed to understand and address it, and the rest is history.
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The two perspectives you present boil down to supply versus demand side thinking.
My experience has been that while the old saying goes “necessity is the mother of invention,” the dominant approach to innovation has been primarily supply-side.
To over simplify the matter, supply-side approaches are always solution in search of a problem. Sometimes they find a problem and become incredibly successful, like the automobile and phonograph for instance. Most of the time they don’t, like the segway and scout modo. Its a huge crap shoot. The common wisdom says that around 80% of new products fail. Of course one should always be skeptical of common wisdom, so take that figure with a grain of salt.
A demand-side approach begins with the need, the problem, and people involved. Solutions that emerge from this approach have a ready-made market. This approach isn’t as dramatic as the lone visionary putting her genius out into the marketplace. But it is, I believe, an approach that delivers results more consistently and predictably if you have the discipline to follow it.
Ok, perhaps i’m a little biased. http://www.niblettes.com/blog/2006/06/10/supply-side-thinking-is-toxic-to-innovation/
Also, I mildly disagree with your point that companies can not create needs out of nothing. Pharmaceutical companies have (arguably) done this by practically inventing disorders that need their drugs as treatment. The fashion industry relies on creating new demands every year: Your pants are too high, so buy these. Now your pants are too low, so buy these. Everything in black. Now everything in white. The cosmetic industry as well creates demand by encouraging women to feel bad about themselves and how they look and then presenting them with a great new product that will fix it (just pick up any edition of any Cosmo–you’ll collapse under the weight of messages proclaiming your inadequacy).
While I can’t think of many examples of manufactured demand, it isn’t completely unheard of.
I agree with you to a certain extent. But I still think companies do not create needs out of nothing, at most they influence consumer behavior.
For example you mentioned fashion companies. Are they creating the need for the clothes or they are just addressing people’s natural need for status and the desire to feel important?
Yup i get your point. Which is why i only mildly disagreed. Manufacturing demand and manufacturing need, while related are not the same. Indeed manufacturing demand usually involves merely tapping into and playing on a latent under-exploited need.
Although a cynic might say big Pharma are in some cases manufacturing need from nothing in order to grow demand (Attention Deficit Hyperactivity Disorder has been accused of being a disorder invented to create need). However this is an exception that proves the rule I suspect.