Growing together: consumers and top management in the face of innovation

Activating a creative process able to identify new market opportunities calls for deep, direct interaction between companies and potential consumers, interactions that can fuel new knowledge and spark new ideas.

The context

Successfully identifying and developing a truly innovative new value proposition for the market: it’s no mean feat, especially for an established company. While Apple, Netflix and Amazon were investing in expanding their strategies, breaking into industries traditionally dominated by other companies, incumbents like Nokia, Blockbuster and Sony opted instead to milk a familiar, mature market scenario, rather than venturing down a risky path in search of something new and innovative. And we all know how that worked out for them.

But the path to change is never an easy one to embark on, and the obstacles blocking that path are myriad. Management theory and practice are very clear on how critical customer engagement is to a company’s innovation journey. Yet as we can see from any number of success stories, this onboarding must begin with the CEO and the C-suite.  In fact, the relationship with the customer starts at the top, and centers on customers that have certain unique characteristics.

The research

To understand how to develop innovative value propositions far flung from the original business model, a recent study explored the role of top management and the CEO in encouraging corporate creativity. More specifically, the study centered on incentives and opportunities that come from top management interacting with potential customers (end users who aren’t customers yet but who might take that step if they’re offered a really innovative value proposition). Inspiration for this idea came from observing what happens with startups before they become bigger, more structured companies. In these contexts, the streamlined company configuration allows for direct interaction between the entrepreneur or CEO and the market. This interaction is invaluable because it helps reveal emerging opportunities and channel the innovative efforts of the company.
To set in motion a creative process capable of revealing new opportunities, a company must have direct and meaningful interaction with a certain sort of potential customer, interaction that can pave the way for coming up with new ideas and shining a light on new development paths for the company. But all this hinges on figuring out what types of potential customers can be most helpful and which processes can be used to glean information and achieve the desired results.
To activate the process of idea generation, companies need to immerse themselves in formal and informal relationships with potential customers. This will enable them to extrapolate the tacit knowledge that conceals opportunities which for companies are hard to see with more traditional research methods. Beyond being creative, potential consumers must possess certain specific characteristics – such as a being willing to take risks and being decidedly non-conformist – and a synergic set of personal traits such as optimism, openness to new experiences and ideas, ability to reflect and to make innovative connections between old and new ideas, and the ability to process information. In this sense, the rise of social networks has proliferated the information available on individual behaviors, which helps companies pinpoint what traits best suit their needs.
Once these traits have been identified, companies must onboard and empower consumers. So after selecting the consumers who best fit the bill, various kinds of interaction processes with top management can happen with a varying degree of frequency: from one-on-one conversations to group discussions, from one-off meetings to more regular sessions.
When consumers get the impression that the company recognizes the value of their opinions, this shapes their behavior, giving them a sense of responsibility during interactions and making them willing to pay more to enjoy the final outcome of the process. It comes as no surprise that the websites of many companies offer platforms where consumers can contribute to innovating the business model, or connect with other users who’ve expressed an interest in improving the product.
When individuals are invited to participate in brainstorming sessions, their creativity is shaped both by their emotional states and their cognitive styles. Companies that implement engagement processes between top management and consumers must be aware of the possible effects that their moods and emotions can have on creative outcomes. To better tap into consumer creativity, companies should elicit positive emotions and mitigate negative ones, and also encourage unconscious associative cognition among participants. Human cognitive ability entails two processing mode (one is fast, associative, and holistic; the other is slower, more analytical and rational). But only the unconscious associative cognition sparks creative ideas, while the rational conscious thought can sabotage the search for creative solutions.

Conclusions and takeaways

Top management in established companies, if they want to develop winning new value propositions, must adopt behaviors that align with proactive, informed innovation, exactly like what happens in startups.  

Most importantly, one item on the agenda must be carving out the time it takes to interact with potential consumers, because the cost of being left in the dark, cut out of innovative processes, is far greater than the cost of the time spent in the interaction. Renowned examples like Mark Parker (Nike), Michele Ferrero (Ferrero), Amancio Ortega (Zara), and Federico Minoli (Ducati) show that it is possible. Other critical problems that top management has to figure out how to face and solve are: how to spot “fashion forward” trendsetters by honing the ability to scout these consumers, and how to do better, more continual data collection.

Ford’s Model T, Apple’s iPhone and Amazon’s Kindle have disrupted the market. This thanks in part to the fact that behind these disruptive products were entrepreneurs who were well-aware that the only way to develop new, high-potential value propositions and create successful new markets is through a direct connection with consumers. Often, instead, what happens is that top managers don’t even know how to use the information they have. But what’s becoming more and more critical is to establish corporate strategies that take into account the behaviors and ideas of consumers, especially the right consumers.