Starting with solving customer problems is the clearest path to creating new ideas, developing new products or services, and finding new ways to grow profitably. Since “innovation” has become such an overused term the idea of what the goal of innovation has been blurred. But no matter what business you are in, the size of your company or where you are located, your surest bet to find new ways to grow is to solve your best customers’ problems innovatively.
Good vs. Great Solutions
From the perspective of your customers, the most innovative solution may not be what you’d think of as the ultimate breakthrough, blockbuster idea. Simply fixing a product or service to make it better than it was may be sufficient in their eyes. There has always been an undue focus on greatness in the world of innovation, although sometimes great solutions simply aren’t needed — nor are they practical.
Good enough may turn out to be the most profitable innovation strategy a business can develop. Examples abound of good-enough ideas that trumped products that were considered to be mediocre. In a recent BusinessWeek column, Scott Berkun explores this theme very eloquently. He points out examples we’re all familiar with where good overcame mediocre, such as:
- Apple’s iPod, which was good enough to beat the really poor competition of MP3 players available when it was launched. Admittedly, the real innovations with the iPod were iTunes and the design of the user interface but the competition was pitiful.
- Firefox, which was developed when Microsoft basically gave up on Internet Explorer. Most of us remember how horrible Explore could be, especially the 6.0 release. The real innovation with Firefox was using Open Source — but it was good compared to Microsoft’s mediocre.
- Google — does anyone remember Internet search before Google? The competition was so bad that all Google needed to do was generate a reasonably good search engine that worked. The real innovations came later, see my column, What Google Teaches Us About Innovation.
- Amazon wasn’t the first on-line book store — but it was the first one to actually deliver books on time at a lower cost predictably and be profitable too boot.
Here’s the link to Scott Berkun’s column if you’d like to read more: http://www.businessweek.com/innovate/content/feb2010/id20100222_506858.htm
How to Start Solving Customer Problems
Begin by figuring out who your best customers really are. Create an Excel or Numbers list of all of your customers over the last 2-3 years sorted by total sales. Create two new columns identified as:
- Margin, and
These criteria are important because they will help you find out who your Most Valuable Customers really are. They are the ones that generate the most profit and that you match up with the best.
Next, gather your management team and go though the list ranking each customer by Margin and Hassle using a #1 = Excellent, #2 = Good or #3 = Poor. Be honest with your rankings based on what everyone on your team really thinks about each customer. Now tally up those customers that you ranked #1 in both Margin and Hassle. These are your candidates for Most Valuable Customers (MVCs), obviously it still must be proven that they’re really MVCs but it’s the first step.