BCG: Many of the most innovative firms innovate by creating unique customer experiences
Interesting findings from a Boston Consulting Group survey of senior managers/executives. The three most innovative global firms by number of votes are: Apple, Google, and Toyota Motor. [Noticed the names are the same as the leaders of the Q2 2008 American Customer Satisfaction Index?] To weigh down the ‘voting’, 20% of the ranking is determined by three-year revenue growth, three-year margin growth, and three-year shareholder return.
- Unique customer experiences is a key output of innovation. 15 of the most innovative firms get this status because they designed unique customer experiences that create loyalty. Breakthrough products is still the main manifestation of innovation.
- Developing a deep understanding of customers is firms’ best performing innovation capability. This finding is worrying. So, most executives think their firms know their customers well enough to be able to innovate through breakthrough products or services, or through applying a differentiated business model. I’ve seen too many (dis)satisfaction surveys where customers don’t feel understood by the companies they hold products from to believe that executives are wrong here.
- A risk-adverse culture is the main obstacle to ROI on innovation. The other primary obstacles are lengthy development times, difficulties selecting the right ideas to commercialize, and lack of coordination internally. A quarter mentioned they don’t have enough customer insight – obstacle number 5. Huh? So, managers believe that getting deep understanding of customers is the best performing process behind innovating, but a lack of customer insight is a key reason why innovation is not happening. Sounds like research and marketing don’t have lunch together!
- Customer satisfaction is the number one measure for innovation success. Second is percentage of sales from new products or services and third overall revenue growth.
Download the full report here.
