Put customers first. Who could argue with that? And yet, within our industry, customer-led innovation is not where it should be. The question is: what makes it so challenging? And, on the flipside, what can make it successful? We have some thoughts…
Companies can roll out hundreds of new products or services and jump on every industry trend. But if they don’t understand the customers and their needs, they’re destined to run into trouble. Sooner or later, such organizations will either fail to respond to the market, launch a product lacking crucial features or miss key opportunities.
Kare Heikkila, Chief Information Officer at IFCO, is clear about the dangers of such missteps. Responsible for the broader tech side of innovation, Heikkila ensures that any digital change is ultimately in the interests of the customers.
"If you’re not alert to customer demands and their needs, you run the risk of becoming irrelevant," he says. "If customers see the benefits they want elsewhere, they will switch. You can start losing market share very quickly."
Mounting pressure to continuously innovate or be first to market with "the next big thing" can therefore easily work against companies. "For innovation to be sustainable, you need to understand market forces and have real-world insights," adds Heikkila. "Both are necessary for purposeful innovations."
Innovations are not meant to simply sweep up awards and then fade into obscurity. Those are the kind that damage customer relationships. What’s more interesting are the innovations that are in it for the long haul. The best of them set new standards, determine the direction of an industry, and, ultimately, improve the lives of everyone.
Which is why customer partnerships have always been central to the way we innovate at IFCO. It’s a customer-centric model that Michael Meierhöfer knows inside out. As VP Sales Global, New Market Verticals at IFCO, Meierhöfer works in product development – and makes sure that the customers are involved in the design process at key stages.
"Listening to customers helps us understand the current and future challenges of our industry," explains Meierhöfer. "Being close to our customers ensures we can anticipate the requirements of future product developments. That’s how we stay ahead of the curve and secure first-mover advantage time and time again."
“Being close to our customers ensures we can anticipate the requirements of future product developments.”
There’s no shortage of research on the power of customer value creation. In fact, it’s hard to find anyone who doesn’t place value on customer-led innovation or sees it as smart business. So, why isn’t it more widespread?
In truth, balancing customer involvement with market pace and industry demands is not easy. To get it right, it takes industry experience, a certain approach to customer relationships, as well as in-house expertise. We tick all those boxes, which is why we stand out in our industry.
Over 30 years, we have established a tried-and-tested, value-driven approach to customer-led innovation. "It’s an approach that ensures we retain existing customers and can anticipate the needs of our industry," highlights Heikkila. "And it wins us new partners."
Here’s what we learned along the way.
Seeking input from customers too early in the product development cycle – without setting out a clear premise – can lead to unnecessary frustrations and delays. Tarun Patel, Director of Innovation at IFCO, believes it’s important to be clear from the outset about how customers will be involved in the different stages of the R&D process.
"There’s a spectrum," Patel explains. "We’re doing less and less of introducing a finished product to customers. Instead, we’re involving them in the concept and design phase more." At the same time, Patel is convinced, everyone needs to understand how such a collaboration will work in practice.
"While we solicit feedback regularly and get into a mode of co-creation with customers, we make it clear that they are not dealing with the finished product," he adds.
Collaborating in this way means we get to innovate more quickly. Additional bonuses include more purposeful designs and cost-effective development processes. Potential issues and challenges are identified early on, which minimizes the risk of innovations that fail to take off.
There’s a very good chance customers don’t know what they want. Steve Jobs was right when he said customers only know they want something when you show it to them. And Henry Ford summed up the limitations of customer-driven innovation with this famous line: "If I had asked people what they wanted, they would have said faster horses".
Admittedly, it’s the subject of much debate whether Jobs or Ford really did say those things. Nevertheless, the words do serve as a witty reminder of the dangers of allowing customer insights alone to drive the innovation process. After all, it’s not their job to come up with a silver bullet for all our industry woes. "That’s where our expertise comes in," says Patel.
Instead, we co-create with customers to put our strengths to best use and gain better perspectives. In our customer-led innovation processes, our role is to bring together various viewpoints and insights so that we arrive at a solution that exceeds all our expectations.
Our customers know their business, supply chains and industry incredibly well. We acknowledge and appreciate this immensely. However, a single customer has a very limited frame of reference. One case study can never be representative of every business model.
"Our customers don’t have the time to invest in research and analysis," continues Patel. "But we do. That’s why we understand their needs better than they do, and, crucially, we understand the fresh grocery supply chain where they operate."
Heikkila has a similar view, highlighting the need to strike a balance between customer and market orientation to achieve purposeful disruptions.
"We steer our customers towards what we believe are best practices and initiatives that would benefit everyone," he explains. "Having an innovation culture within the company brings value. As well as fully equipping us for future market trends, it also fuels efficient customer-led thinking."
Prototyping is standard for us. Creating workable models of a product or solution is imperative to figuring out if our innovations work in practice. And if they don’t, determining why not. In close collaboration with our customers, we test our prototypes in existing end-to-end supply chains. It’s how we better understand the requirements and the challenges of our industry.
Take our Banana Lift Lock RPC. Prototype trials to test its performance and viability were conducted with numerous retail clients and suppliers across various regions around the globe. "Customer feedback from these trials was instrumental in finalizing the design," highlights Meierhöfer, who oversaw the customer-led innovation process for the reusable banana crate. And we make sure our customers know that. "In turn, this approach leads to increased confidence in our business," adds Patel.
Patel is someone who works hard behind the scenes on product development. But he also knows the importance of keeping an open line of communication with customers during the whole R&D process: from speaking to customers about potentially important features, to reiterating the design and testing the prototype in a live customer environment. "Communication is a key contributor to success," he says.
Even the best trial conditions cannot mirror the complexities of the real-world supply chain in its entirety. Nevertheless, they are a very powerful tool. "As everyone understands we’re not working with a finished product, prototypes and field trials can play an important role in setting, communicating and managing expectations," continues Patel. "Real-world experience helps maintain transparency and fluidity throughout the R&D process."
How do we avoid getting stuck and being susceptible to disruption ourselves? By not viewing customer-led innovation as just a subset or single facet of the R&D process. Heikkila is very clear about this. "Customer-led innovation is integrated into the core of our company strategy and has become a part of our innovation culture."
It would have been a huge mistake to only apply it sporadically to incremental quality improvements or new product development. We would not be successful at co-creating with our customers, had we not flipped the entire model of product creation on its head. In other words, we don’t push our ideas onto customers.
Instead, we choose to place customer experience and relationships at the heart of what we do – and we use the resulting insights to shape the way we do business. For us, this extends far beyond product development.
It’s how we stay ahead of the curve. Since 1992 we’ve been developing cutting-edge products and setting industry standards precisely because we listen to our customers and view our business through the customer lens.
Or, in the words of our CEO Michael Pooley: "We have taken a different approach. We started with our customers’ problems, and the challenges inherent within our own business model, and then looked for a technical solution that would help us solve them."
Innovation without the right framework is unlikely to lead to sustainable business growth. Let alone help anyone stay ahead of the curve. That’s why we created a structure where customers are the key drivers of innovation, and where our industry expertise, technical know-how and insights can be put to best use.
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