Architecting innovation: customer-centricity through innovation hubs
The word innovation has become ubiquitous, sprinkled across websites and mentioned in every boardroom around the world. It seems to me that organisations consider the word itself a panacea to achieve loyal customers and increased revenue; organisations are chasing the wrong beacon.
I believe the way for organisations to be truly innovative is finding a path that involves the entire employee community.
We need to talk about innovation hubs …
A typical innovation strategy consists of setting up an innovation hub or lab and employing a Head of Innovation into the upper echelon of management; typically from a technical background.
Most of these innovation hubs exist in isolation, with a dedicated team (freshly hired), who play and explore new software and methods to unshackle them from the constraints of existing legacy systems and ‘old ways of working.’
While it’s great that Innovation is pushed to the forefront through a visible and focused function, actually making it separate from business groups can impact its ability to enable innovation in the business.
1. Innovation should never be isolated
Innovation should not just fall on the shoulders of a single team. Ideally it needs to be spread across the entire organisation, and throughout all functions, departments, business units, and mindsets - particularly ensuring engagement from customer-facing team members.
A broader spread enables exploration of ways to innovate within each customer touchpoint, channel and offering, as well as the configuration of the business. ‘Doblin’s Ten Types of Innovation’ outlines the different areas within a business that should be explored.
source: Doblin’s Ten types of Innovation
Additionally, involving the entire employee community brings innovation front-of-mind, enabling a broader and more intense opportunity for every part of the organisation. Leveraging the knowledge and experience of such a diverse group empowers innovators to evaluate what already exists, new possibilities, and use insights from all stakeholders including customers.
2. Don’t ignore legacy systems & methods of working
Legacy systems often slow teams down, because they have to create work arounds which add to technical debt, slow development time and hinder them from delivering new features and updates quickly and easily.
Legacy systems have a tendency to act like giant snowballs; their complexity increases as they keep rolling and growing. The reality is that these systems are often the cogs of an organisation and if you want to make big changes you can’t ignore them. Work with legacy systems, not against them, and perhaps put a plan in place to replace or rebuild them so that they’re no longer a barrier to release new features and product ideas to market.
3. Methods of working need to evolve
The ways in which people work and teams interact can also be a hindrance to innovation. Humans are creatures of habit who are naturally opposed to change, so injecting new methodologies takes time and requires collaborative input and high engagement so they can see the benefits and advantages that lay ahead.
Change should not be enforced. People need to see the value and become self-motivated to change, and the most effective way to do this is involve them in creating the new ways of working. Start with mapping out the current processes, policies, organisation structures, and how product/project funding works. Highlight the things that are working well, the pain points and areas for improvement, and then co-create the ideal working models which will promise simpler workflows, meaningful interactions and insights from real customers. Involvement in this process will help people see the benefit and purpose of change.
Again, work with people not against them, to gain common understanding before implementing change.
Make innovation hubs drive innovation
There are several fundamental things that need to change if innovation is to extend across the entire business, which include:
1. Adopt a customer-centric mindset
McKinsey recently published a report that tracked 300 publicly listed companies over a five year period in order to understand ‘The Business Value of Design.’ Amongst the many interesting insights that it uncovered are these two facts:
“Only 50% of companies they surveyed conducted user research before generating their first design ideas or specifications”
“40% of companies surveyed aren’t talking to their end-users during development”
Counter this with the countless studies conducted over the last 20+ years that prove that developing empathy for users, whether internal or external, by adopting a customer-centric approach increases business success and can surface insights for creating new products and services that people value, need and want.
Building a customer-centric culture can be challenging because it requires a different mindset and new methods of working. The key to really understanding customers is through adopting a ‘Design Thinking’ approach to problem solving.
A design thinking lens involves looking at problems from a human, business and technical view point. It’s important that teams contain individuals from each of these three disciplines to provide a well-balanced perspective and a richer set of viewpoints.
Design thinking encourages the creation of lots of ideas which can be explored quickly, in order to validate them with real customers and learn quickly whether it’s an idea worth taking forward.
To do this, you need to be clear on your customer segments. Then you can begin to get to know the personas within these segments at a deeper level, to understand their emotional needs and the reasons behind their behaviours.
2. Change the structure
Evolve from an innovation team working in isolation to a multidisciplinary group of individuals embedded into each business unit. The role of the Head of Innovation is now to create small CX-driven teams within each business product, leverage the knowledge of domain experts and guide them through customer-centric activities to improve their particular touchpoint and highlight innovation opportunities
This approach allows the business unit to be heavily involved in shaping and creating the innovations. There’s skin the game and strong motivation to prioritise the project and make it work. It also lowers the risk of the project dying during its inception because the business unit isn’t motivated to make it happen.
Organisational silos are converted to branches of innovation that stem out of the core (which was previously an innovation hub).
Each branch conducts its own user research focused on the user segments and personas that they have chosen to target. These insights are then shared with all the other branches at ‘Insight Highlights’ sessions, which might be held once a fortnight or whatever cadence suits the organisation.
The branches don’t need to be created all at once; organisations can pilot this approach one business group at a time. Piloting and staggering creation of innovation branches by six months allows the organisation to learn from each branch’s experience and improve the growth of the next branch.
3. Take on a holistic perspective
Use a systems thinking approach to see all the connections that your brand, employees, products and services have with customers. A holistic perspective allows you to see the interactions, disconnections as well as give the organisation a bird’s-eye view of each customer touch point that can then be studied in more detail.
A holistic perspective enables you to start creating consistent journeys at every single customer interaction. This is crucial because customers typically engage across multiple touch points; for example they might see a product promoted on social media, visit a website for information and then a store to purchase the item. The journey may conclude there, or continue if the customer is unsatisfied or requires after-sale support.
As you can see, there are various touchpoints that a customer interacts with, some digital and some tangible, but all are emotional in some way or another. The key is to ensure each and every interaction across the different touchpoints is consistent and that communications factor in the state of empathy at each step, in order to build personal connections that resonate and stay with customers.
Building seamless and consistent journeys are challenging because organisations are structured into different business groups that may not interact often, if at all. This is why the ‘tree and branches model’ described earlier is effective.
The ‘Innovation Core’ owns and drives the customer-centric perspective branches across all business groups and customer touchpoints, delivering a powerfully branded and consistent experience for customers across all their interactions with the organisation.
Mapping out every single touchpoint and creating a variety of user journeys for each persona is an effective method that helps organisations gain a holistic perspective that also goes deep into each customer’s experience.
Journey maps enable you to see the detailed steps and interactions the customer experiences with your products and services; they highlight pain points, emotional states, positive moments and opportunities. These moments can be captured for a variety of phases starting before they engage with your brand (dreaming, awareness, evaluating), during their engagement and the end of the journey which should consider offboarding, returned customers and dealing with disgruntled customers.
Customer journey maps and user flows provide rich insights, that can then be used to personalise experiences, drive innovation and develop strategies to retain customers and encourage loyal brand followers.
4. Adapt to a new way of working
A customer-centric mindset means that products are tested early to gain validation before investing too much time and money. This approach can be quite foreign to some organisations because it disrupts the way in which they have been accustomed to working. Features will need to be tested to demonstrate real value for the business and customers.
Moving away from Waterfall and into the Agile and Lean methods allows teams to deliver faster, but care should be taken to ensure teams develop the agile mindset and not just follow the ceremonies to tick the boxes that claim they are being Agile.
Conducting formative research before starting a project and running design sprints are two simple and cost effective ways to ensure you’re building the right product, because they enable fast product idea validation prior to jumping into development of a product that may never resonate with customers.
5. Co-create with your customers & test early to avoid costly development
Being customer-centric isn’t just about testing your prototypes. True customer-centricity comes from involving them in the actual creation of your product. An accurate and deep understanding of customer behaviour and mindsets can be learnt by spending a few hours mapping their experiences with your products.
Co-creating journey maps, empathy maps, proto-personas, testing prototypes early and ideating solutions together with customers will reveal and show you how to alleviate pain points. This process also helps you discover ways to bring new ideas to life that will be welcomed by customers, as they’re based on real needs and not on organisational assumptions.
Testing your ideas early and integrating user testing into the development cycle is an effective way to quickly validate and provide confidence that the product is moving in the right direction.
Customer-centricity is the beacon of innovation
Ideas are easy to come by, the challenge lies in execution. The first step is to ensure you’re actually building the right thing, and that can only be achieved if you validate it with the users you’re targeting. The beacon for innovation needs to be customer-centricity, with focus dispersed across the entire organisation and each branch aligned to the needs of the customer. This will ensure a seamless and consistent experience is met at every single touchpoint.
If you can achieve inter-connective branches of intentional and considered change, spreading the beacon of customer-centricity through a core grounded in positive culture and vision, you are set to transform into a truly innovative organisation.