Innovate Better By Listening To Your Customers

We recently hosted a webcast conversation between Sonali and Elliot focused on innovation and why it’s so important to speak to your customers early and often.

Don’t have time for the full webcast now? Catch the webcast highlights and tips from their conversation in our companion blog below.

If you’d like to read the full transcript of Elliot Susel’s conversation with Sonali Shetty, you may download it.

Feeling Your Way Across the River

About ten years ago, Sonali Shetty recognized an approaching shift in the way companies could interact with their customers. Apple had just opened the app store, social media was on the rise, and Facebook had opened up their API to third party app developers. All of a sudden, companies could now directly communicate with their customers and client base. It was a new frontier.

“I wanted to…educate [startups and corporations] on what this change meant for them and how they needed to prepare for it,” Shetty says. So Kova Digital was launched. At the time, they were a third-party app developer on Facebook. But the digital world took off quickly, and very soon the landscape evolved. Products weren’t just limited to apps, but mobile, web, and IoT came along, as well as algorithms and machine learning. But all this didn’t change Shetty’s focus, it just expanded the ways in which Kova Digital could help their customer base.

Shetty likes using the Deng Xioping analogy of crossing a river by feeling the stones. Your goal of crossing the river remains your focus, but you’re feeling your way as you go, stepping on the stones that provide the most solid footing and make the most sense. “We always wanted to be a product innovation company, but we pivoted and modified in the best Lean Startup tradition in terms of what that means,” she says.

“We always wanted to be a product innovation company, but we pivoted and modified in the best Lean Startup tradition in terms of what that means.” Share on X

The Three Major Types of Innovation

Pivoting to new possibilities on the product landscape allowed Shetty and Kova Digital to focus on innovation and helping companies do things that’s not business as usual to get a desired outcome.

“No company says they don’t want to [innovate],” Shetty says. In fact, it’s a core value for a lot of companies.

In Shetty’s eyes, there are three major types of innovation:

  1. Incremental Innovation. A series of small upgrades or improvements made to a company’s existing products, services, processes or methods. Perhaps the most common and easily applied type of innovation for a company. IT groups are very good at this.
  2. Disruptive Innovation. Creating a dramatic change that transforms existing markets or industries by introducing groundbreaking new products. Shetty uses the iTunes store as an example. It was interesting and new, but more importantly, it was a software product that helped Apple build an ecosystem that had a huge impact on their hardware sales.
  3. Radical Innovation. An invention that destroys or replaces an existing business model.  Think Uber or Airbnb. It happens rarely in business, and while businesses should be aware that there is always the possibility for a major disruption in their industry, trying to establish this type of innovation for an existing company shouldn’t be a main focus.

Shetty likes to focus her work on disruptive innovation. It’s a way to continue to bring value to companies. And value, Shetty emphasises, is very important. “You have to keep thinking through ‘what is value?’ and ways to bring that to life.” It’s something every company – big or small – should be thinking about.

Innovating is a Job in and of Itself

But just because companies should be doing something, doesn’t mean they are. Or at least, not always very well.

“In my experience, [big companies] are mostly bad [at doing innovation work],” Shetty says.

The problem is twofold. First, and all too often, career risk and project risk are viewed in the same bucket, making people afraid to take risks. Because if it ends up being something that fails, people are afraid that they’ll be out of a job as a result. But also, and perhaps more commonly, it’s hard to innovate from within a company. It takes time, effort, and resources away from doing the company’s day-to-day business.

That’s why Shetty advises making it someone’s job to think about innovation. “That someone doesn’t have to be internal to the company,” Shetty points out, “you could hire somebody else…but it needs to be someone’s job to understand the customer, understand the customer journey and look for gaps and opportunities within that.”

Plus, having an outside company come in can help focus the thinking and strategy behind the desire to make a change. Rather than focusing on copying a competitors innovation, Shetty encourages companies to “copy the thinking behind it.” Because often the need or the urgency behind an innovation won’t be the same from one company to the next.

Which is why, Shetty stresses, it’s very important to look at your customers and figure out what is of value to them and to really hone in on delivering that value in an impactful way. And one of the best ways to do that is to go straight to the source: the customers you’re serving.

“It needs to be someone’s job to understand the customer, understand the customer journey and look for gaps and opportunities within that.” Share on X

Let Your Customers Guide the Way

Shetty and Elliot emphasize how important it is to speak to your customers early and often to learn about what they want and need. The faster you can learn the fallacies in your thinking or design, the faster you can get to what might actually be valuable to them – and ultimately you as a company.

Startups with technical talent in particular tend to want to immediately jump into building something. “Coding is comfortable,” Shetty observes, “it’s something they know how to do. [They don’t want to spend the time…on talking to the customers.]”

But many companies – large and small, startup and established – are guilty of not speaking with customers because “they believe what they believe.” Whether it’s ego or emotion guiding that belief, unless they have data to back it up, it’s just hypotheses. Shetty emphasizes that you should take that hypothesis and test it in order to learn early lessons. “We need to reframe [failure] as learning. If we can test those learnings early and often, then we’re so much better off.”

That, Shetty stresses, is a lesson for any company. Not just business to consumer companies, but business to business companies as well.

A lot of people think that speaking to consumers is only useful in a B2C context. But that is perhaps because examples most commonly heard in popular media are B2C like Coca-Cola or Apple. It’s important to remember that, no matter what size your company is or what you are selling, you’re still selling to a human. It’s something Shetty thinks everyone should remember. “Whether it’s B2B or B2C, eventually you are solving a problem and bringing value to a customer.”

Thanks to Shannon Lorenzen for contributing this piece. If you seek to bring the entrepreneurial spirit to your organization, Lean Startup Co. can help.