Consumer-Driven Innovation: Bringing Others to the Ball

If regular consumers get more helpings of innovation, then perhaps enterprise and corporate customers need to act more like consumers.  They need to find ways to implant that “innovate to survive” instinct onto their suppliers, and make innovation about “more than words.”

Of course, the resistance from enterprise and government customers and their suppliers is “this is different.”  A Fortune 10 company is not going to use a software system developed in someone’s garage.  And the US government is unlikely to have three kids in hoodies knocking on its door with a working prototype of a stealth, next-generation fighter jet.

Not untrue, but also a predictable, “maintain the status quo” response.  How do you insert the innovation instinct given the particular industry circumstances?  In some situations, the answer may be to procure in the consumer-driven market when you can and to set up incentives to replace the consumer-driven dynamics when you cannot.  For the former, where there is an opportunity to go with the consumer version of an application (many software and IT solutions have consumer versions), an enterprise or government can rely on that solution.  For the latter, the customer can minimize the upfront payment, and pay on a subscription basis to maintain the ability and credible threat of switching.

Another perhaps more structural way is to expand the invitation list to the ball. Firms can find a way to bring in more innovative start-ups perhaps by providing smaller courts for the newer players to compete — parallel to whatever is happening at center court — giving them an opportunity to start small, grow bigger from there, aspiring to eventually making it to the big show.

This draws from Clayton Christensen’s ideas.  Christensen points out that incumbent firms rarely disrupt their own business.  His work suggests that disruptive innovation comes about when innovative companies pursue business models of providing simpler/cheaper products or business models, upsetting the status quo.  While, at first, these innovations are pooh–poohed as having less performance; often, they grow to become the market as consumer adopt them and the suppliers improve the offerings.  Customers have to invite in firms that have an incentive to disrupt the status quo by going beyond the incumbents. Where it does not exist organically, customers need to generate this dynamic in one’s industry, perhaps by signaling to entrepreneurs that this is an industry where disruption will be welcome.

One thing I will blog more about in the future are what I am calling (for now) “red sauce” industries.  These are massive sectors of our economy that seemingly would be ripe for the same disruptive attitudes (“go solve real problems”), wearing big targets on their chests because of their size and customer unfriendliness, that nonetheless seem to be immune from the forces of disruption.