The many facets of customer-led R&D and innovation
Posted: Friday 22nd January 2016
One of the most significant trends acknowledged in many industries today is the need for companies to partner with customers in the R&D (Research & Development) stage of the product development cycle, in order to further enhance and encourage new innovations that are in line with what customers and the market needs at any given time. Whether it is through hosting interactive workshops, setting up CRM (Customer Relationship Management) systems, online customer forums and feedback mechanisms, or tactfully nurturing long-term relationships, the customer’s involvement in the innovation process is a key to delivering robust, relevant products to help stay competitive in an increasingly challenging global market.
Over the past ten years, product development in many companies has increasingly derived from the knowledge gained through extensive consultation and fact-finding with key customers. While this can be viewed as a strategy to secure customer loyalty and reduce competitor threat, moving away from ‘just’ a product-driven company to one with a customer-centric focus, generally increases the possibility of significant innovation in the evolution of a product.
For many years, Meech International has routinely utilised customer feedback when designing new technology ranges for static control and web cleaning applications. In this white paper, we aim to illustrate how customer-led R&D has benefited customers and manufacturers alike, drawing on best practice examples of customer-led R&D programmes, the pros and cons of this process, as well as some key success stories.
Why is customer-led R&D important?
We all know R&D plays a critical role in the innovation process and represents a necessary investment in the development of new technologies. However, it is companies’ relatively recent but growing tendency to integrate customer knowledge (ideas, insights, information, etc.) that has both transformed the innovation process and effectively converted many customers into unofficial partners in product and service innovation.
As a result, we now live in a time when manufacturers listening to consumers and refining their project designs accordingly is considered a key component of a solid and forward-thinking business plan.
How do manufacturers benefit from customer-led R&D?
The substantial advances in information and communication technologies (or ICTs) over the past ten years have given manufacturers a host of platforms through which they can communicate with their customer base. These include CRM systems, online forums, automated feedback forms and, most noticeably, social media channels. The open accessibility of these platforms means that companies are now capable of collecting valuable customer information from a wide variety of sources that can all be filtered into the R&D process.
In line with this, the customer is no longer just a buyer, but a potential member of a highly valued focus group, one that could put forward a ground-breaking idea or suggestion that could contribute to much improved product designs and services.
Secondly, the predisposition to directly address the customers’ wants and needs, while also taking on board their feedback, inevitably brings the manufacturer closer to the customer, which provides a solid foundation on which to build enduring relationships. A relationship that has such a keen focus on customer satisfaction is likely to result in more robust brand loyalty and engagement, and therefore grant a competitive edge to the manufacturer.
How do customers benefit from customer-led R&D?
For the customer, it all boils down to accessibility. In an age where customisation is becoming a dominant trend across multiple industries, failure to engage customers and ask for their opinion can prove detrimental to business. By being given the opportunity to play a key role in driving innovation by the manufacturer, the customer becomes an informal, yet highly valued participant in the R&D process.
This leads to the most conspicuous benefit for customers: the products and services that emerge from this co-creation process are much more in line with their needs. Companies now understand that they need to design and manufacture products which reflect their customers’ requirements, rather than customers having to adapt to a manufacturer’s unilateral vision. It is quite possibly the most significant role switch to have taken place in the manufacturing world in recent years.
When should customer feedback play a role in product development?
Companies tend to consult their customer base whenever they are looking to innovate their products and services but, ideally, it should be a routine exercise. Some firms like to involve suppliers in their quarterly review meetings; why shouldn’t key customers also be involved in some capacity?
After all, the philosophies behind the principles of marketing stipulate that a firm should always seek to better its understanding of the needs and requirements of the markets it serves, before making the necessary decisions to satisfy such needs more successfully than the competition. With this in mind, there is no better way to understand the current state of the market than by consulting the customer. The best companies proactively encourage and appreciate customer input in every facet of the business relationship, not just when input is required to suit the company’s needs.
As a result, we have identified a classic example of how a customer-led R&D process would roll out:
- manufacturer identifies a potential area of improvement in one of its product offerings or even a range of technologies
- manufacturer decides to employ customer feedback to incite the innovation process
- manufacturer gathers ideas from its customers
- customer ideas are assessed internally
- the most effective ideas are incorporated into the design of new products
The way in which these ideas are reviewed and assessed can vary depending on the nature of the company and its preferred methods of engaging its customers. A few of these methods are explored in the following section.
How can businesses gather customer feedback?
Undertaking customer surveys on a recurring basis is crucial for running a successful business, regardless of industry and sector. The analyses drawn from these can highlight customer approval but, as importantly, can also measure their dissatisfaction. By designing comprehensive feedback forms that include scorings to go with open-ended questions concerning a specific product or service, manufacturers are able to identify critical needs in their customer base and therefore determine what action needs to be taken to fulfil these requirements. A well-designed survey can steer the customer by raising questions concerning issues they would probably not have considered. The aim is to obtain objective feedback, as opposed to positive feedback.
Strong interpersonal relationships
Taking customer feedback on board does not necessarily need to be a formalised process. For some companies, nurturing a close relationship with the customer through on-site visits and face-to-face meetings over an extended period of time, represents the most obvious solution for mining reliable information that can prove beneficial to the R&D department during the design of the next product. For this type of approach, actual physical proximity to the customer is an advantage. However, this does rely on the individual tasked with the responsibility of nurturing that relationship to identify opportunities for further product innovation and ensuring that they reach the relevant part of management. This is possible for companies with a global presence, which are able to leverage their considerable regional expertise, their subsidiaries and partners to bring to market products that are relevant to the nuances of the specific region or industry.
Information and Communication Technologies (ICTs)
ICTs encompass a wide variety of mediums, such as mobile technology, computer networks, as well as a number of similar services and applications, including videoconferencing. By enabling users to access, store and transmit information, ICTs have proven to be effective tools for bringing customers and manufacturers closer together, thus opening up more opportunities for innovation, especially for companies that do not have a widespread global presence. Additionally, customer information (identity, location, feedback, purchasing behaviour, etc.) is stored and analysed on a continuous basis, thus providing companies with a wealth of invaluable knowledge.
For some manufacturers, inviting a number of customers to an on-site seminar or a workshop can equate to a disruption of the status quo. However, placing the customer at the centre of the discussion will often lead to the generation of a multitude of new ideas that can potentially improve products and services, and therefore achieve transformational innovation. Also, setting up workshops comes with a number of additional benefits for the manufacturer, aside from extracting information from the customer. They can be a great tool for a company to display thought leadership, re-position a brand, promote upcoming products, but most importantly, engage face-to-face with customers.
Perhaps the most significant evolution in customer relationships of the past ten years is the implementation of social media in B2B marketing. These days, Twitter, LinkedIn or even Facebook and Pinterest can prove to be invaluable tools in determining how customers perceive a brand and their services. An organisation can use these social platforms to encourage and respond to feedback, as well as log suggestions and noteworthy ideas, which in turn facilitates the tailoring of products and services to customer needs. This can also be achieved by employing free tools such as Google Analytics, which are instrumental in monitoring what users are saying online about a specific brand.
What are the potential downsides to customer-led innovation?
We have now established that companies are more likely to achieve effectual innovation by regularly consulting their customer base. However, in order for this to be a truly objective analysis of the subject, an equally compelling question needs to be tackled: are there any arguments that can be made against customer-led innovation?
The first and most obvious one that comes to mind is that, while one customer’s insight can lead to the improvement of product functionality, another might not have a sufficiently broad market vision to inspire true innovation. In this scenario, the manufacturer risks being led down the wrong path while trying to provide good customer service and take feedback on board. For this reason, companies need to understand when it is appropriate to listen to customer insight and when it is preferable to follow their own vision.
Another aspect to take into consideration is that democratising the innovation process and involving a wide variety of participants carries the risk of slowing it down. The more players included in a project, the more likely the manufacturer will contend with an extensive set of divergent needs and requirements, some of which will inevitably be in conflict with others. Consequently, if the manufacturer is faced with a lengthy task of establishing criteria for filtering customer input, the prospect of losing its competitive edge increases.
A manufacturer’s predisposition to involve the customer in the innovation process leads to another potential pitfall, which is to inadvertently raise customer expectations in terms of the form and function of the product that will eventually be delivered. Today’s business environment is heavily affected by the amount of information we can access and share online, which means that customers are more aware generally and have higher expectations than perhaps they would have had ten years ago. Therefore, companies are finding themselves in the delicate position of adequately managing customer expectations and measuring satisfaction, while at the same time involving them in their drive for significant innovation.
By focusing on understanding the expressed needs of the customer and subsequently tailoring products and services to suit those requirements, a manufacturer might risk becoming too customer-led and not sufficiently market-oriented (Stanley F. Slater & John C. Narver, Customer-Led and Market-Oriented: let’s not confuse the two (1998). While customer-led businesses tend to develop and nurture lasting relationships with customers that have the potential to provide valuable insight, the very same customers are also capable of constraining companies’ ability to innovate because certain innovations may threaten their existing business model. One could therefore argue that, by being too customer-led, a company’s role may become adaptive and reactive, rather than trailblazing.
For these reasons, it is fundamental that companies balance their dedication to satisfying the customer with a routine assessment of industry trends, backed up by traditional market research. This way, a degree of objectivity is maintained at all times when evaluating customer feedback.
What role has customer-led innovation played at Meech?
Meech’s Hyperion™ ionising bars have been developed as a direct result of customer feedback. Because of its commitment to providing outstanding static elimination solutions across a variety of sectors – including print, packaging and plastics – Meech has often turned to its customers to understand what product features would benefit their businesses most.
For instance, the Hyperion 971IPS (Integrated Power Supply), a long range ionising bar that runs on a 24V power supply, was developed as the result of input from customers operating in the coating industry. Feedback confirmed that, due to the harsh production environments, the performance of Meech’s older bars were being affected by the presence of airborne contaminants deposited on the surface of the emitter pins, which became increasingly difficult to clean.
As a result, after gathering customer feedback through its distributors, the development of a bar that would minimise the effects of contamination and substantially reduce the amount of cleaning required became a top priority for Meech. In line with this principle, the Hyperion 971IPS featured a castellated pin holder that protects the bar from dust remnants, while an Ion Current Monitoring feature allows its performance to be routinely monitored, and included an alarm signal to advise the operator when the bar required cleaning.
Another of Meech’s Hyperion bars developed as a result of customer feedback is the recently launched Hyperion™ 924IPS. A large OEM needed an anti-static bar for short range applications, while also highlighting the issue of space on a production line, which could not accommodate the size of a traditional Hyperion bar. Furthermore, the OEM was concerned about the presence of high-voltage cables intertwining with its in-house machinery.
After listening to the OEM’s requirements, Meech designed the Hyperion™ 924IPS, a compact, purpose-built pulsed DC ionising bar that can be fitted into smaller spaces on a production line. Also, aware of other customers’ issues with contamination, a ‘clean pins’ alert was included in the design of the 924IPS, a key feature which helps the user determine whether good ionisation performance is being achieved. The end result is a system that incorporates the feedback of customers both old and new.
Meech also utilises 3D printing technology to design new products. The 954v2 Ionising Gun, used for the neutralisation of static charges and the removal of dust contamination, has been created and manufactured using 3D printing. This type of technology allows shapes to be designed which would either be impossible to mould or too expensive to tool, which ultimately allows for more customer led modifications/designs to be considered. Furthermore, the employment of 3D printing during the development process can be an effective tool for future customer-led innovation opportunities. Manufacturers can bring 2D concepts to life during the design phase, enabling customers to see and touch a work-in-progress development, giving them a more accurate representation of what is being created. This can be a powerful engagement tool between business and customer, enabling the latter to play a more influential role in shaping the end-product that they may one day invest in.
Examples of customer-led innovation among big brands
The access that customers now have to vast amounts of insightful, comparative information has led big name brands to generate products and services that can be customised and personalised to suit individual needs. For an organisation, the ability to understand the ways in which its consumers embrace these customisations can lead to uncovering data and information that will prove instrumental in future innovation.
Below are a two examples of big name brands which have welcomed input from its customers:
The world’s most recognisable online retailer is quite possibly also the brand that best understands to what extent today’s customers value knowledge. This is best exemplified by the wealth of information book buyers are presented with on the company’s website: price, synopsis, similar reads, sample pages and, most notably, customer reviews. Not only are all these determining factors in helping the customer make that all important purchase, they also provide Amazon with unparalleled insight to its customers’ purchasing behaviour.
The renowned computer technology company’s direct model – by which sales are made by the PC manufacturer directly its corporate customer or consumer, thus bypassing distributors and resellers – came to fruition as a result of Michael Dell’s appreciation of customer knowledge and familiarity with PC equipment. By introducing a model that allows first-hand interaction with the customer while cutting out the dealer channel, Dell has placed itself in a better position to understand its customers’ needs and to predict forthcoming trends.
How will customer-led innovation evolve in the next ten years?
If the processes of R&D and innovation have been affected so much in the last ten years by the rapid advances in communication technology, predicting the way it will evolve in the next ten becomes a difficult task.
For instance, the flow of data and information will only increase with the surge of new smart devices on the market, especially phones and tablets. This will inevitably lead to the creation of more sophisticated analytical tools for gathering and segmenting customer information for profiling and R&D purposes.
The seismic shift towards the customisation and personalisation of products and services means that customer co-creation is likely to become a major, if not the primary, source of innovation (The Economist – Intelligence Unit “Agent of Change: The Future of Technology Disruption in Business”). The ability to connect to a seemingly limitless network of resourceful individuals is tantamount to having the world’s largest focus group, one whose opinion arguably outweighs that of an in-house research and development department.
The world is increasingly becoming more interconnected, which benefits businesses everywhere. Being able to communicate instantly with a global network of customers means that companies will be able to gather feedback in a multitude of regions around the world. New products being developed with a customer in one market will also likely benefit another one in a completely different part of the globe. Alternatively, global customer-led R&D could result in a variation of designs for the same product tailored to the needs of specific markets.
Of course, such developments would give rise to further questions on the points raised throughout this white paper. With big data set to grow, will organisations find it harder to extract the smart data that will prove fruitful to innovation? Does the increasing sophistication of ICTs mean that the need to set up in-house workshops and advocate face-to-face meetings with customers will become obsolete? And if customers really are set to become the primary source of innovation, will traditional R&D departments become a thing of the past?
What is indisputable is that businesses will need to develop innovative and flexible formats for customer-led innovation. This reflects the large scale cultural movement towards a more personalised approach to life, a fact validated by the growing proliferation of customisable products and services. It is likely that this trend will continue for some time. As a result, business practices will also need to embrace this cultural trend.
The continued move towards customer-led innovation will also mean that over time manufacturers will need to seriously review their production and manufacturing processes. This will be necessary to ensure they can cost-effectively and profitably generate lower runs of more bespoke products, created from a standard template but with specifications suited to an individual client’s needs. This presents a significant challenge, as manufacturers transition their existing equipment from the “one-size-fits-all” model of manufacturing, to equipment that can manufacture on demand and according to a wider array of specifications.
We already see these challenges across the multiple industries we operate in – including print, packaging, coating, labelling and plastics – so it would be naïve to suggest that other manufacturers and suppliers who service these industries will not also be impacted in the same way.
As a result of these developments, we at Meech are constantly testing ourselves, our products and manufacturing processes to ensure we remain at the fore-front in these changing times of industrial manufacturing, in which agility, quick thinking and an innovative approach to “innovation” itself are absolutely critical to the success of the modern manufacturer.
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