There is a lot of talk these days about innovation being critical to the competitiveness and growth of an organization. In a 2005 study sponsored by Cisco Systems, 635 business and IT decision-makers from companies of all sizes ranked innovation as more important to their competitiveness than better education, lower wages, or reductions in corporate taxes. The world's top 1,000 corporate research and development spenders invested $384 billion in innovation in 2004, according to a survey by the consulting firm of Booz Allen Hamilton. This investment by the so-called Global Innovation 1000 represents between 80 percent and 90 percent of total R&D spending by business worldwide.

So if a company is going to invest in innovation how can it ensure that innovation is going to pay off? By making sure that the innovation is relevant and valuable to growing the business. Today, companies are looking to their suppliers and customers for new ideas or applications of their products, services or solutions. When the Council on Competitiveness asked 199 executives to identify their most frequent collaborators in innovation, suppliers and customers were cited by 78 percent and company employees by 70 percent.

So given all this hoopla about using customers and suppliers as a source for innovation, is it really just about asking what they need? Before ATMs came into our world do you think if you asked all those people standing in line at the bank what they needed, they would say an ATM? NO, of course not! What they would have said is, “more tellers. The point is that asking your customers “what they need” does not always translate into innovation. Innovation can only come from carefully listening to why your customers are dissatisfied, and then further observing and understanding how they are compensating for a void or unmet need.

Debra Colombana, Vice President of Client and Market Development
Debra.Colombana@phelongroup.com