Want Transformational Innovation? Do Not Listen to Customers!

(1) If I had asked people what they wanted, they would have said faster horses. — Henry Ford.
(2) It’s really hard to design products by focus groups. A lot of times, people don’t know what they want until you show it to them. — Steve Jobs

The above quotes from two pioneering leaders are legendary because it implies that they did not care about listening to customers. Given that both men were remarkably successful in disrupting their industries and building massively profitable companies, should every CEO and entrepreneur just foist their untested ideas on an unsuspecting market? Is it bad to be customer-focused?

Strangely, the answer is NO. These quotes are paradoxical in the sense that they only present one facet of what drove the innovation practices for Jobs, Ford and many other unconventional business mavens like Mario D’Amico (Cirque du Soleil), Mark Cuban (American businessman and investor/judge on Shark Tank), etc.

The idea is simple – ask customers their pain points, but not for solutions. If you ask customers leading questions like what new features they want in a product or what they expect in the future, then you will get conventional answers, or worse, today’s fleeting fad. Focus groups and customer surveys designed in such formats are seldom useful because customers rarely know whether they will like something they have never experienced in the past. Plus, many customers hide their real motivations, both consciously and unconsciously. This is one reason why new companies with novel ideas can topple industry behemoths by shattering the norms.

According to Rory Sutherland, for a business to be truly customer-focused, it needs to ignore what people say. Instead it needs to concentrate on what people feel. Sutherland is considered the father of modern advertising, and he has personally propelled hundreds of products to million-dollar sales, during his time at his firm Ogilvy advertising. So, he speaks from practical experience and a deep knowledge of behavioral psychology.

Coming back to Ford and Jobs – both were successful because they worked to address the real (unspoken) pain points for customers without being constrained by contemporary industry norms. Ford realized that the common man wanted a low-cost mode of transportation, without the hassles of maintaining a horse, which needed food, a barn, rest, vet visits, etc. Automobiles already existed but they were horrendously expensive. Therefore, Ford created the assembly line and the model-T was born, becoming a huge hit in a market with (supposedly) non-existent demand. All because he solved the problem of personal transportation.

Similarly, Jobs solved the problem of customers who wanted to listen to their favorite songs but did not want to carry clunky CD music players and dozens of CDs. At the time CDs could hold only 15 songs or less. Adding a sleek futuristic design catapulted the iPod to cult status since it solved a customer need with a gorgeous interface. Adding iTunes library was also a masterpiece stroke, as it attracted customers who loved a specific song but did not want to pay to purchase the entire album.

D’Amico, the CEO of Cirque de Soleil uses similar logic to implement changes to their performance routines. According to him if you ask customers extremely specific questions, you’ll end up playing classics like Swan Lake forever and having to replace blue costumes with red. This irks artists, kills their creativity and ultimately bores customers who will seek out competitors for better entertainment. Instead D’Amico suggests asking customers and end-users what they hate in the current product. This opposite view provides better answers and real reasons to innovate. For the Cirque, such feedback allowed the company to create shorter dance formats which is a popular (and profitable) segment for new audience who are on the fence about attending 4-hour performances. Yet once these customers attend, they love it so much that they are ready to pay for the long-form sessions too!

Another example is ClassPass, which allows subscribers to pay a flat rate monthly fee and attend any type of fitness class they like in their locality. This is a boon for folks want to exercise but do not have the motivation or time to visit the gym every day. Such users love the ClassPass as it allows them to experiment with different fitness styles like yoga, spin cycling, kickboxing, Zumba and a dozen others without paying through the nose for every individual membership. So, the real problem was not just cost but motivation which ClassPass was able to identify and solve.

In conclusion, most business fail to innovate because they are stuck in a revolving door of trying to respond to customer requests for incremental changes. This helps in the short run but makes them vulnerable if a new disruptor arrives on the scene. To make matters worse, resources and brainpower that should be applied to “inventing the future” are wasted on superficial changes that makes the company rigid to new changes.

There are some rare cases where incremental innovation works, but if you want to transform an entire industry then follow Ford’s advice – listen, but don’t listen! Listen to customer problems, not customer solutions.