How to develop powerful products in partnership with customers

Challenging business problems are rarely solved in silos. Instead, they are often tackled by different parties that bring their unique expertise to the table and work together as a team.

Partnerships with customers are particularly critical as individually most initiatives in the beginning usually lack financial resources, research and development capacity, design and process engineers, and technical and production staff, as well as the infrastructure to nurture innovation.

Customer partnerships can also help move innovations from the laboratory to the market. Specialist organisations also have a key role in supporting innovation. They provide direction and oversight, and often play a key role in piloting some of the innovation to prove its worth. These organisations are critical in mobilising private finance to scale-up and facilitate commercialisation.

>See also: A history of innovation: the unsung heroes

Customer partnerships are more than just about ‘putting customers first’, finding mutually satisfactory solutions to shared problems, or a dedication to excellence in every sale or service encounter. They require commitment to forging long-term relationships that create synergies of knowledge, security and adaptability for both parties.

Customer-partnered innovation fuses all the elements of process and product innovation management within one network structure to create a synergetic response that neither partner could create using its own resources. They extend in both upstream and downstream and include all supplier relationship management. 

Sustainable partnerships often require concerted efforts during their initial phase and continued maintenance to keep them on track. This includes alignment of interests and objectives for all stakeholders, mutually beneficial growth, strong and predictive partnerships, and clear understanding of the contribution, IP and roles of each party. A stimulating environment that is conducive to collaborate and resolve any conflicts is essential.

Software and services companies now often collaborate with both enterprises and consumers in developing new products and services.  Partnering, and partnering for innovation in particular, is a powerful, sustainable source of growth, value and competitive advantage.

There have been industry surveys that show how CEOs can help their organisations connect with customers in new ways to accelerate innovation. For example, one survey recommends tackling shared governance issues, exploring unconventional partnerships and making it easier to interact. Attacking these goals requires implementing secure and effective processes.

By having a robust process and platform for business development and partnering, entire organisations (and even their trusted partners) can collaborate on opportunities and proposals.

To help opportunities mature sufficiently before the go/no-go decision, evaluation and due diligence processes should be standardised, ensuring that they are as efficient and thorough as possible.

Finally, once partnerships are underway, organisations must carefully implement alliance management procedures that include governance, relationship health checks, milestone/obligation tracking and team coordination.

In today’s competitive markets, more and more organisations are turning to partnering as a source of sustainable growth, but it’s not enough. By partnering for innovation, organisations can maximise opportunities and benefits, outperforming the rest of the market.

>See also: The three blueprints for business innovation

With the current technology and connectivity, it is lot easier to collaborate to keep the values with each of the key stakeholder organisations. Development of IP may belong to the organisation, but customers can own the specific template and implementation knowhow. There should be a win-win agreement right upfront for this to work effectively.

Another aspect in the development involves making ‘everything as a service’, meaning businesses need to make products or services available as a consumable service – for instance, an application programmer interface (API) to create templates that can be managed by a business.  Some in the industry call this an ‘API Economy’.

The following table (from Innovation Point) summarises the customer-partnered innovation appropriately.

Traditional approaches Customer-driven innovation approach
Adopt a “present to future” orientation – takes today as the starting point “Starts with the end in mind” – identifies long-term opportunities and then “bridges back to the present”
Assume a rule-maker/taker (defensive/follower) posture Assumes a rule-breaker (revolutionary) posture
Accept established business boundaries/ product categories Seeks to create new competitive space/ playing fields
Focus on incremental innovation Seeks breakthrough, disruptive innovation – while continuing to build the core
Follow traditional, linear business planning models Marries process discipline with creative inspiration
Seek input from obvious, traditional sources Seeks inspiration from unconventional sources
Seek articulated consumer needs Seeks unarticulated consumer needs
Are technology-driven (seek consumer satisfaction) Is consumer-inspired (seeks consumer delight)
May have a “one-size-fits-all” organisational model May experiment with entrepreneurial “new venture” or other organisational structures


Sourced from Subramanian Gopalaratnam, Xchanging

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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