• Ferhan Bulca

    I am an executive leader and a serial intrapreneur focused on innovation and design thinking. My purpose in life is to create products and services that make the world a better place to live in.

    In the course of my career, I have developed a deep understanding and expertise on all aspects of technology commercialization and product/service development. As a result, I have built multi-million dollar businesses from the ground up.

    I am the creator and the Lead Instructor for Business Innovation Certificate Program at University of Toronto, School of Continuing Studies.

    I offer business consulting services and I am available as a speaker for private and public events.

    Watch my recent talk at Ashoka Canada's Changemakers event at University of Toronto on YouTube.

  • Consult with me on Maven
  • Enter your email address to follow this blog and receive notifications of new posts by email.

    Join 300 other followers

Your Organizational Culture Determines How You Innovate on Mature Products/Markets

Everybody can visualize the organizational culture of a start-up company. A small group of dedicated, motivated people working shoulder-to-shoulder with visionary founder(s). Things are humming and dynamic. How about the organizational culture when the product matures and is adopted by a larger market segment? How does that culture contribute to further innovation?

Let me first frame the conversation using Geoffrey Moore’s four innovation zones, introduced in his book Dealing With Darwin. Moore maps these four zones to his famous market adoption curve.

Geoffrey Moore's Four Innovation Zones

Geoffrey Moore’s Four Innovation Zones

At the leading edge of the curve is Product Leadership, which corresponds to disruptive innovation. At the tail end, there is Category Renewal. In this post, I will focus on the middle section and discuss the role of organizational culture in the company’s ability to innovate in that area.

Geoffrey Moore identified two main innovation categories for mature products/services:

  • Customer Intimacy refers to improving the value of the product/service to customers,
  • Operational Excellence is about improving operational efficiency to gain cost advantage over competitors.

While many organizations claim or want to do both, typically their culture is geared towards one or the other, not both. Improving customer intimacy requires an outward looking culture whereas the attention is inside when it comes to operational excellence. In today’s bottom-line driven approach, operational excellence is where most organizations focus because:

  • One can readily quantify goals: Cost of materials, taking waste out of operations, automating processes are all quantifiable and easily understandable. Leaders can set goals (eg. “reduce warehouse floor usage by 50%”) and monitor progress.
  • Improvements are internal: Improvements are done in operations behind closed doors. They are under the control of leaders of the organization.
  • There is little risk of public failure: What happens in the company stays in the company. Naturally, operational changes may impact customer experience but, for the most part, the outside world has limited visibility to how operations are run.

Customer intimacy, on the other hand, requires a different culture, which emphasizes continuous effort to better understand customers and respond to their evolving needs. True customer insight comes through walking a mile in the customers’ shoes, understanding their pain points and improving the product/service to eliminate these pain points. This approach conflicts with operational excellence as it is outward looking, ambiguous, risky and potentially costly.

In summary, customer intimacy and operational excellence require two very different organizational cultures to do well. These cultures are inherently in conflict with each other and should be managed well to be successful. Otherwise, typically operational excellence camp wins at the expense of better customer experience.

I welcome your comments on my blog. If you have specific questions, please feel free to contact me at ferhan@ferhanbulca.com.

Advertisements

How To Gain Customer Insight?

Recently, I was working with a client when he told me that he was mandated to develop customer insight so that their products attract better adoption. Being in business for over 20 years, he had good ideas about what customers cared for. He also recognized that there was probably a lot more he could learn about his customers but he did not know where to start. So, we put our thinking hats on and started brainstorming.

First, we needed a framework to work on. Inspired by Using Customer Insight to Build Competitive Advantage (2003) by Carlson Marketing Group, we created this:

Customer insight cycle

Customer Insight Cycle

Let me explain this framework a bit: We all have assumptions and convictions about what customers value in our offerings (products/services). We have an idea about the tough problems we solve for our customers. This knowledge is customer insight. We take actions based on our insight but, most of the time, we do not fully validate our understanding of the customer. Our actions are, most of the time, not purely based on our understanding of the customer, either. Many internal (organizational) factors contribute to the decisions we make and the actions we take. These multiple factors add complexity to the next two steps, Assessment and Data, making it difficult to make a direct cause and effect relationship.

Second, we discussed applying this framework to his problem to see if it fit. The first question was where to start. It is a cycle and it is hard to identify where one steps in. We decided that Insight box was the place to start. This may come across surprising because customer insight is our end-goal. If we knew it already, why would we need all this exercise? In fact, we knew that we did not know everything but we had theories. In fact, the person I was working with and his peers all had theories (my word, not theirs) about their customers. The problem is that those theories were not always consistent with each other. But, who was right? That is why we start with the “Customer Insight Theories” and validate them by going through the above cycle a few times.

Third, we developed a plan for my client to work with his peers using the framework. He left the conversation energized and motivated to take the steps that will give him the insight he is looking for. Equally importantly, now he has a framework to institutionalize how the company gains and retains customer insight.

I welcome your comments on my blog. If you have specific questions, please feel free to contact me at ferhan.bulca@intrascope.ca.

%d bloggers like this: