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An Ear to the Ground

“An Ear to the Ground”

It’s easy to become consumed by internal operations, but staying in touch with customers and distributors is key for innovation.

A two-part story on innovation, entrepreneurs share their methods for gleaning feedback this month. In November they discuss how to analyze those ideas.Innovation in a vacuum is a recipe for frustration. Fred Lisy learned that the hard way. As COO of Orbital Research Inc., a $2 million R&D company in Cleveland, Lisy spent three years writing proposals, winning funding, researching and developing solutions, then writing more proposals to continue the work, but never got those solutions into the marketplace. Then he realized the problem: Orbital wasn’t spending enough time interacting with end users during development.

The turning point came when Orbital developed a control device that would make airplanes safer. But when Lisy presented the technology to prospective clients, it was shot down. His device didn’t fit their parameters. “They wanted something shaped differently and more modular,” explains Lisy. “And sadly, we could have made it that way — but now we had lost two years and needed more funding to make the modifications.”

Today Orbital not only consults with end users from the get-go, but also contacts manufacturers that will be involved in the commercialization process. Since 1997 Orbital has grown 607%, which Lisy chalks up largely to getting feedback from external markets.

Be systematic

The innovation process starts with information about customer needs and gaps left open by competitors.

Query new customers. Ron Huston likes to interview new customers as soon as they come on board. “That’s the best time to find out what they liked or didn’t like about a previous supplier because it’s still fresh in their minds,” says Huston, founder of Advanced Circuits, a $25 million circuit-board manufacturer in Aurora, Colo.

Get input from partners. Weekly conference calls with 35 franchise partners helps Brian Scudamore glean ideas for continuous improvement. “It’s like a town-hall meeting,” says Scudamore, founder of 1-800-Got-Junk?, a $12.5 million junk-removal company in Vancouver, Canada. “People share what’s working and what’s not. Innovative ideas are encouraged and rewarded.”

Engage resellers. If you use distributors or resellers, tap their brains about holes in your market. They may offer a different perspective — and including them in the development process can make them more loyal.

Create a customer advisory board. ChannelWave Software Inc. is inviting key customers to sit on an advisory board that will meet quarterly. Conversations with its earliest customers helped ChannelWave build a more robust product — and form the acquisition strategy it deployed in 2000, says Christian Heidelberger, president and CEO of the company based in Cambridge, Mass., which has revenues approaching $20 million.

A customer advisory board should include about six to 12 key customers, says Heidelberger. More than a dozen will give you too much feedback and not enough focus.

Get product development involved in sales. ChannelWave also extracts valuable information by involving its product managers directly in the sales process. “Customers love this because they get more explicit answers to their product questions,” explains Heidelberger. “And it gives our product managers more real-world feedback to help prioritize future projects.”

Open your doors. The Roasterie, a coffee distributor in Kansas City, Mo., hosts a monthly “coffee club” for local coffee enthusiasts that is part recreation, part market research. “Although it’s very informal, it gives us a great barometer on what’s going on in the marketplace,” explains founder and president Danny O’Neill.

Scrutinize your Web site. The Internet makes it easy to elicit information from customers without disturbing them, says Thomas Nardone: “A lot of companies stay in touch with customers who are vocal, but your Web site gives you the ability to stay in touch with all customers — even people who might not have ordered because they didn’t find what they were looking for.”

Founder of Isdera Corp., a $1.5 million online retailer in Livonia, Mich., Nardone regularly examines Web traffic according to product categories and pages. He also studies the search engine to see what products shoppers have hunted for that he may not be offering. This analysis helped Nardone expand offerings from 50 products in 1998 to more than 1,500 items — and launch a spin-off Web site.

Challenges

Devising a system for continuous innovation isn’t easy because of the imprecise nature of feedback. “We all struggle with this because it’s not measurable,” says Cristi Cristich, founder and president of Cristek Interconnects Inc., a $12 million manufacturer of electronic connectors in Anaheim, Calif. “In essence, what you’re trying to do is to collect gossip, and then produce some sort of trend line and calculate ROI from it.”

Earlier this year, Cristich created three different databases to collect information about competitors and customers, which will be reviewed on a quarterly basis.

Although the databases are still in an embryonic stage, Cristich has already noticed “more global knowledge about competitors — and a greater appetite for it.” Still, it will take time for the systems to really pay off, says Cristich, who is thinking about tying the databases into some sort of employee-recognition program.

Ask big questions

Another obstacle: Customers don’t always know what they want or need.

If you’re truly going to innovate, it’s doubtful you’ll find turnkey answers when conducting external research, says David Wiener, CEO of SoundTube Entertainment Inc., a manufacturer of audio products in Park City, Utah, with 35 employees. “Because the customer hasn’t thought of it yet, they can’t ask for it,” he explains.

To help spark richer answers, Wiener likes to ask broad, goal-oriented questions:

  • How can we grow your business?
  • What areas would you like to be in that you aren’t already?
  • How can we work together better?
  • How can we support you in ways that either others or we haven’t?

After learning what might change the customer’s business, ask yourself, “How would that change my business?”

One caveat: “Consider your source to determine what quality of information you’re getting,” says Wiener. “You have to find out what people want, but you can’t take what they say as gospel; you have to distill feedback. You have to balance outside input with your gut, and your gut has to be well trained.”

Remember: Continuous innovation doesn’t have to be a groundbreaking technology. It may involve packaging, a new price level or how you bundle services.

That’s why it pays to keep your eyes open and spend time outside your business. Innovation is often a matter of stumbling onto something intriguing and then applying it to your market niche.

Writer: TJ Becker.

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