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December 20, 2013

Why Customer-Centricity Has Come Full Circle

Posted by Sanjay Dalwani (View Profile | View All Posts) at 9:24 AM

Customer Centric Innovation: Vittorino Filippas at TEDxUniTn [Source: http://www.youtube.com/watch?v=kFh3Q2eOZ1U]

One of my favorite stories about fast food innovation dates back some 35 years ago. That's when the manager of a McDonald's started putting a poached egg, a slice of cheese, and Canadian bacon in between two toaster muffins and selling it as the Egg McMuffin. That one breakfast sandwich allowed him to extend his franchise's hours. But it did something else: It gathered the attention of the company's top brass. Although McDonald's was and is a massive corporation, it organized itself so that an innovation could come from anywhere - even off the grille of a store manager in some obscure small town.

Today we're seeing a variation on this theme and it's all thanks to the rise of the digital consumer. In certain cases, customers around the world are becoming as powerful as R&D squads at major enterprises. Consider what's brewing at Starbucks. There are reports that the latest fad - adding a bit of fizz to their traditional hot and iced coffees - is something the corporate chiefs at Starbucks are watching with intense interest. Rather than discourage the practice, the company is quietly telling its Baristas to give in to the growing numbers of orders for carbonized drinks. Starbucks could have easily squashed the fizz movement. But maybe an upstart competitor, looking to find a new market and disrupt an established player, would have jumped on the carbonation bandwagon. Its first-mover advantage could have knocked the wind out of Starbucks' sails (and, more importantly, sales).

Even Howard Schultz, the company's hard-driving CEO, is referring to fizzy drinks as a new segment for the company. That's huge. Traditionally a consumer products organization tells its customers what they will want year after year. They use a savvy mix of marketing tools and overt advertising to start consumer trends. So it's noteworthy that Starbucks is doing quite the opposite by allowing customers to dictate what the company's newest segment will be.

In the old days - I'm talking 10 years ago - people didn't have the extensive social networking capabilities they have now. Word of mouth actually took some measurable amounts of time. Nowadays a trend can become such in the matter of an afternoon. It's why customer-centricity has returned to our vocabulary. I say return because in a bygone era, the "customer was always right." But after mass production created more of a take-it-or-leave-it mentality among retailers, customers learned the hard way that they had less influence than they'd thought.

Being responsive to customers is a must in today's global marketplace. Ask the people at Krispy Kreme, the quaint donut chain. They know that to grow and to grow big, they must expand in India. But many Indian consumers (especially Hindus) would want nothing to do with donuts made with animal-based products. So the company ingeniously has invented a recipe for vegan donuts that it claims retains the same decadent taste of its age-old donut recipe.

What's even more interesting about customer-fueled innovations is that new businesses tend to grow up around those innovations. So it's a chain reaction and where it stops, nobody knows. What we do know is that customers are exercising their options more than ever before.

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