customer centric innovation - piezas inaldepiezas.inalde.edu.co/2013/lams/rohit_deshpande.pdf ·...

Harvard Business School

Customer Centric Innovation

Professor Rohit Deshpande


4 September 2013

6th Annual INALDE LAMS seminar

Cartagena, Colombia


Outline

• Understanding Customer Centricity

• Quick Deep Dive: Customer Centricity (and

Global Branding) research program

• Understanding Customers: The Importance of

“Customer Insights”

• Serving Customers: “Culture, Strategy &

Execution” in Customer Centricity

• Case Examples (throughout)

• Where to go from here: Additional Readings

Copyright R. Deshpandé 4 September 2013


• “The set of beliefs that puts the customer’s interests

first, while not excluding those of all other

stakeholders, in order to develop a long-term

profitable enterprise.”

• Deshpande, Farley, and Webster 1998


Customer-Centricity


“Because the purpose of business is to create a

customer, the business enterprise has two–and

only two–basic functions: marketing and innovation.

Marketing and innovation produce results; all the

rest are costs.”

Peter Drucker


The Purpose of a Business


Deep Dive into Research Project:

The “Global High Performance

Firms” Study

• Over 600 senior managers in large firms in England, France, Germany, Japan, and the U.S. (“The Triad”)

• All quoted on major stock exchange (e.g., Nikkei, Bourse, etc.)

• Interviews in each of both Company and Customer/Client firms (B2B context)

• Replicated for largest firms in B.R.I.C. (Brazil, Russia, India, China)



Results? The highest performers look alike!

• There is no difference in the “success profile” by

country, industry, or other demographic

• The most successful American firms have the

same “success profile” as the most successful

Brazilian, Chinese, or Indian firms



What is the “Success Profile”?

Companies that:

1. Are customer-centric rather than product or

technology centric

2. Out-compete other firms in terms of deep

customer insights

3. Integrate branding with customer-centricity

4. Reward employees for customer-focused

innovation

l Entrepreneurial, open organizations

l Employee participation is encouraged

especially in delighting customers



Understanding Customers: The

Importance of Customer Insights

Customer-centric firms know more about their customers and have deeper insights than

their competitors.



Case Example: Corona Beer



Key Customer Insight

• Corona Beer (Mexico)

the “ritual of the lime”



Source: http://camy.org/gallery/index.php?BrandID=317

Corona Print AdCorona Beer



Serving Customers: Using Insights

Customer-centric firms know how to use

customer insights to out-compete in serving

their customers – not just customer satisfaction

but customer delight



Case Example: Singapore Airlines

Evoking the elegant ambienceof an exclusive club,

our new First Class cabinoffers unparalleled privacyin just twelve SkySuites,*

upholstered in soft

Connolly leather andtrimmed with burr wood.Each SkySuite can reclineto any angle, including a

completely flat bed,which is then draped

with crisp linen and asoft duvet. You may alsoenjoy the widest choice of

entertainment in the airon the world’s largestinflight personal video

screen at 36 cm (14”).Our new menus offer

World Gourmet Cuisine,created by a panel of

seven world-renownedchefs and served

whenever you choose,accompanied by selections

from our wine masters.Singapore Airlines.

Now more than ever,a great way to fly.

*SkySuites are now available on all flights between Singapore and London, Frankfurt,

Sydney, New York JFK (Newark from 22 April). Daily services to San Francisco via Hong

Kong, Los Angeles via Tokyo from 30 May and Los Angeles via Taipei from 12 June.

Progressively being introduced on all other MEGATOP 747 series.

Singapore AirlinesNew First Class



upholstered in soft













upholstered in soft











*SkySuites are now available on all flights between Singapore and London, Frankfurt,

Sydney, New York JFK (Newark from 22 April). Daily services to San Francisco via Hong

Kong, Los Angeles via Tokyo from 30 May and Los Angeles via Taipei from 12 June.

Progressively being introduced on all other MEGATOP 747 series.

Singapore AirlinesNew First Class

Source: Company documents.

First-Class Seats



Singapore Airlines




• Singapore Airlines (Singapore)

Compete with software - not just hardware



“Singapore Girl” Ad, 2000




Case Example: Chocolates El Rey




• Chocolates El Rey (Venezuela)

Having the very best product quality “(product

centricity”) is not enough

[the “better mousetrap fallacy”]



Serving Customers: Using Insights

Customer-centric firms know how to motivate

employees to produce customer-focused

innovations



Case Example: Kikkoman



Advertisement from the 1990s

Kikkoman




Kikkoman (Japan)

Customer-focused innovation means adapting to

local consumption habits rather than force feeding

foreign habits




Kikkoman


Customer-Centric Firms know how to integrate

branding into overall corporate strategy—why?


Serving Customers: The Importance of

Customer Centric Branding


• Branding provides the “inside-outside” connection

(Face of the company to customer)

• Sell the brand “inside” before you sell it “outside”

(employees are internal customers)

• Branding is about more than a logo, it’s about

Emotional Customer-Centric Connections (customers

& employees)

• A brand is a relationship and a promise



Serving Customers: The Importance of

Customer Centric Branding

Integrating customer centricity and branding in

an M&A growth context:

The case of Citigroup



New Citi Arc Logo


Acquisition focus

Strong, separate

franchises

U.S. business

concentration

Strong expense

discipline – acquisition

synergies

Balanced approach

to growth

One face to the

client

Increasingly

international

Sharpened expense

discipline

Primarily organic

Breaking down silos

Greater international

investments

Structural review of

expenses, operating

efficiency

Past Today Future

Our Transition

“Company in Transition”—Slide from the World Tour 2007




To Summarize:

Customer-Centric Innovation means rethinking what

“Marketing” means to you



“Customer Centricity” “Organizational Alignment”

Culture Operations

“Customer” “Brand”

Strategy MarketingH.R.Tactics



Marketing not only as strategy and tactics but as

Culture

• Tactics: Managing the 4P’s

• Strategy: Developing a Value Proposition and

Competitive Positioning Based

on Customer Needs

• Culture: Being the Advocate for the Customer

Throughout the Organization

“Customer Centricity”



Marketing’s Role in the “New HP”

Source: Company.



February 11, 2005 15

One Voice Worldwide -- HP

Brand Design and Experience

Operation One Voice

Source: Company.



Implications of Being Customer-Centric

• Marketing is not something you do to the

customer.

• It is how the customer gets to influence your

company.



So…. It’s really about “Culture”

“The Customer-Centric Organization”

CULTURE:

– “The customer’s interest should always come first,

ahead of the owners.” (“Prioritize Stakeholders”)

– “I believe this business exists primarily to serve

customers.” (“Customer 1”)

– “We have a good sense of how our customers

view our products and services.”(“Deep Customer

Insights”)

(from: R. Deshpandé, Developing a Market

Orientation, 1999)



Key Learning Principle #1

Innovate around your Customers

not just around your Products.



Best Sources of Innovations…

…are sometimes disguised as customer problems!

The flip side of a “Customer Complaint” is a “New

Product Idea”.




View Your Customers as Strategic Assets, they Help

You Define Your Business and Identify New Business

Opportunities for Innovation.



Characteristics of “Best Customers”

1. Ask you to do things you can do well.

2. Make demands that challenge you to develop your

distinctive competence.

3. Take you in directions consistent with your strategy.

4. Value the relationship with you as a major asset in

their business/work/lives.

5. Are willing to pay for the resources you commit to

solving their problem (“consultative selling”).




Stay Loyal to your Loyals.



• Cognitive (the “head”) – frequency of repeat

purchases

-------------------------

• Emotional (the “heart”) – delight in the

customer experience

-------------------------

=> Net Promoter Score = (Promoters –

Detractors)

(The Ultimate Question, Fred Reichheld)

Customer Loyalty Metrics




Marketing is everybody’s job,

especially the CEO’s.



“The Virtuous Customer-Centric Cycle”

Product

Innovations and

Superior

Customer Service

Customer-Centric

Values Driven

Organization

Shareholder

Value

Increases

Motivated

Employees

Profit

Growth

Increases

Revenue

Growth

Increases

Increased

Customer

SatisfactionReinvest



Additional Reading

• Harvard Business School cases (use the HBP website)

– Branding Citigroup’s Consumer Business

– Citigroup: Re-Branding in 2007

– Chocolates El Rey

– Corona Beer

– Hewlett-Packard

– Kikkoman Corporation: Consumer-Focused Innovation

– Singapore Airlines: Customer Service Innovation


customer centric innovation - piezas inaldepiezas.inalde.edu.co/2013/lams/rohit_deshpande.pdf ·...

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