Should innovation come before Customers?

Greg Satell writes in a DigitalTonto article, that focusing exclusively on customers can destroy a business just as fast as neglect. The advent of digital technology has made the customer the central focus and rightly so, but do businesses take their eye off of the premise that there is a constant need to balance the interests of a variety of business stakeholders? Responding to some criticism he received on a previous article about capturing and delivering value, Greg puts focusing exclusively or initially on the customer in perspective:

“The customer is always king” has long been a time-honored business adage. Peter Drucker, the most renowned management thinker of the 20th century, was probably best known for advocating a consumer-centric approach.

Focusing on customers
Focusing on customers

A lot of the confusion stems from a misunderstanding of what Drucker said, which was:

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”.

The truth is that a successful business must balance the needs of a variety of stakeholders“Focusing on customers to the exclusion of everyone and everything else can kill a business just as easily as neglect”.

Another gem that should provide food for thought for startup founders and innovators is many successful, shall I refer to them as celebrity-innovators have been positively derisive about listening to customers or the voice of the crowd. Greg says:

“The ability to make distinctions between smart and dumb crowds can be the difference between a runaway success and unequivocal disaster

“There’s a reason why people like Henry Ford and Steve jobs didn’t like listening to customers—customers are a crowd and crowds are often stupid. They usually represent the conventional wisdom of the present, rather than the possibilities of the future and following them often leads to mediocrity, not excellence. That’s why truly visionary entrepreneurs make their fortune from betting against the crowd.  They create something new, something nobody is asking for because they’ve never seen it before.  It’s difficult to “start with the customer” when one doesn’t exist yet”.

We see innovation today whereby harnessing the intelligentsia of the crowd can outperform experts. While Jobs succeeded with Apple as a closed system, time will tell whether ultimately that approach will see Apple effectively fend off all competition. I for one, believe in going with your gut instinct, but a startup founder might have problems raising finance, if his solution defies all conventional wisdom from a VC perspective. True genius is the ability to perceive and commercialize a non existent customer base.

Luck plays a factor somewhere in there as well. But if we accept the premise that crowds are mindless beasts until someone influences behaviour, perhaps guys like Steve Jobs and Mark Zuckerberg simply or intuitively know at which points in the market, crowds are ‘stupid’ and respond with innovative products to protect it from its own stupidity.

After all as Greg Satell says, You need to have a plan to disrupt deleterious feedback loops. Got that?