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Scott Antony, one of the Innovator’s Dilemma gurus, has a great post on how market research, if not done properly, can kill the innovation process within a company.

In essence he says that there are 4 ways to screw up innovation with market research – ask the wrong people, ask the wrong questions, have the wrong people interpret the data, and making the wrong decisions based on the data.

Does that resonate with your experiences? How many companies have you seen do market research to prove something which they have already taken a position on? And how many times have you seen companies do market research only within their existing customer base, even though they need 90% of all their future revenues to come from companies or people who never bought from them before?

Scott is right when he says that if done properly market research can be a powerful weapon – it just needs to be handled by pros who know what they are doing. Unfortunately, and in most cases, market research is done by amateurs who put out crappy surveys – or worse, pay you money to fill out those crappy surveys.

I had the pleasure to see Tony Hsieh from Zappos.com talk about the importance of corporate culture at the recent community 2.0 conference.

I was left with two new proof points for things that I knew were critical to a company’s success – the importance of hiring people who have a perfect cultural fit with the company, and the importance of customer service as a marketing and sales channel.

When you look at the Zappos.com corporate values, or read the corporate culture book (they ship it to you free of charge) – you are not left with that empty corporate speak feeling that you get when reading most companies’ belief statements. They mean something, and you can either associate with them or not. When they say “create fun and a little weirdness,” or “deliver WOW through service,” or “be humble,” or “build a positive team and family spirit,” or “build open and honest relationships with communications,” you can point to numerous people issues within many companies that are caused because the company does not foster or enforce a culture like that. In fact, they go so far as to pay people $1,000 to leave the company – and according to Bill Taylor, so should you. If people do not feel a 100% fit with your culture, make it easier for them to go…

The company is also a great case study for how you should treat your customer service department as one of the most important customer communication channels. At Zappos, they go as far as saying that customer service is their business. Even for non-retail companies, the lesson learned should be that customer service should be treated as one the most important touch-points of your company’s UI (user interface) through which customers experience your brand. In fact, and as McKinsey and Booz Allen & Hamilton have argued in recent articles on the change of the CMO role, customer service should be managed by marketing.

Now I need to buy some shoes, and it looks like I will be a loyal Zappos customer for a long time to come…

Most people believe that leading innovators start off with a larger pool of ideas than those who consistently perform poorly in the marketplace. While this is certainly true – if you only start with a few lousy ideas you will end with a lousy product – there is another, and perhaps more important, characteristic of a successful new product innovator’s idea pipeline.

They kill ideas faster!

While successful innovators start with a lot more ideas than those who do not continuously innovate, some studies say twice as many; they also kill ideas faster and fund fewer candidates in the actual product development stage. That ensures that the products that actually have a chance to succeed are not underfunded. If you cannot shoot the marginal ideas fast enough, the potential winners will not only be underfunded, they will also lack the corporate attention to let them succeed.

In interviewing a person in charge of communities at a Fortune 100 company as part of our community effectiveness study that we are doing with Deloitte and the Society for New Communications Research, I learned about a real neat side effect of business communities – the ability to sell products in the long tail.

Large companies typically cannot afford to pay attention to relatively small business opportunities. If your company has billions of dollars in revenue, and a goal of growing that revenue by 5% a year, and you identified a $50M new market opportunity, chances are that you will not be able to justify a business plan to tackle this new opportunity. Some of the more innovative companies have found ways to monetize those opportunities by selling or licensing the IP or partnering with companies for whom a $50M market makes sense.

With large business communities surrounding your company, you could potentially do it yourself, and in a profitable way. Say that you developed a software application that only has a tiny market potential relative to your company’s size. You could make that application available in your community, and rely on the community to deliver support, refine the documentation, etc. So in effect you developed a channel to enable your company to serve the long tail in a cost effective manner and in a way that is not defocussing. In the long run, leveraging business communities to serve the long tail could also increase your share of customer wallet as well as increase your customer switching costs for the bigger applications – all benefits that deliver dollars to the bottom line.

A new study found that if you have a UK Birmingham accent, you are likely to be perceived as less intelligent than if you have a Yorkshire accent – in fact a Birmingham accent will make you sound more stupid than silence.

A friend of mine spent hundreds of thousands of dollars on making his online service a few tenth of a second faster.

What’s the connection? Are people with certain accents really more stupid than others? Do people using online services really care about improvements that range in the tenths of seconds response time?

No – it’s the hidden or unconscious associations that lead to perceptions that make all the difference. In the case of Birmingham, people associate the city with crime, unemployment and other negative things – leading to the perception that people with a Birmingham accent must be less intelligent than others, including silence. In the case of speed of online offerings, people associate that with ease-of-use. If you enter a query and the results come back in a jiffy, you will perceive that service as really easy-to-use.

So do you know what your customers are unconsciously associating with some of your product or company attributes?

It could make or brake your offerings…

John Hagel delivered a great speech at FASTforward ’08 this morning (more here). One of the interesting take-aways from his talk is that in the face of talent being the new scarcity in this new economy, most companies are developing plans to better attract and retain that talent, instead of developing it in house.

Those who will be become great developers of talent will automatically attract and retain outside talent as well. Those who will play the old attract and retain game will lose, because at the end of the day, control lies with the talent – not the firm.

One of the most fascinating companies at the BRITE conference was Eli Lilly, represented by Marc Kershisnik, Executive Director of Market Research.

It is one thing to talk about putting the customer at the center of your offering instead of your product or your company – but how do you do that when you are a pharmaceutical giant?

Eli Lilly seems to have figured that out – they no longer look at the drug as a way to fix a discreet biological/physiological problem, but instead at how the drug will fit within a sick patient’s lifestyle – so in effect putting the patient at the center of the offering. And that is not just in marketing, it starts at the time of product conception and product/market requirements, continues throughout the drug development phase, into clinical trials, and all the way to market introduction.

A good example of that is how they started the oncology on canvas community, which enables cancer patients to express how they deal with their disease though stories and art. They did not start this community after launching a new oncology drug – they started it before having any oncology drug offering.

Another example is how they dealt with their osteoporosis offering in France. The drug is for people with severe bone loss – the type who cannot take a child on their lap without causing a fracture. The treatment regenerates the whole bone structure and cures the disease in 18 months. The only problem is that patients need a daily injection of the drug for 18 month – something that many patients would give up or skip frequently enough to bring the outcome of the treatment in jeopardy. So how did they solve the problem? They enlisted an army of paid nurses to help patients with their daily treatment. In doing so they did not disrupt the patient-doctor trust relationship by injecting themselves into the process (which probably would not have worked anyway). They also focused not on the biological problem that the drug was curing, but instead on the patient ‘s lifestyle during the disease treatment process. The success ratio of the treatment in France: 90%.

No wonder then that a company with this amount of foresight would also transform itself from the inside out. Most recently they conducted one of the largest Vision Jams within their company – 6 days of 24 hour online brainstorming among 40,000 employees on the future strategy for the company. The whole strategy for Eli Lilly’s 15 year plan was created from the bottom up and not from the top down.

Now who said that you cannot teach an old dog new tricks? Of course it helps that the company does not think of its main purpose as making money for shareholders, but instead of considering its primary purpose and duty in the marketplace as treating diseases.

Guess what – with a strategy and market attitude like that, long term profits and shareholder returns will probably never be the problem.

PS – also check out my partner Lois Kelly’s post on the same topic…

Where do you think this green building was built?

(via PSFK)

And where do you think this Marilyn Monroe building was built?

(also via PSFK)

The first one is Singapore, the second is Bejing…

Does this make you think that the center of gravity in world innovation may be shifting West?

If only we would spend more money on educating our kids instead of creating pockets of hatred and terrorism around the world, maybe we would have a chance to still be around the center of gravity for innovation in the next generation. But the way it is moving now, it looks like the brightest will migrate West, as many of us have done in past generations…

That is what Watts Wacker of FirstMatter says in a round table discussion on innovation in marketing with Ann Lewnes of Adobe, Todd Peters of Staples, Mats Rönne of Electrolux, Watts Wacker of FirstMatter and Rodney Mason of Hawkeye in the January – February edition of The Hub.

Other interesting tidbits from the roundtable discussion:

• According to Mason, one third of the people under 30 do not make their buying decisions without checking their social network first
• Most are not ready for consumer generated pricing yet, but many have dabbled with sensory branding
• Many see the biggest innovation potential for marketing on the web, in social networks and still in search… Wacker thinks the biggest inspiration for innovation comes from the out of home industry

Overall a good read…

A new report jointly produced between Forrester Research and Heidrick & Struggles paints a bleak picture of the (d)evolved CMO (Chief Marketing Officer). You can download the report here, but only after agreeing to become a “lead.”

While two thirds of CMOs want to get a higher involvement with business strategy development and increased P&L responsibility, the reality is that far too many of them are in fact disconnected from where the real action is.

Some of the findings are mind-boggling:

• Only 45% of CMOs have responsibility for product, service or solution development. Only 37.5% are responsible for pricing.
• Only 27.5% are in charge of sales  training.
• Only 25% are responsible for in-store buying experiences.
• Only 12.5% are accountable for the activities associated with customer service and support.

How can you be the Chief Market Listener and not be in charge of what customers say after they buy your product? If you are the Chief Market Officer, how can you not be in charge of deciding what gets sold in the marketplace and how much it will cost the buyer to acquire it? And if you are the Chief Customer Officer, how can you not be in charge for the in-store customer experience? The sales training issue is either a cause or effect for the ongoing rift between most sales and marketing department…

But wait, it gets worse…here is some data about their top objectives:

• Only 27.5% have “increase customer life-cycle value” as one of their top objectives.
• “Innovate” is an objective for only 40% of the survey takers
• Only 27.5% have “increase customer retention” as an objective

And just when you thought you got the extend of the sorry state of CMOs, you find this:

• Only 12% consider “personal knowledge of your customers” as one of their top 5 competencies to their personal success.
• Only 17% consider technology savviness to be one of those top 5 skills

Thankfully (sarcasm intended), more than 65% see people management as one of those top skills. But wait a minute…isn’t it leadership characteristics that get you into the C-suite? Management skills are so Industrial Revolution/last century skills…

Other interesting tidbits from the report include:

• On a scale from 1-3, with 3 being the most important, CMOs found marketing measurement (2.55) to be way more important than customer community development ((1.89) and social computing/web 2.0 tools (1.73).  That goes hand-in-hand with the fact that 92% have advertising as one of their main responsibilities.
• There is room for new industry marketing organizations, conferences and publications. Those three resources come in dead last in a list of 16 resources that CMOs ranked most valuable to their professional career development.

 The recommendations from the authors to improve the situation?

• Spend more time on career development
• Seize the opportunity to lead the organization towards customer-centricity
• Build credibility through the marketing team and leadership contributions.

How about not accepting the CMO job if it does not mean you are really the Chief Market Officer, or the Chief Customer Listener, or the Chief Voice of the Customer Officer, or the Chief Customer Lifecycle Value Owner?