How Apple, Lego, Netflix and Other Great Brands Explore the Market to Innovate
This is the third article in the series on how to leverage the innovation process to improve the customer experience. In the first article I laid out my four simplified steps to innovation:
- Explore – understand customer needs, pain points and challenges at each step in the journey
- Ideate – generate ideas to solve for those needs and pain points
- Evaluate – identify the optimal ideas to invest in
- Design – create and test prototypes of the new experience until it is ready for deployment.
In this article I will focus on what I feel is the most important and perhaps the most unheralded part of the innovation process: the ‘Explore’ phase.
The human spirit seems to have a basic need to explore. We have a drive to discover new things, seek out new experiences, and go to new places. We are curious by nature. And the greatest among us seem to be the most curious.
The Kings of Curiosity
Biographer, Walter Isaacson, describes the key characteristic of Leonardo Da Vinci as follows,
“What makes him a creative genius I think is that he was curious about everything.” 1
Albert Einstein was once quoted as saying,
“The important thing is to not stop questioning. Curiosity has its own reason for existing.” 2
And Thomas Edison biographer, Randall Stross, wrote that when Edison was a child,
“Edison’s doctor also thought that he was ill, because of his abnormally large head, his curiosity, and his tendency to ask questions.” 3
Just as these great inventors and thinkers were intensely curious and driven to explore, companies that are great at innovation have a culture that encourages exploration through market research.
Explore Phase Activities
Once you have a clear and focused innovation objective, the first step in the innovation process is to explore that objective.
Exploration of the objective should be comprehensive and ideally cover all possible methods of research.
I advocate a rigorous approach which includes Customer Research, using in depth techniques like focus groups, in-depth interviews and ethnographic studies to gain a deep understanding of customer needs related to the innovation objective. The key to Explore phase customer research is not to ask customers what they want, but rather to gain a deep understanding of their present experience and desired outcomes related to the innovation objective.
Henry Ford drove home this point when he said,
“If I had asked people what they wanted, they would have said faster horses.” 4
Customer Journey Mapping can be extremely useful at this point to systematically identify customer desires, pain points and emotions at each step in the present experience. Competitor and Industry Research leverages legal and ethical methods of gathering intelligence on the key players and the market. “Big Data” involves mining current customer data to gain insights related to the innovation objective.
Identifying Insights from Market Research
As you conduct each type of market research you are continually seeking to identify key insights. Insights are the fuel for innovation. Without insights achieved from the latest market research, your innovation efforts are driving blindly.
Insight Sparks Ideas
When we have finished the Explore phase the insights gathered will be used directly to generate ideas to solve for the innovation objective. The quality of our insights will be directly correlated to the quality of our ideas.
As a result, if we don’t put in the hard work to generate great insights from a thorough market research effort, we can not expect to come up with breakthrough ideas.
This helps us to understand is why Einstein famously said, “If I had an hour to solve a problem, I’d spend 55 minutes thinking about the problem and 5 minutes thinking about solutions.” 5
Examples of Insights That Led to Great Innovations:
About 10 years ago, LEGO embarked on an innovation effort around an objective of creating products that were more enticing to girls. Market research had shown that girls comprised only 9% of the primary users for their existing toy products. 6
To explore their innovation objective, LEGO embarked on a four-year study to learn about the playing habits of girls. The study included 3,500 girls and their mothers. In conducting the research they both observed play behavior and conducted extensive questioning of the girls and their mothers.
The extensive customer research conducted by LEGO led directly to the launch of LEGO Friends in 2012. LEGO Friends “centers on the everyday lives and personalities of five girls… building sets reflect different parts of town where the girls’ adventures take place.” 7
Sales of LEGO products to girls tripled in the first year after the launch. And the product is now considered to be one of LEGO’s biggest successes.
UNTUCKit was an entrepreneurial start-up in 2011 built around a simple innovation objective to find men’s dress shirts that looked good untucked. 8
UNTUCKit founders Chris Riccobono and Aaron Sanandres conducted a year of extensive consumer research around their objective. They interviewed hundreds of men to learn about their experiences with dress shirts. 9
The initial research led UNTUCKit to create shirts that are shorter in length and with adjustments to fit the torso.
Starting from an initial investment of $150,000 the company now has 73 stores and sales over $100 million 10
Apple made excellent use of competitive and industry research in 2001 when it had an innovation objective of finding the recipe for digital music, which is how Steve Jobs described the inspiration to develop the iPod during one of his seminal speeches at the Apple Special Event in 2001.
You can listen to Steve Job’s 10-minute masterpiece at this link: 11
Competitor and Industry Research Uncovered the Opportunity for the iPod
Prior to developing the iPod, Apple had recently launched iTunes, which initially was an app on the iMac for storing and playing music files. Apple wanted to enable iMac users to play their iTunes songs on a portable music device.
As Jobs describes in the speech, the company thoroughly researched the competitor’s portable music players and found flaws in each one. There was no market leader.
The Flaws of Portable Music Players in 2001
MP3 players, which had existed for a few years, could only hold about 150 songs. Alternatively, hard drive players could hold more songs, but they were bulky devices with difficult to use interfaces. 12 In addition, MP3 players were slow to load songs.
Uploading a single song could take 5 minutes. MP3 players also suffered from short battery life and were tedious to use. To scroll through songs you had to move one at a time. If the device had 150 songs it required 150 clicks to get through the list.
The iPod: A Breakthrough Innovation
Armed with this competitor research, the original iPod was designed to solve for all of the shortcomings of the existing portable players. It held 1,000 songs. Songs could be uploaded in 5 seconds. All 1,000 songs could be uploaded in just 10 minutes.
It was easy to use, the scroll wheel enabled users to speedily navigate the list. The battery life was long. And the iPod was small enough to achieve Jobs’ vision of enabling a user to fit their entire music library in their pocket.
Netflix utilizes so called “big data” in its development efforts for original content. This type of market research requires companies to have vast amounts customer behavior data and the analytical skills to leverage the data. Companies that have these data science resources can generate superior insights leading to great innovations. 13
Bright – Netflix’s First Big Original Film
Starring Will Smith, Bright was the first original film launched solely on Netflix in 2017. The decision to purchase the film concept and all of its marketing was the result of analysis on customer behavior. Although critics did not give the movie good reviews, the movie is one of the most highly streamed films ever on Netflix. 14
Netflix CEO Reed Hastings said, “The critics are pretty disconnected from the mass appeal…[they] are an important part of the artistic process but are pretty disconnected from the commercial prospects of a film. If people are watching this movie and loving it, that’s the measurement of success.”
Instituting a Robust Explore Phase to Enhance Your Customer Experience Innovation Efforts
All companies need to continuously innovate to improve the customer experience in the present fast paced business environment. Don’t make the classic mistake of jumping right into idea generation for new customer experience initiatives.
A robust Explore phase is necessary to inform idea generation. When the Explore phase is performed well, it sets up the entire innovation process for success.
© Copyright 2019 Len Ferman
Isaacson, Walter. Leonardo Da Vinci. First Simon & Schuster hardcover edition. Simon & Schuster, 2017.
Stross, Randall E. The Wizard of Menlo Park: How Thomas Alva Edison Invented the Modern World. New York: Crown Publishers, 2007.
Read more: 3 Examples of Radical Innovation