How To Move Beyond R&D To Search For Customer Value
Most innovators are obsessed with the products and services they are working on — far more obsessed than they should be. I have met software programmers who get so excited about the technical aspects of the application they are creating, they forget the users of their software. In companies where there is a need for extensive R&D before a product is launched, the scientists are obsessed with the science. They have an intense focus on their research that precludes thinking about customers and their needs.
But such a focus on technology and R&D is not enough for success. In a previous article, I wrote about why R&D spending is not a measure of innovation. Successful innovation requires combining great products with sustainably profitable business models. At the heart of sustainable profitably is an exchange of value between the company and its customers. Innovators have to create propositions that serve customers’ needs in a manner that customers are then willing to pay for. This exchange of value is at the heart of all successful products and services.
Which leads us to an interesting thought. What if the science in R&D was driven by the search for value propositions that resonate with customers? This topic was the focus of a conversation I had with Pat Verduin, Chief Technology Officer at Colgate as they prepared for the launch of the new Colgate Total SF. Beyond the great product itself, I was much more interested in hearing from Pat about the key innovation lessons that Colgate had learned and applied to having an R&D process that is driven by the search for customer value.
Breakthrough insights require the participation of multiple actors that bring with them varying perspectives. The types of people a company hires matter. According to Pat, “if you hire the same people you will always get the same answers.” At Colgate, there has been a distinct effort to hire people from different backgrounds. These include dentists, biologists, data scientists and engineers.
Pat notes that bringing these various people into the organization makes the company start to think differently about the problems it is tackling. It changes the ingredients the company uses in products. At Colgate, it has even changed what they test and focus on during clinical studies. Pat credits the diversity in the Colgate teams for a renewed focus on holistic health rather than just cavities.
Partnerships are important to the innovation process too. Beyond diversity in your internal teams, you also need to collaborate with diverse external partners. “Gone are the days when companies could work on their own and solve all the problems they face,” Pat argues strongly. “We collaborate with many diverse partners, including our mint growers.”
Once you have diverse teams inside your company, you have to break the silos between them. There is no value in diversity if the diverse group does not work collaboratively. There should be a tight link between commercial marketing and R&D. “This requires the marketers to learn the science, ”says Pat. “In fact, all the way up to the CEO, we all need to understand some of the science involved in making our products.”
As a balance to this, the scientists also need to understand the commercial side of the products they are inventing. Indeed, Pat feels strongly that the scientists need to spend time in context with customers. In most companies, customers are treated as the sacred domain of sales and marketing. This can get in the way of R&D being able to make great products that deliver value.
Go To The Customer
Innovative products are a combination of science and insights. Science by itself can be very interesting. However, such research can take you down many avenues. The key question is whether the avenues you are exploring matter to customers.
“We listen,” Pat muses. “We listen a lot.” With people on the ground in over 80 countries, insights are what drive R&D at Colgate. “The unmet needs of customers drive what we do, ”says Pat. “This provides us with a clarity of objectives and opportunity spaces.” It is in those spaces that the R&D process is then applied.
Listening not only involves big questionnaires but also going into people’s homes. And the R&D scientists are involved in getting out of the building and learning about customers lives. For example, one thing that Colgate has learned is that people don’t always brush correctly with the right technique. So the products they develop must still create value even in this context.
Getting It Right
It is important to note that R&D is still a very important part of innovation. In companies like Colgate, getting the R&D right is critical for sustained success. The types of products that Colgate makes require clinical research, which the company should never short change. As Pat notes, “Companies like ours have brand reputations to protect.”
Also important for large companies is balancing the needs of now and the needs of the future. Managing innovation for large companies means improving core products, while exploring for new growth opportunities. This is why a company like Colgate would invest in developing Colgate Total SF as an improvement on the already successful Colgate Total toothpaste. Their ultimate success in innovation will be judged by how much they invent new products and business models beyond their core product portfolio.