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What Business Are We In? The Emergence of Health as the Business of Health Care. On January 19, 2012, after 131 years of operation, the Eastman Kodak Company filed for Chapter 11 protection in U.S. bankruptcy court. No doubt some people were surprised by this filing, because they grew up at a time when bright yellow boxes of film accompanied every family vacation and celebration.

Those who were paying more attention offered many explanations for the bankruptcy. Central among them was that Kodak was late to recognize that it was not in the film and camera business: it was in the imaging business. With the advent of digital imaging, Kodak was outpaced by other companies that could better achieve consumer goals. This lesson has been repeated many times over. The analogous situation in health care is that whereas doctors and hospitals focus on producing health care, what people really want is health. Health care is just a means to that end — and an increasingly expensive one. To some of us, the point may seem both obvious and irrelevant. Who Your Customers Want to Become - HBR IdeaCast. An interview with Michael Schrage, research fellow at MIT Sloan School’s Center for Digital Business and author of the HBR Single Who Do You Want Your Customers to Become? He also blogs for hbr.org. Download this podcast SARAH GREEN: Welcome to the HBR IdeaCast from Harvard Review.

I’m Sarah Green. MICHAEL SCHRAGE: It’s my pleasure. SARAH GREEN: Michael, I’d like to just start with the problem. MICHAEL SCHRAGE: Well first off, forgive me for doing this. And sometimes the customers are simply an inconvenience in that regard, friction that needs to be overcome. And instead of focusing on how do we come up with faster, better, cheaper innovations, let’s ask a slightly different question.

What happens when we treat innovation as an investment in the customer? SARAH GREEN: See, this is interesting because when you frame it that way, it also sounds a lot more difficult. MICHAEL SCHRAGE: Yeah. But I think it’s imperative if you’re running an organization. And it’s an interesting one to observe. Can you design new customers? Hold Strong Visions Weakly. Guest Post: by Ralph-Christian Ohr Remark : Coincidentally and amazingly, Tim and I were obviously thinking and writing about business model experimentation and pivots at the same time.

Hopefully, I can add some complementary thoughts to Tim’s post from yesterday with mine today. In one of my previous posts I discussed the crucial distinction between need and solution. Innovation is about matching these two components – i.e. solving a customer problem (desirability) through a viable business model, leveraging feasible products and services – in a novel way. It’s important to note that solutions are not represented by products and services solely, but by entire business models creating, delivering and capturing value. Source : www.ideo.com Let’s consider some different cases that can occur: Need: known – Solution: known Customer problem and desired solution are properly specified. Need: known – Solution: unknown Need: unknown – Solution: unknown Data does not yet exist. First stage: Pivoting. Innovation – A New Match Between Need and Solution. Guest Post: by Ralph-Christian Ohr While revisiting some collected innovation readings, I recognized that it might be important to briefly emphasize again one “fundamental”: the distinction between needs and solutions.

According to Christian Terwiesch, co-author of “Innovation Tournaments”, innovation is defined as “… a new match between a need and a solution so that value is created.” The novelty can be in the solution, in the need or in the match. In all cases, this new match results in a specific market, leading to a demand for the solution. It’s the innovator’s job to come up with solutions capable of meeting those needs. Don Norman at IIT Design Research Conference 2010 from IIT Institute of Design on Vimeo. Dev Patnaik highlights the distinction between both in a Business Week article named “Needs + Solutions = Innovation”: Lance A. Assumption: ‘Customers Can’t Articulate Their Needs’ Assumption: ‘Customers Don’t Know What They Need’ Point: Innovation doesn’t create a need. Voice of the Emergent Customer. By Drew Boyd Are some customers better than others at developing new concepts? Professor Donna L. Hoffman at the University of California Riverside thinks so.

Emergent customers have a unique ability to "wrap their head" around a new concept and improve it. Emergent customers are better at imagining how concepts address latent unmet needs. Openness to new experiencesReflectionExperiential and rational processing styleVerbal (rational style) and Visual (experiential style)Creativity (self perceived)Creative personalityOptimismThe study included 1,124 respondents and compared performance of those identified as emergent customers against those of lead users, early adopters, and a control group. How would you put this to use? Market research firms could use the scale to screen research candidates. For innovation workshops, my 'dream team' would include a mix of emergent and non-emergent participants. Needs + Solutions = Innovation.

Here's a simple equation that leads to new thinking and novel products. But it's a formula that too few companies have grasped Over the next few weeks, colleges across the country will open their doors to welcome a new batch of freshmen. Some will find their way into an introductory economics class, where they'll begin to grapple with the fundamental concepts that underpin that discipline: namely, supply and demand. Most disciplines rely on a handful of basic precepts that serve as the building blocks of larger theories and more complex arguments. What, then, are the fundamental concepts of innovation? One fundamental concept is the difference between needs and solutions. Understanding this distinction can affect how you listen to your customers, how you conceptualize new products and services, even how you analyze existing markets to create new strategic platforms.

At the same time, Nike has explored the needs of its customers, providing an expanding pallet of products for them. The most important innovation technique. “I didn’t realize how hard it was to run a small business.” That’s what Groupon CEO Andrew Mason had to say about his recent experience in studying the needs of his next customer base, which is the starting point of Groupon’s next strategic direction. From Businessweek: There’s an excellent Japanese restaurant in Chicago’s Wicker Park neighborhood. The place has been around for years and still draws a crowd, a trendy mix of tattooed hipsters and business-casual professionals. Black-clad waiters with spiky hair shuttle plates of sashimi, which is pricey but worth it, judging from the reviews on Yelp. What Mason is doing is going out into the frontlines and learning to live in the customer’s skin to empathize and identify unmet needs. In my opinion, of all the innovation techniques available to an innovation practitioner, entrepreneur, marketer or business leader none is more important than getting out on the field and observing people in their domains.

Of course, this takes time. How to understand the unmet needs of customers. Most breakthrough ideas are born when we have a deep understanding of the customer. When the world changes unexpectedly as it has in the last 18 months, customer needs change, and as business leaders we must find a way to address them. Of all the techniques available to an innovation practitioner, entrepreneur, marketer or business leader none is more important than getting out on the field and observing people in their domains.

One of the key discovery skills that makes up the ‘innovators code’ is the detailed observation of human behavior. It’s no secret that being deeply empathetic and getting under people’s skin can drive insight into their needs and frustrations. The problem most businesses have about understanding unmet customer needs, is that they rely on the popular survey or focus group to get these insights by asking their customers what they want or need. Most of the time, the things people say and what they do are not always the same. So where do you start? Next.

How Customers Decide to Buy. Do you ever wonder what's going on inside your customer's head? There's actually a pretty systematic process that most prospective customers go through, says Duane Sparks, author of Selling Your Price. Before making the decision to buy, he says, customers go through the following five distinct "decision-making" thought processes: 1.

Do I want to do business with this person? Who is this person, really? Do I trust him? 2. 3. 4. 5. This pattern plays itself out in every sales-oriented conversation. Decisions in a Cold Call ... In a cold call, the customer makes the first decision based upon the tone and confidence in the caller's voice. After interest is piqued, the customer then makes the third decision based upon the benefits stated in the first few sentences. ("... save $1 million in inventory costs. ") The fourth decision is not whether to buy, but whether to have a conversation about the possibility of buying. See? ... Get the Process Right There's an important lesson here.