Anticipation and Innovation

Newsletter

Most businesses try to satisfy customer needs and expectations. Other enterprises even make a conscious effort to exceed them. But truly successful companies achieve an even higher level of excellence, a more powerful form of competitive advantage. They anticipate the needs of customers and innovate to meet those future needs. Microsoft’s “Where do you want to go today?” campaign has practical financial relevance.

While it is critical to continually survey customers and other stake holders to determine their needs, recommendations, and desire for future products and services, that only tells you what the client is thinking right now. Customer feedback has limitations because people can’t always identify what it is they’ll want in the future. But strategically, you can’t plan for right now; you have to plan for the future if you want to ensure your company’s survival.

Effectively using the principle of anticipation and innovation is the ultimate competitive advantage. Dr. W. Edwards Deming, management and quality guru, said, “Innovation comes from the producer—not from the customer” and pointed out that no customer asked for a microwave oven. Henry Ford said that if he’d asked his customers what they wanted, they would’ve asked for a faster horse.

The innovative thinking of entrepreneurs—regardless of the size or maturity of their company—leads the consumer marketplace. Pocketsized cell phones, GPS navigation, iPods, ebooks, and tablet computers are just a few examples of game-changing product innovations from producers over the last decade.

What happens to companies that fail to anticipate or meet customer needs? Can a big, strong, powerful, dominating company fail to anticipate in its industry, fall from competitive grace, lose leadership position and opportunities, and become relegated to “also ran” status?

General Motors, Ford, and Chrysler dominated the U.S. and international passenger-vehicle markets for decades. In 2008 GM lost its top sales position to Toyota, and in 2009 GM and Chrysler received multibillion-dollar bailouts from the federal government and filed for bankruptcy. In their 2008 fiscal years, GM lost $31 billion and Ford lost $14 billion. In 2007 the majority interest in Chrysler was sold to a private equity firm after its parent for nine years, Daimler AG, tired of its continued losses. In June of 2011, the U.S. government sold its remaining stake in Chrysler to Fiat. Why have the Big Three declined so dramatically? Because over the years they have consistently missed the customer demand for cost-effective, fuel-efficient, high-quality cars, trucks, and SUVs that exhibit appealing style and features. But the Japanese automakers anticipated American consumer desires and have captured major market share.

In September of 2010, Blockbuster filed for bankruptcy. In February of 2011, Borders filed for bankruptcy. These once dominant organizations didn’t anticipate the shift in how people would view movies and read books. History is full of many more examples of companies that failed because they failed to anticipate. As Albert Einstein said, “The significant problems we face today cannot be resolved at the same level of thinking we were at when we created them.”

Of course, on the flip side you have companies like Apple. Not surprisingly, Fortune and Fast Company both listed Apple as the most innovative company in the world in 2010. Nobody can anticipate customer needs and desires better than Apple, and as Fast Company put it, they chose Apple for “dominating the business landscape.”

Anticipating customer needs is essential for product and service innovation. The Ritz-Carlton has a deliberate program of data capture and analysis after each guest’s visit, information they use to anticipate the needs of returning guests. From desired room temperature, to type and firmness of pillow and mattress, to preferred morning newspaper, fulfilling guest needs is the focus not only of the current stay, but for every future stay. What innovative ideas can you contribute to your business in anticipating customer needs?

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