Why Companies Must Lead, Not Consumers

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[2]In a recent post [3] my colleague David discusses a critical issue to do with the shift of power between corporations and consumers. As David notes, while consumer empowerment creates an urgent need for companies to understand and serve the needs of their customers better, it doesn’t absolve them of their role as innovators, risk-takers and leaders in the development of new products, services and business models. In fact, as better consumer information squeezes out the differences between brands, the need for corporate innovation has never been greater.

I think some companies have been caught out by this. In their eagerness to be seen to be ‘getting’ social media and the new consumer-control paradigm, they’ve placed too much brand equity into co-creation initiatives that subsequently (but not surprisingly) failed to yield meaningful results. The best example of this is Starbucks. Two years ago to much fanfare [4] (and to offset a bunch of negative publicity [5] at the time) they launched MyStarbucksIdea.com [6], a site inviting consumers to suggest ways in which Starbucks could improve customer experience.

To date more than 80,000 ideas have been submitted. Impressive. And in a blog post [7] on December 8th last year Starbucks noted that 53 of these ideas (0.066%) have been implemented. Maybe, I guess, this isn’t a bad number.

But (not surprisingly) it didn’t take long for knowledgeable thought-leaders in the blogosphere to begin pulling those numbers apart [8] and reach the conclusion that the vast majority of ideas implemented had either been planned anyway or were recommended by partners or employees, leaving just 6 genuine customer ideas (0.0075%) good enough to make the cut. Not overly impressive.

My point here isn’t to lambast Starbucks for not ‘getting social’ or to suggest that they launched the site and then willfully ignored a bunch of amazing ideas. The opposite in fact. It’s that nobody on the outside, even their most passionate customers, can possibly understand the business of product and service innovation like Starbucks’ own management and employees. It was always a stretch that customers would be able to make a meaningful difference by adding new ideas that were then taken up by the company. In fact it could be argued that it’s a surfeit of ideas that has caused the company its current challenges [9]. Too many stores, too much merchandize, too little focus on the core product and service offering – a great cup of coffee in a comfortable ‘3rd space’.

Social media is an amazing medium through which companies and customers can learn more about each other and engage in meaningful dialogue. And co-creation between companies and their partners will be a powerful way for companies to develop innovative products and services that really make a difference. As John Chambers said: “No matter where you work, most of the smart people work somewhere else’.

But be careful about expecting consumers to drive your business. Consumers expect companies to lead, not follow. If Starbucks couldn’t make it work in the cup-of-coffee business, imagine how difficult others will find it. I don’t know how to design a car. I don’t know what type of technology I’ll carry in my pocket in 3 years time. I don’t know how to make wine. But I do know what I like when I see or taste it. The role of predicting what I’ll like, taking the associated risks of developing and producing amazing products and making or losing gobs of money doing it belongs to corporations. Not me.

Five Filters [11] featured article: Chilcot Inquiry [12]. Available tools: PDF Newspaper [13], Full Text RSS [14], Term Extraction [15].