How companies use customers to build sustainable growth
Every year, Forbes releases its list of the world’s most innovative companies. In 2018 that list included household names like Salesforce, Tesla and Amazon, as well as lesser-known brands like Workday and ServiceNow. Forbes has its own methods for determining who makes the list, but there’s one thing all these companies have in common: a relentless focus on working with their customers to create excellent experiences.
Customers are an overlooked part of the innovation process — particularly in the early stages of idea generation. These companies show how going beyond the typical customer feedback methods can inspire real innovation.
Innovation begins with collaboration — with customers
Founded in 2004, ServiceNow provides cloud-based services to automate enterprise information technology operations. When it comes to innovation, Fred Luddy, ServiceNow’s Founder and Chairman, is blunt: he has never had an original idea. He was always inspired “by someone doing something — or struggling to do, wishing they could do it differently.”
According to Forbes, the two qualities that make ServiceNow the most innovative company of 2018 are “simplicity and customizability.” Luddy had seen how IT processes created pain and bottlenecks in organizations of all sizes, and he resolved to do something to address it. By focusing on the qualities people really care about — simple and highly customizable technology — he was able to deliver a product that everyone found beneficial.
And customers responded positively. Doug Leone, a managing partner at Sequoia Capital, said during ServiceNow’s Series D round that he “had never seen such positive reviews from customers.”
“I was always inspired by someone doing something — or struggling to do, wishing they could do it differently.”
— Fred Luddy, ServiceNow’s Founder and Chairman
Workday, founded in 2005, is a cloud-based ERP system for HR, finance, and planning. In 2018, Workday acquired Adaptive Insights in response to their customers’ growing need for an all-in-one enterprise planning system.
Workday’s CIO, Diana McKenzie, has spoken at length about the relationship between Workday and their customers. Her trick? Making sure Workday remains “the first and best customer of our product.” By acting as their own customer, Workday is able to see what works best, what doesn’t work, and what else is required from their own systems.
Her other advice? “Go out and meet the customers… go have conversations at the source.”
With a market cap of $97B, Salesforce has literally won the award for customer-centricity. The SaaS giant has topped Forbes’ innovation list for years now.
In their own announcement, Salesforce co-founder Parker Harris attributed their ability to stay innovative to their ability to listen to their customers. “We’re continually inspired by our customers and by listening to where they want to take their companies,” said Harris.
At Dreamforce, Salesforce’s annual convention, Salesforce Industries EVP John Wookey described how customers are the driving force behind real disruption across industries: “The real disruption that is happening, is happening to our operating models, to our business models, and it’s very much driven by our customers.”
Salesforce’s focus on the customer and their ability to connect with shifting demands has no doubt enhanced their ability to remain relevant and stay innovative.
“We’re continually inspired by our customers and by listening to where they want to take their companies.”
— Parker Harris, Salesforce Co-founder
Like Salesforce, Tesla has also topped Forbes’ innovation list multiple times. And no wonder: the company is credited with ushering in the evolution of a deeply institutionalized industry, from ICE vehicles to electric vehicles.
One of Tesla’s greatest innovations is its sales model. Their direct-to-consumer model allows them to interact directly with their customers. Disintermediating the dealer-franchise model has allowed Tesla to gain direct access to the very people they’re innovating toward.
For Tesla, customer centricity is an initiative embraced at the top. Elon Musk, Tesla’s celebrity-CEO, is renowned for engaging with customers directly on Twitter and taking their comments seriously.
What makes Tesla truly customer-centric, however, is the fact that they finally did something about the auto-industry’s worst-kept secret. Everyone knows that the process of buying a new car sucks; it just took an innovative company to rewrite the script.
It would take too long to describe Amazon’s list of innovations, so here’s an incomplete list: wireless and staffless grocery stores, drone deliveries, on-demand Uber-like delivery service and the Kindle.
Since 1995, Amazon’s mission has been to become “Earth’s most customer-centric company.” Since then, Amazon has basically redefined how we shop while also redefining customer eccentricity.
Jeff Bezos has translated his promise to “focus relentlessly on our customers” into long-term investment decisions and laying the groundwork for sustainable innovation. It seems to have worked: today, Amazon has over 300 million customers worldwide.
These companies all began the same way: by observing a sub-optimal experience that affected a large group of people. By understanding the people involved, they could innovate creative solutions that ended up disrupting entire industries. Somewhat ironically, it could be argued that these five companies all had the same innovative idea: put customers first and let them lead the way toward specific product innovations.
As Jeff Bezos noted, the key to long-term growth is customer engagement. It is no use reaching for short-term gains if it leads to an eventual customer exodus. That’s why customer centricity — at all levels of an organization — is so central to sustained growth and continuous innovation.
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