Part 6 - When customer insight turns into innovation
The customer can be an important source of new ideas. Not because the customer necessarily knows how the product of the future should be constructed, but because the customer knows the problem, the situation and the experience that the business is trying to improve.
This is where customer insight meets innovation.
The company listens to questions, observes usage, analyzes complaints, studies search behavior, tracks returns, and talks to employees who meet customers every day. Sometimes this information points to small improvements. Other times it reveals a need that could provide the basis for an entirely new product, service, or business model.
But it doesn't happen automatically.
Between customer insight and innovation lies an organizational process. Someone must detect the signal, understand its meaning, formulate an idea, get it heard, test the solution, and learn from the result.
Therefore, this article is as much about the organization's ability to listen and learn as it is about the customer themselves.
Innovation can begin with a problem
Innovation is often associated with technology, research, laboratories, entrepreneurs, and major breakthroughs. All of these can be important sources of innovation.
But innovation can also begin in far more everyday places.
A customer asks why a task needs to be done a certain way. A store associate discovers that many customers are requesting the same item. A customer service representative hears the same frustration multiple times a day. A user finds an improvised solution because the product is not working optimally in a particular situation.
What is interesting is not necessarily the comment itself.
What is interesting is what the comment reveals .
Behind the question may lie an unmet need. Behind the complaint may lie a weakness in the product. Behind the customer's improvisation may lie an alternative way to solve the problem.
Thus, customer insight becomes raw material for innovation.
Innovation researcher Eric von Hippel at MIT has documented for decades that users themselves can be important innovators.
His research on so-called lead users shows that some users meet needs earlier than the broader market and therefore develop or adapt solutions themselves.
Von Hippel formulates the point clearly throughout his work:
"Users are increasingly able to innovate for themselves." - Eric von Hippel
This challenges the notion that innovation always moves one way: from the manufacturer to the customer.
Sometimes knowledge goes the opposite way.
The customer knows the problem better than the solution
The customer's most important contribution to innovation is not necessarily to
describe the finished product.
It could be describing the situation.
What is the customer trying to do?
Where does the process stop?
What takes too long?
What is difficult to understand?
What costs unnecessarily much?
What does the customer have to do manually?
What is missing?
These questions shift the focus from the product to the task the customer is trying to solve.
Jobs to Be Done – what is the customer really trying to get done?
Clayton Christensen and his colleagues developed Jobs to Be Done as a perspective on innovation. The premise is that customers don’t primarily buy products because they want them for their own sake. They “hire” products and services to do a specific job in a specific situation.
Wharton describes Christensen's perspective as follows: many product innovations fail because the business focuses on features and product categories rather than the job the customer is actually trying to get done.
It is an important shift.
A customer doesn't necessarily buy a drill because she wants to own a drill. She might need to attach something to a wall.
She doesn't necessarily buy software because she wants it. She might be trying to plan, communicate, or complete a task faster.
'She doesn't buy transportation because she wants the means of transportation as such. She wants to get from one place to another.
When the business understands the task, the space for innovation also opens up.
Then the question can be changed from:
How do we create a better version of our product?
to:
Is there a better way to solve the customer's problem?
The last question can lead to completely different solutions.
The customer can be the innovator
Eric von Hippel's research goes even further.
He has documented how users in many markets not only come up with ideas but actually develop their own solutions. This can happen because manufacturers do not yet offer what users need, or because some users are so far ahead of the market that their needs have not yet become mainstream.
Von Hippel calls such people lead users .
They are characterized by experiencing needs earlier than the main market and have a great advantage in finding a solution. Therefore, they may also have strong incentives to develop or modify products themselves.
This has important consequences for how businesses work with customer insights.
The average customer can tell a lot about today's market.
But individual customers can provide signals about tomorrow's market .
The business must therefore not only ask how many customers say something. It should also investigate who is saying it, what their experience is and whether their needs may be an early sign of a broader development.
3M is a well-known example of a company that has systematically employed lead-user methodology to find ideas for new products. Harvard Business Review described how the method could make the search for breakthrough innovations a more systematic process by identifying and learning from advanced users.
Customer insights are not just a wish list
The customer's role in innovation must also be defined.
Being customer-oriented does not mean that the business should ask customers what products they want and then produce what the majority answers.
It would reduce innovation to commissioned work.
The customer knows their problem and situation, but does not necessarily know the technology, research or solutions that may be possible in the future.
Therefore, the business must combine several forms of knowledge:
customer experience
employee observations
professional competence
technology
research
market knowledge
creativity
economic assessments
Innovation often occurs at the intersection of these forms of knowledge.
That's why customer insights provide direction , but not necessarily the answer.
George S. Day at Wharton has formulated this from a clearly market-oriented perspective: the goal is to find innovations that create new value for customers that they are actually willing to pay for.
"You're looking for innovations that create new value for customers that they are willing to pay for." -George S. Day
Here, innovation is directly linked to the value creation we discussed in
Part 2.
A technical invention can be impressive.
But a market innovation must also create value for someone.
The customer service representative can discover the innovation first
A lot of customer insight comes in through the front line.
This makes the employee who meets the customer a potentially important player in the innovation process.
Think about the customer service representative who hears every day that customers are having problems with the same process.
The first conversation may seem like a simple matter.
The tenth suggests a pattern.
The hundredth shows that the business probably has a system problem.
The customer service representative can therefore have information long before management sees it in a report.
The same applies to the store employee who hears which products people are requesting, the salesperson who registers new needs, or the service technician who sees how customers actually use the equipment.
This is part of what is described in Norwegian working life as employee-driven innovation .
The Ministry of Trade, Industry and Fisheries' handbook on employee-driven innovation was developed precisely to help businesses use their employees' ideas, knowledge and experience more systematically to strengthen their innovation capabilities.
The point is basic:
The people closest to the problem may also be among the people closest to a possible solution.
When the signal doesn't come through
But here an organizational challenge arises.
The employee can see the problem.
That doesn't mean the organization sees it.
A customer may come up with a good idea.
This does not mean that the idea will be registered.
The first line can detect a pattern.
That doesn't mean management will know about it.
Information does not move automatically through organizations.
Many businesses have highly structured systems for
information from top to bottom. Strategies, goals, budgets and routines can be communicated through multiple levels.
The information from the bottom up may be far less systematic.
Thus, the business may face a paradox:
It spends significant resources on market analysis and innovation projects, while customer insights that already exist within the organization do not reach the people who can do something with it.
Ideas can stop with management
This is an important point, because innovation is not just about producing ideas.
The organization must also be able to accommodate them.
An employee who makes a suggestion takes a small social risk. The suggestion may be taken seriously. But it may also be ignored, rejected, or perceived as criticism of existing solutions.
If this happens repeatedly, employees learn something.
Not necessarily that they lack ideas.
They learn that it doesn't pay to come with them .
Then the organization may still have creative people and extensive customer insight, but weak innovation capabilities.
This is also the reason why Norwegian work on employee-driven innovation has emphasized organization, management, and systematic use of employee expertise. Public documents have mentioned employee-driven innovation as a potential strength in Norwegian working life, precisely because broad employee participation can mobilize knowledge and creativity that would otherwise not be fully utilized.
The problem may be absorption – not lack of ideas
This gives us an important distinction.
Businesses may have an ideas problem .
But they may also have an absorption problem .
An idea problem means that few new proposals arise.
An absorption problem means that the proposals exist, but the organization is poor at discovering, assessing, testing, and scaling them.
In the latter situation, arranging another innovation day is of little help.
The problem doesn't necessarily lie in creativity.
It lies in the system that should make creativity useful.
From commentary to organizational learning
For customer insight to become innovation, there must be a path through the organization.
It doesn't have to be complicated, but some basic features need to be in place.
The business must be able to detect signals, collect similar observations, assess their significance, and decide which ideas should be investigated further.
Then the idea must be testable.
Some proposals may be rejected quickly.
Others need small experiments.
Some require research or major investments.
The crucial thing is that the organization has a learning loop .
The customer gives a signal.
The employee discovers it.
The company is investigating the signal.
A hypothesis is developed.
The solution is being tested.
The result is measured.
The business learns.
This makes customer insight more than just information.
It becomes development.
The experiment ties insight and innovation together
A common mistake is to go directly from idea to full implementation.
But customer insights can be wrong.
The employee's interpretation may be wrong.
Management may misunderstand the reason.
That's why experimentation is important.
A business can test new text on a website before rebuilding the entire site. It can try out a new service process in one store. It can create a simple prototype before putting the product into production.
The experiment reduces the distance between assumption and knowledge.
In this way, the customer becomes part of the innovation process even after the idea has been developed.
The business doesn't just ask:
Do you like the idea?
It examines:
Does the solution actually work better?
This difference is crucial.
Innovation needs organizations that can tolerate making mistakes
Customer insights can challenge existing perceptions.
It can show that a product the management has faith in does not work well enough.
It can show that customers are using the solution in a different way than the developers had planned.
It can show that a competitor has understood the market better.
Then innovation also becomes a question of culture.
Organizations that treat errors as something to be primarily hidden will have a harder time learning from experiments.
Organizations that can distinguish between irresponsible mistakes and well-founded attempts that fail have a greater opportunity to learn.
This doesn't mean that all ideas are good.
This means that innovation requires an environment where ideas can be assessed for their content, tested and rejected or further developed on the basis of knowledge.
From simple improvement to breakthrough
Not all customer insights lead to radical innovation.
Most probably don't.
A customer inquiry may lead to a better explanation.
A pattern of complaints can lead to a changed process.
Observation of usage can lead to a better interface.
These are incremental improvements.
They can still be very valuable.
A hundred small improvements can, over time, dramatically change the customer experience.
But sometimes the insight points towards something bigger.
Lead-user research is interesting precisely because advanced users' problems and solutions may be ahead of the broader market.
Then the business can discover an opportunity that competitors do not yet see.
Customer insight can thus contribute to both continuous improvement and more radical innovation .
Innovation can also come from outside
The customer is not the business's only external source of ideas either.
Suppliers, universities, research groups, entrepreneurs, partners and other businesses can contribute knowledge and technology.
This is a central idea in open innovation.
Customer insights should therefore be understood as one part of a larger knowledge ecosystem.
But the customer has a unique position.
The technology community can know what is technically possible.
The researcher can understand the mechanism.
The supplier may know the component.
The customer knows the experience.
When these perspectives meet, innovation can become stronger.
Artificial intelligence can make signals more visible
AI now gives businesses new opportunities to discover patterns in customer insights.
Large amounts of customer inquiries can be analysed.
Feedback can be grouped.
Recurring problems can be identified.
Ideas from employees can be compiled.
Product reviews can be analyzed across markets and languages.
This can make the organization better able to find signals that previously disappeared in the amount of information.
But technology alone does not solve the organizational problem.
An AI model can detect that 12,000 customers are describing the same problem.
Someone must still be willing to do something about it.
That brings us back to management.
The role of management is to open the door
Management doesn't have to come up with all the ideas themselves.
A more important task may be to build a system where good ideas can come from multiple places.
From research.
From technology.
From the customer.
From the employee.
From the supplier.
From the market.
Management must create channels that ensure that signals are heard,
mechanisms that allow ideas to be assessed and resources that allow promising solutions to be tested.
Norwegian work on employee-driven innovation has highlighted the value of mobilizing employees' ideas, experiences and expertise more systematically.
It also gives us an important correction to the notion of the lone innovator.
Innovation is often the result of the knowledge of many people being connected together .
Customer insight can become invisible capital
Here we meet again The Invisible Capital.
The customer's comment in itself has little value if it disappears.
The employee's experience has limited organizational value if it only exists in the employee's head.
But when the business manages to collect, share and use this knowledge, a resource emerges that can be difficult for competitors to copy.
The business learns the market.
It learns how customers use the products.
It learns which problems recur.
It learns which solutions work.
It learns which ideas should be tested.
This accumulated knowledge can become part of the business's invisible capital .
It is not necessarily found in the accounts.
But it can affect innovation capacity, competitiveness and long-term value creation.
The customer is a source of innovation – but innovation is a team effort
We can thus summarize the main point.
The customer can be an important source of new ideas.
But the customer is not the innovation department.
The customer's experience must be met with the knowledge of the employees, the company's expertise, technology, research, capital and management.
Eric von Hippel's research shows that advanced users can in some cases develop solutions themselves that later have significance for a larger market.
Clayton Christensen's Jobs to Be Done perspective reminds us that innovation should begin with the understanding of what problem the person is trying to solve.
And experiences with employee-driven innovation show that the business must also be able to mobilize the knowledge of the people closest to customers and work processes.
Thus, we can describe the innovation chain quite simply:
The customer experiences the problem. The employee discovers the pattern. The organization develops the insight. The innovation tries to solve the problem better.
If one of these links is missing, a valuable idea can disappear.
If they work together, customer insights can turn into innovation.
And innovation can lead to value creation.
The next question is therefore how the business builds the relationship that makes the customer want to come back:
Recommended literature
Customer focus, customer insight and customer relationships cannot be understood in isolation from developments in digitalisation, innovation and user experience. The way a business interacts with its customers is shaped today by people, technology, digital services, organisation and the ability to develop new solutions.
Therefore, this bibliography currently contains books that highlight several of these perspectives.
Here you will find literature on digitalization, innovation, user experience, usability and the development of digital services, among other things. Steve Krug's Don't Make Me Think is a natural example: The book is about usability on the web, but at the same time touches on a fundamental question in the entire Customer series – how easy or difficult the business makes it for people to succeed in what they are trying to do.
Similarly, literature on innovation can help us understand how observations, needs and problems of customers and users can be developed into better products, services and work processes.
The literature list will eventually be expanded with more books that specifically address customer focus, customer insight, customer relations, customer loyalty, e-commerce, service and customer experience.
The goal is not to collect as many books as possible, but to build a literature base that makes it possible to understand the customer from multiple professional perspectives.
From San Francisco and Oxford to the customer
Experiences from professional seminars and study trips in San Francisco and Oxford are also part of the background for this professional universe. Topics such as innovation, digitalization, e-commerce, user experience and new business models have over time contributed to a broader understanding of how technology and organizations must take as their starting point the people the solutions will actually work for.
The Customer Series continues this perspective: Technology is a tool. Innovation is a tool. Value arises when solutions actually work for the people they are designed for.
The Long Tail: Why the Future of Business Is Selling Less of More
Author(s): Chris Anderson
Short review
The Long Tail is one of the most influential books on how the internet has transformed commerce, marketing, and consumer behavior. Chris Anderson introduces the theory of the “Long Tail,” which explains how digital markets enable significant value creation through a large number of niche products, rather than relying on a few bestsellers.
The book shows how digital distribution, low inventory costs, search engines, and intelligent recommendation systems have made it profitable to offer an almost unlimited product range. Where traditional stores were limited by physical shelf space, online stores can offer millions of products and let customers find exactly what they are looking for.
Chris Anderson illustrates the theory with examples from Amazon, Netflix, Google, and the digital music industry, showing how the internet has changed the rules of competition for businesses around the world. Many of the insights have since become even more relevant through artificial intelligence, personalization, and modern search technology.
The authors take the reader through the entire process – from planning and organizing to publishing, managing and continuously improving content on websites and digital services. Although technology has evolved since the book was published, the principles of quality, relevance, management and long-term content work are at least as relevant in an era where search engines and artificial intelligence assess the credibility and usefulness of content.
Why we recommend the book
At The Invisible Capital, we consider The Long Tail to be one of the most important books in e-commerce, digitalization, and modern value creation.
The book explains why customers no longer just buy the most popular products, but increasingly find value in specialized products and services that meet individual needs. This insight has had enormous impact on the development of online stores, digital marketplaces, search engine optimization (SEO), information architecture, and content strategy.
Today we see that the theory also fits very well into the development of artificial intelligence. AI helps people discover relevant content, products and knowledge that were previously difficult to find. This has given the Long Tail principle a new dimension, where well-structured content and high professional quality are increasingly important for visibility, trust and value creation.
This is a book we believe everyone who works with e-commerce, digital marketing, customer experience, innovation, digital strategy or artificial intelligence should read.
Content Strategy for the Web (2nd Edition)
Author/authors: Kristina Halvorson and Melissa Rach
Short review
How do you create content that actually helps people – and at the same time supports your business goals? Content Strategy for the Web is considered one of the most influential books in the field of content strategy and digital communications. The book shows how good content does not arise by chance, but through a deliberate strategy where user needs, the organization's goals, structure, work processes and management are closely linked.
The authors take the reader through the entire process – from planning and organizing to publishing, managing and continuously improving content on websites and digital services. Although technology has evolved since the book was published, the principles of quality, relevance, management and long-term content work are at least as relevant in an era where search engines and artificial intelligence assess the credibility and usefulness of content.
Why we recommend the book
At The Invisible Capital, we believe that good content is one of the most important forms of invisible value creation. A website is far more than design and technology – it is the content that builds trust, creates great customer experiences and helps people find the answers they are looking for.
This book is perfect for leaders, communications consultants, content producers, web editors, UX designers, and anyone working with digital services. It shows why a clear content strategy leads to better user experiences, more effective interactions, and stronger digital results over time.
In an era where artificial intelligence is increasingly important in how information is discovered, understood, and communicated, this book is more relevant than ever. It reminds us that technology alone never creates value – it is good, structured, and relevant content that makes the difference.
Don't Make Me Think
Author: Steve Krug
Short review
Don't Make Me Think is one of the world's most influential books on usability and web design. Since its first edition in 2000, the book has helped designers, developers, content producers, and managers understand a simple but powerful principle: Good digital services should be intuitive. The user should be able to complete their task without having to stop and think about how the website works.
Why we recommend the book
This is one of the books that has had the greatest impact on my own work with digital services. Over the years – from SAS and the Norwegian Opera & Ballet to working on Bærum Municipality’s website – the principles in this book have been an important reminder that technology is never an end in itself. The goal is to make everyday life easier for the people who use the services. Despite the fact that the book was published many years ago, the message is just as relevant today.
Internet Marketing & eCommerce
Authors: Ward Hanson and Kirthi Kalyanam
Short review
Internet Marketing & eCommerce provides a thorough introduction to how the internet has changed marketing, commerce, and business development. The book combines theory and practical examples in digital marketing, e-commerce, customer behavior, value creation, and digital business models. Although written at a time when the internet was still in its infancy, many of the fundamental principles are still highly relevant.
Why we recommend the book
This book was an important part of my own learning journey in digital marketing and e-commerce. It helped build my understanding of how technology, customer experience and business strategy are interconnected – an insight that later became very important in my work with SAS, the Norwegian Opera & Ballet, Bærum Municipality and eventually the project The Invisible Capital. Many of the ideas about customer value, digitalisation and innovation presented on the website have their roots in the knowledge this book conveys.
The Innovator's Solution: Creating and Sustaining Successful Growth
Authors: Clayton M. Christensen and Michael E. Raynor
Short review
In this sequel to The Innovator's Dilemma, Clayton Christensen shows how businesses can translate innovation theory into practical strategy. The book explains how companies can identify new growth opportunities, develop disruptive innovations, and build organizations that thrive in rapidly changing markets.
Why we recommend the book
While The Innovator's Dilemma explains why established businesses are often challenged, The Innovator's Solution provides concrete advice on how to meet the challenges. The book is therefore a natural next step for anyone who wants to understand innovation, strategy and long-term value creation.
The Innovator's DNA: Mastering the Five Skills of Disruptive Innovators
Authors: Jeff Dyer, Hal Gregersen and Clayton M. Christensen
Short review
What characterizes people who create groundbreaking innovations? The authors identify five key skills – observation, questioning, experimentation, networking and association – that are common to the world's most innovative leaders and entrepreneurs.
Why we recommend the book
This book shifts the focus from organizations to the people behind innovation. It shows that creativity and innovation can be developed through deliberate training and experience. The perspectives align well with the philosophy behind Invisible Capital, where human competence and curiosity are the most important drivers of development.
Competing Against Luck: The Story of Innovation and Customer Choice
Authors: Clayton M. Christensen, Taddy Hall, Karen Dillon and David S. Duncan
Short review
In this book, Clayton Christensen further develops the theory of Jobs to Be Done – the idea that customers do not primarily buy products, but "hire" them to solve specific needs. Through practical examples, the authors show how businesses can develop products and services that address customers' real-world challenges.
Why we recommend the book
For anyone working in customer experience, service design, and innovation, this is one of the most insightful books ever written. It reminds us that value creation always starts with understanding the people we are developing solutions for – a fundamental principle of Invisible Capital.
The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail
Author: Clayton M. Christensen
Short review
The Innovator's Dilemma is considered one of the most influential books on innovation and technological change. Clayton M. Christensen introduces the theory of disruptive innovation and explains why even the most successful businesses can fail when new technologies and business models challenge established markets. Through a series of examples, he shows how companies often focus on today's customers and incremental improvements, while overlooking innovations that later change entire industries.
Why we recommend the book
This is one of the books that has had the greatest impact on modern innovation thinking. When I first read it, it gave me a whole new perspective on why some businesses succeed in transformation, while others lag behind – even when they are well led. The insight has been an important part of my own understanding of digitalization, innovation and change management, and many of the reflections in The Invisible Capital build on the ideas Clayton Christensen presents in this classic. The book is as relevant today, in the face of artificial intelligence and digital transformation, as it was when it was published.
Open Innovation: The New Imperative for Creating and Profiting from Technology
Author: Henry Chesbrough
Short review
Henry Chesbrough introduced the concept of Open Innovation and changed the way many businesses think about research and development. He shows how companies can create more innovation through collaboration with customers, universities, start-ups, suppliers and other external partners.
Why we recommend the book
Open Innovation has had a major influence on modern innovation thinking and was also an important topic during the seminars in Oxford and San Francisco. The book shows why future value creation occurs in the interaction between people, businesses and knowledge environments – not within closed organizations alone.
Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant
Authors: W. Chan Kim and Renée Mauborgne
Short review
Blue Ocean Strategy challenges businesses to shift their focus away from fierce competition and instead create new markets with little or no competition. The authors present strategies and models that help organizations develop innovative products, services, and business models.
Why we recommend the book
This book has inspired leaders around the world to rethink strategy and innovation. Instead of competing for the same customers, it shows how businesses can create new value through creativity and differentiation. The perspectives align very well with the themes of innovation, digitalization, and long-term value creation in Invisible Capital.
Outside Innovation: How Your Customers Will Co-Design Your Company's Future
Authors: Patricia B. Seybold
Short review
Patricia Seybold shows how businesses can create better products and services by actively involving customers in the innovation process. The book describes how dialogue, co-creation and close collaboration with users can provide better solutions and stronger competitiveness.
Why we recommend the book
Customers often hold the most important insights into how products and services can be improved. This book emphasizes the importance of listening, involving, and learning from users – a perspective that is echoed in many of the articles on The Invisible Capital. Innovation rarely happens alone; it is created in the interaction between people.
Blown to Bits: How the New Economics of Information Transforms Strategy
Authors: Philip Evans and Thomas S. Wurster
Short review
This book analyzes how digital information is changing competitive conditions, markets, and business strategies. The authors explain how the internet is disrupting established structures and creating new opportunities for businesses that are able to think differently.
Why we recommend the book
Although written early in the internet revolution, the book describes many of the developments that still characterize business today. It provides valuable perspective on how digitalization affects value chains, competition, and innovation – themes that are central to Invisible Capital.
Wikinomics: How Mass Collaboration Changes Everything
Authors: Don Tapscott and Anthony D. Williams
Short review
Wikinomics shows how openness, sharing and collaboration across organizations create new forms of innovation and value creation. Through a number of international examples, the authors describe how digital networks make it possible to develop products, services and knowledge together.
Why we recommend the book
This book was groundbreaking when it was first published, and many of the ideas have since become a natural part of everyday digital life. The perspectives on collaboration, knowledge sharing, and open innovation processes align very well with the philosophy behind Invisible Capital, where people and networks are at the center of value creation.
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