Is the Experience Frontier the New Innovation Frontier?

Editor’s Note: Innovations has always been important, but in the current era, where “disruption” (digital and otherwise) has become a business mantra, innovation has become the absolute lifeblood of business across all sectors. If you aren’t producing disruptive innovations, you risk being disrupted yourself. Greg Heist makes the provocative argument that there is a huge opportunity in thinking about the innovation of the customer experience, not just of the products per se. This is a very well thought out piece worth taking seriously by both marketers and researchers.

---

Companies are often built around creating the next new thing. Whether it’s Apple developing the iconic iPhone and iPad, Netflix pioneering video streaming or Tesla rethinking the electric vehicle, when it comes to innovation, our minds instinctively gravitate toward the realm of product innovation.

However, it’s becoming clear that building a better mousetrap isn’t the sure path to success that it once was. Lippincott’s study of more than 500 consumer brands shows that the stock price of companies identified as experience leaders increased an average of 8% per year over laggards, significantly outperforming the S&P 500. As a result, customer experience is an increasing area of focus for companies seeking new ways to stand out and drive deeper engagement and stickiness with their brands.

In part, this explains why companies like Airbnb, Rent the Runway and Peloton are darlings of the start-up community and have quickly gained staggering enterprise valuations. For them, the experience is paramount and any “product” is merely in service of the experience the brand engenders.

Making the Jump from Product to Experience Innovator

While the case for focusing on experience innovation is compelling, it’s also daunting. To start with, the tenets of innovation are naturally oriented toward the tangible. This ingrained mindset about what “innovation” drives the creation of very concrete outcomes. With that kind of infrastructure in place, what happens when the “thing” being innovated isn’t tangible at all? And, more importantly, what can organizations do to set themselves apart as experience innovators?

Below are some examples of how organizations are successfully navigating this transition:

1. Leverage customer experience measurement to fuel innovation

The increasing use of Customer Experience (CX) Voice of the Customer measurement has given companies more insight than ever into the various touchpoints customers have with their brand, products, services and even employees. And while the focus of these measurements is typically to optimize the experience, CX insights can also drive the innovation of experiences.

As an example, Pizza Hut in the UK had been experiencing dismal performance on its digital ordering website and its mobile app. Traditional ways of thinking about this would generally result in efforts to make incremental performance improvements in the hope that it would improve the overall experience.

Instead, in a bold move, Pizza Hut decided to insource all digital and e-commerce resources and integrate them into a startup called Pizza Hut Digital Ventures. The goal of this new initiative was to reinvent the Pizza Hut digital experience. By structuring this team as a semi-autonomous startup within Pizza Hut, it provided the freedom to innovate the entire digital experience.

The result was a website with zero downtime, 1.5 seconds faster load times and a mobile app that increased its 1.5-star rating to 5 stars. Additionally, by creating a “deal bot” that matched orders with available discounts, the team also drove up conversion rates by 50%.

The key here is thinking beyond just measurement. Forward-thinking companies don’t look at metrics like NPS as an end in and of itself–rather they use what they’re learning to reimagine the experience altogether.

2. Widen your lens to see new possibilities

If organizations want to move toward experience innovation, they must broaden their perspective and think about a much wider palette of possibilities. A practical model to help crystalize innovation opportunities is illustrated in the Doblin Ten Types of Innovation framework.

The premise of this model is that, for an innovation to be successful, any given type should not be comprehended in isolation. In fact, research based on this framework shows that the more types integrated into a single innovation, the more likely it is to ultimately succeed in the marketplace.

Let’s flesh this out by looking at the Quip toothbrush—an excellent example of the Doblin framework in action.

• Product Performance: One of the most immediately striking features of the Quip toothbrush is its design. It touts itself as the slimmest powered toothbrush on the market.
• Product System: Besides a replaceable bristle unit, Quip has a uniquely designed travel cover that doubles as a holder. It also offers toothpaste delivered in both a regular size for daily use and travel size.
• Profit Model | Service: Through a subscription model, Quip drives ongoing profit via sales of its brush heads and toothpaste. By auto-sending customers a new brush, battery, and toothpaste every three months, it addresses the pain point of replacement frequency.
• Channel: Quip is only sold online through its site, which is radically different than the typical model of toothbrush sales at retail, allowing Quip to reinforce its market differentiators.
• Customer Engagement: Ever hear of a toothbrush company having a blog? Quip uses its direct-to-customer relationship to share interesting and informative content about oral care in a way that is distinctly different.

In the case of Quip, it’s clear that in widening the lens of innovation to more than a product, they ultimately created an unreplicable experience.

3. Embrace agility to reinvent experiences

Successful innovation is more than just identifying and responding to opportunities. Organizations must bring solutions to the market in a timely manner. Too often, however, rigid processes get in the way of making good ideas happen.

Zappos overcame this hurdle through a widespread culture of employee empowerment. Its holacratic structure allows employees to form teams based on specific workstreams, organically restructuring around opportunities without the friction of a more hierarchical organization.

In this case, a single customer service call spurred a Zappos employee to advocate for a dedicated customer loyalty team trained to assist customers with special needs. This agility enabled the launch of Zappos Adaptive, an extension of the Zappos online experience that serves the unmet needs of consumers with disabilities.

When agile innovation becomes the norm, customer insights can fuel all kinds of opportunities–from enhancing the customer experience, to launching new products that extend the brand experience, to reimagining the very business model itself.

It should come as no surprise that Gartner predicts that this year more than 50% of organizations will redirect their investments to customer experience innovation. With that being the case, the next better mousetrap might not be a mousetrap at all. Rather the experience frontier will enable organizations to espouse fresh thinking that creates new value—our favorite definition of innovation—through the enduring power of experience.

This piece was written in concert with Sam Herzing, Senior Delivery Manager, Gongos, Inc.