It goes without saying that innovation is the lifeblood of any successful enterprise. A study by the American Productivity and Quality Center showed that top-performing companies derive more than 40% of their profits from new products, compared with less than 30% for average companies. Yet estimates are that 80% of new products fail in the marketplace, suggesting that perhaps the problem lies with the development process rather than the products themselves.

Until the 1980s, technology largely drove design with suppliers telling customers what they needed — basically an “if we build it, they will come” approach. With the realization that many good ideas originate with the user, companies started listening more intently to their customers.

The most-successful enterprises have overcome the mind-set that the customer belongs to the sales force and new-product development belongs to engineering. The best way to break down this barrier is by encouraging design engineers to interact with clients and gain a richer sense of their needs.

Too often customer service narrowly focuses on issues such as pricing and delivery, when it should be on solving problems. However this requires a deep understanding of drivers such as regulatory compliance, financial performance, and safety. Such knowledge fosters true customer-driven advances, as opposed to the typically product-focused output of R&D laboratories.

Helping solve customers’ problems also requires objective self-assessment of one’s ability to deliver innovative solutions. How efficiently can a custom product be produced to meet a special need? How quickly can a new product be developed that provides a step-change improvement over current technology?

A more-holistic approach to innovation that has proven to be quite fruitful partners R&D engineers with their application-engineering counterparts. Application engineers solve problems every day, either by witnessing them firsthand or by communicating with customers. Their world is rich with field experiences, which are invaluable in identifying opportunities for real innovation.

A good example of this approach involves a new ultralow-emission valve-stem packing we developed for a major petroleum refiner. Through an interactive, collaborative process with the customer, we developed a product that met their performance and ease-of-use criteria.

We also packaged two different types of compression packing per container to eliminate handling and storage of individual coils. And to eliminate guesswork, the new packaging indicates the number of valves the contents will repair, rather than the weight. The success of the new product, which has received numerous awards, belongs equally to the customer.

As we recover from one of the worst recessions in recent memory, companies need to position themselves for the inevitable growth to come. Those whose corporate cultures encourage interacting with customers and understanding their true needs stand a far better chance of success than those who go it alone or take a minimalist approach to collaboration. Centering innovation efforts on the customer and creating a culture in which research, engineering, marketing, and sales professionals all equally share ownership of customer relationships will emerge as the winners.

Edited by Kenneth Korane

© 2010 Penton Media, Inc.