Servant Innovation: What it is, how it works and why you need it.
Introduction
In 1970, a man named Robert Greenleaf retired from his career at AT&T and wrote an essay he’d been thinking about for years. The short book was The Servant as Leader and its tenants launched a movement that thrives today and spawned organizations like the Center for Servant Leadership and the Servant Leadership Institute. Greenleaf believed a leader of organization could be most effective not by placing their self above employees but by becoming a servant to them.
It’s 50 years later and I believe our companies are facing another turning point. As leaders, those we need to serve still include employees – and great progress is being made in areas like wellness, sustainability and diversity. Wall Street, on the other hand, has traditionally believed companies serve shareholders above all else, though that’s is evolving as evidenced by the recently updated Statement on the Purpose of a Corporation from the Business Roundtable.
But for many established companies, the pendulum has swung too far. They’ve fallen into a trap of serving themselves and shareholders over the needs of their customers. At the same time, the term “innovation” has become overused as every company claims it to be their driving force.
The truth is, there is only one real purpose for any organization that sells anything – and that is to provide something of continuing value to customers – so they will make a fair trade of money for that thing. There is no way to create something of continuing value by looking inward or by proclaiming a trendy innovation program.
Fortunately, the solution is quite simple: face outward and truly dedicate yourself and your organization to the needs of customers. There is no better innovation program than becoming a servant to those you’re asking to buy something.
Customers don’t care about your product or service. They care about what your product or service does for them – the task it accomplishes, the problem it solves. In many ways, they’re indifferent to how they solve their problems as long as it works.
Servant Innovation, as I’ll explain, allows us to more effectively understand the problems our customers are trying to solve. Through deeper listening, focusing on customer outcomes, keeping things simple and demonstrating empathy, we can escape the inward focus trap, leap-frog our competitors and re-energize organic growth. Here’s an overview of how to make that happen.
Escaping The Inward-Focus Trap
All organizations, if they survive the early days, have something customers want. This fact is evidenced by customers’ willingness to trade money for a product or service that helps them solve their problem or accomplish a task. Entrepreneurs who start these companies often experiment (at low cost) until they hit upon something that works. It’s always been this way, though thanks to author Eric Reis, we now can make this journey more effectively with a process called Lean Startup. As an example, RXBAR founder Peter Rahal made the first energy bars in a Cuisinart at his parent’s home, selling the company a few years later to Kellogg’s for $600 million. I know a scientist at a coal company who dried coal in a brownie pan in his own kitchen, later to help build a full-size $32 million coal drying facility that greatly improved energy efficiency. Learning-by-doing is usually inexpensive at first.
If start-ups prove successful, companies grow and take on overhead in the form of machines and/or people in order to supply the growing demand. Herein lies the trap: over time, we risk becoming beholden to our own overhead. Our focus turns from interacting with buyers to make sure we sell enough to cover our costs. We’re forced to perpetuate the status quo thanks to our original customer focus, which created a “cash cow.” We claim to divert some of our profits to new products, but we’re caught in incrementalism because we need to feed the beast – the organization itself.
In the chart below, we see the customer focus line decline over time, while the sales focus line increases.
In the second chart below, we show the customer line flipping back by returning to Servant Innovation. I use the term “returning” for a good reason: all companies practiced Servant Innovation to begin with. Understanding customer needs will not be new – but it may need to be relearned.
Returning to Servant Innovation
Servant Innovation isn’t new; in fact, far from it. Thousands of years ago, stone age people conducted what we now call “voice of customer” in order to survive. Without money, they traded with other nearby groups, exchanging products each group knew how to make using resources to which each had access. If something wasn’t of value to the other group? No trade. How to create something of value? Ask them, watch them, experiment and create.
Every single power brand of today – consumer or business – started out just like the stone age people, conducting effective voice-of-customer work. Apple, Amazon, Starbucks, Ford, GE, DuPont – all started tiny with low overhead, found the right formula over time, and grew to produce more and more of what resonated with buyers. So did Enron, Gateway Computers and Toys R Us, which along with thousands of other well-known brands have largely disappeared. And today, WeWork, Uber and Tesla have massive revenues coupled with seriously high costs.
So, what must we do in order to keep up and evolve with the changing needs of our customers? How can we avoid the inward-facing, overhead cost trap? How can we face outward, understand our buyers better and continue to provide them something of greater value than our competitors?
I believe the answer lies in Servant Innovation. Robert Greenleaf’s original article in 1970 was entitled The Servant as Leader. He made a big point of explaining how those two words could – and should – coexist. Likewise, we can examine The Servant as Innovator. We can explore what’s required to fuel organic growth….for each of us, individually, and for our organizations, collectively.
The very first – and most important thing we need to do – is to shift our mindset from ourselves to others. A former mentor of mine loved to say “I guess customers are pretty important. The last time I checked they were a big part of our revenue.” It’s easy for all of us to get caught up in the day-to-day tasks of running a business and our individual jobs, some of which seem far removed from our customers’ use of our products or services. But all of us would be nowhere without those customers. 100% out of business. We need them. They’re our life blood. Our dedication to them got our companies started. Now we have to re-dedicate ourselves to them to assure we survive and thrive.
Over the years in business, I’ve heard two distinct schools of thought and met two distinct types of leaders: one camp focuses on profits and making money as the ultimate goal, constantly struggling for ways to make that happen. The other camp focuses on serving customers, believing that, if done right, success will follow. Servant Innovation falls squarely in the customer-first camp. It is based on first finding solutions that solve real problems and then being rewarded for it.
Creating a new innovation program or proclaiming customer-centricity is not sufficient to ward off status quo perpetuation. A mindset shift is required for the entire organization, including those people on the front lines who interact with customers and especially those responsible for product management. If you’re going to be an innovator, start by being a servant.
The 4 Pillars of Servant Innovation
There are four key elements to making your return to Servant Innovation. They sound simple, but they’re not always easy to implement. I believe you need them all, especially in today’s competitive environment where barriers to entry are lower and new competitors can rise so quickly. To win and re-energize organic growth, we must:
Listen Deeply
Inquire Relentlessly
Solve Simply
Love Honestly
1. Listen Deeply
It’s impossible to learn more about your customers without really listening to them. These days, listening can take many forms as companies try to obtain the “voice-of-the-customer.” We should always include a mix of research methods, especially online surveys, which are so easy to implement. But, when we get a chance to speak with customers one-on-one or in a small group, we need to take advantage of that opportunity.
All of us have our listening roadblocks, like rehearsing in our minds, interrupting or multi-tasking. But we can overcome those weaknesses and become much better listeners by understanding what makes a good listener, by learning new strategies and by practicing.
Innovation trainer Dan Adams, founder of New Product Blueprinting, developed the “PEAR” method, which reminds us of the importance of our posture, expression, actions and response. According to Adams, being a good listener requires really listening, but also appearing that we’re listening. When the person speaking (like our customer) believes they’re being heard, they tend to open up and share critical information. So, don’t just listen – look like it.
For Servant Innovation, we’re seeking to listen more deeply. We probably listen relatively well now. Maybe very well. But we can always improve. Set the goal to be the best listener your customer has. If your customer were to take a survey and was asked “of all the people you work with, who is the very best listener of them all,” would your customer’s answer be you? Why shouldn’t it be? It can be.
To learn more, you can read a previous article I wrote on How to Be a Better Listener. In it, I outline 16 tips that are organized around what you can do before, during and after a discussion.
2. Inquire Relentlessly
Usually we’re instructed that when we interact with our customers, we should try to better understand their needs. That process is part of basic innovation. But in Servant Innovation, we need to be more thorough and more specific.
What are we inquiring about? We need to understand our customers’ “jobs to be done” and the corresponding outcomes they seek. Every customer for every product or service has goals. They require something and a given product or service is their tool to get that job done. If a consumer needs their thirst quenched, there’s a drink for that. If they need a giant roll of paper moved in a factory, there’s a forklift for that. If they need to foster employee connections and community, there’s a novel book group for that. Lots of customer “jobs” out there – and lots of products and services to help them with those jobs.
Ironically, we’re not looking for our customers’ ideas or suggested solutions. We’ve all heard someone come back from a customer meeting and, with great excitement, says something like this: “they told me exactly what they wanted, so let’s make the modifications – we know they’ll buy it because they told me they would.” Unfortunately, things don’t always work out if we follow customer requests literally. Being a servant to them doesn’t mean blindly following their orders. It means thinking through what’s going to be best for them, whether they realize it or not.
The most important part of our search is actually finding customers’ desired outcomes. These outcomes relate to the jobs they are trying to accomplish that our products or services are supposed to be helping with. There can be a few, dozens or even hundreds of outcomes to understand. We can learn how to capture those in consistent statements that will eventually form the foundation of our new product’s performance.
So, instead of immediately responding to a customer’s request for a larger control knob for a machine, perhaps we determine they want to “minimize the effort required to adjust machine speed.” To accomplish this for the customer, we might decide a larger control knob is best, as they suggested – but we might decide to eliminate the knob completely and have voice-activated control. The customer didn’t think of that – but we did…after we understood their desired outcome.
Tony Ulwick, of the consulting firm Strategyn, has contributed much to this thinking via his Outcome-Driven Innovation. His insightful Jobs-To-Be-Done Canvas is an excellent tool for organizing the steps required to truly understand what customers are trying to accomplish and providing a framework for eventually solving those problems.
But outcomes are hard to determine. If these customer outcomes were on the surface and on the tip of every customer’s tongue, then everyone would have them. They’re actually buried and not obvious…to an interviewer or interviewee. We need tools and training on inquiry methods to learn how to ask the probing questions that lead to the answers we need. They must be teased out or they won’t be discovered. In the name of serving your customers and devotion to them, your pursuit of their desired outcomes must be relentless. Once you know those outcomes, developing solutions to address those is a different story.
3. Solve Simply
Too often, we keep products or services the same and simply add additional features to extend the life of the offering. This incremental innovation can lead to too much complexity…and often higher prices for buyers. But Servant Innovation should decrease complexity and maybe even decrease price. After all, we’re doing everything for the good of the customer – why not make products more accessible to them, not less? It’s not our first instinct because making things easier for customers is sometimes harder for us.
The business landscape is littered with examples of companies who didn’t reinvent their products or services and watched an upstart steal share with something totally new and different. Clayton Christensen is especially good at finding these examples and helped give us the term “disruption” to describe it. Most disruption is more about simplicity than complexity. It usually involves rethinking products or business models in a different way and there’s one guarantee: it solves a customer pain point in a straightforward way, helping accomplish a job-to-be-done cheaper, faster, better – or even all of these.
Looking back again (this time hundreds of years, not thousands), we find William, a Franciscan friar from Ockham, England, born 1285. He became known as William of Ockham and is best known for his philosophical principle, Ockham’s Razor. His recommended problem-solving methodology involves cutting away unnecessary complexity by choosing the hypothesis with the fewest assumptions. It’s sometimes interpreted as “the simpler solution is often the best one.” Today, we like to say, “don’t try to boil the ocean.”
The key question we have to ask ourselves is whether we’re willing to disrupt ourselves. Are we willing to sacrifice our cash cow that’s been our reliable source of revenue for all these years and cannibalize it with something new…something simpler? If we have the courage to do this, can we adjust our company’s cost structure accordingly? In other words, can we make ourselves into the upstart we know is coming?
4. Love Honestly
Love’s a strong word but couldn’t be more appropriate here. What better describes how we can be a servant to another individual or company? Why would we not love our customers? Because when we do, it inspires us to place their needs above our own. I believe there are at least 3 parts to the love we should have for our customers:
Empathy – the ability to understand and share the feelings of another
Curiosity – a strong desire to know or learn something
Devotion – loyalty or enthusiasm for a person, activity or cause
As illustrated below, all of these three factors contribute to make each of the other ingredients of Servant Innovation work better. With empathy, curiosity and devotion, we become deeper listeners, we’re more relentless in our search for outcomes and we’re more motivated to solve simply.
The alternative mindset is to make money however we can. In that scenario, customers are a necessary evil, they become a burden, annoy us and we simply tolerate them. Imagine innovation under those circumstances, adding features just to sell more, regardless of whether we’re helping our customers. Not only is that a less effective way to innovate, it’s not fulfilling, not fun and leads to employee turnover, which in turn, further damages customer relationships.
Love is part of the mindset shift we need to make to go from inside-out to outside-in. We have to have faith that if we take care of customers, success (revenue at fair margins) and profit will follow.
Controlling Overhead
Looking one more time at our two charts, we see that even if we manage to improve our response to customer needs, we still need to reduce our focus on sales to cover fixed costs. We don’t accomplish this by de-emphasizing sales, we pull it off by lowering our fixed costs…or at least making those costs more flexible and variable.
New products can follow a Lean Startup mentality by beginning at lower costs, creating minimum viable products (MVPs), learning-by-doing and passing milestones to obtain expansion funding. You can even get training on how to de-risk high-stakes projects.
Existing products – and the entire overhead structure that surrounds them – will be harder to tackle. It won’t happen overnight, but even having awareness of the situation and long-term goals can help. It will require diligence in many inter-related areas of cost, including materials, supply chain, manufacturing, inventory, transportation, support and administration. I’ve seen great success when companies segment products into different value propositions and set appropriate operating profit or EVA goals for each of them. Hitting the targets requires backing off on activities related to lower-margin product lines, while maintaining or even increasing support for higher-margin segments.
Conclusion
The objective is to minimize “status quo perpetuation.” When things are going well, it’s tempting to believe it will last without changing much. Even installing a new “innovation program” usually won’t help because companies are innovating for their own benefit, not customers’.
Only when you shift your mindset and return to Servant Innovation will the successful path to the future emerge. The key ingredients?
Listen Deeply
Inquire Relentlessly
Solve Simply
Love Honestly
Please let me know what you think of the Servant Innovation concept. Do you have examples of how you’re doing this already? Do you think you can make the mindset shift and get to this level of devotion? If you can make it, can you bring your company along? If not, what hurdles to you see?
We’re all on this path together and need to help each other along the way. The result will be a thriving global economy fueled by great, effective products and services for consumers and businesses.