Thursday, February 19, 2009

Innovation Lessons from the Failure of Circuit City: Business Model Innovation and Finding the Real Needs to Meet

Bye Bye Circuit City over at the Permanent Innovation Blog discusses the demise of Circuit City and draws a valuable insight from a Dutch study on consumer electronics. The latter showed that for 50% of consumer returns, the products worked fine - it was the hassle of installing and operating these increasingly complex goods that made consumers give him and hit the big red "Not Easy" button. Circuit City may have been focused on providing zillions of choices without offering the expertise that consumers needed to make the right choice in the first place and then to make it work easily. Best Buy and their famous Geek Squad may represent a more innovative approach to managing the service end of the business. In today's world, the business model that neglects service and knowledge will lose customers and profits quickly.

Whatever your business, innovation in how you do business is needed. How do you identify unmet customer needs? Are your customer service people deeply connected to your marketing and R&D folks? Are you learning from your customers and finding what jobs they really need to have done? Are their frustrations sources of inspiration for your innovation? Or is customer service something your outsource to people who don't know and care about your business needs?

Another lesson is the need for simplicity in the products and services we offer. This isn't just a Circuit City problem - it's also a problem for manufacturers in numerous areas. Thick user manuals with complex installation instructions loosely based on English are not working. The winners over the next decade will increasingly turn to sound design and human-centric thinking to make their products less likely to be returned by a computer with installation angst who hit the "Not Easy" button.

1 comment:

FireStorm said...

Well said. Innovation isn't just about the product - it's about the service, the user experience, the business model, as you say. It's what companies need now more than ever. Too many are cutting back!!