Manage Customer-Centric Innovation—Systematically

No matter how hard companies try, their approaches to innovation often don’t grow the top line in the sustained, profitable way investors expect. For many companies, there’s a huge difference between what’s in their business plans and the market’s expectations for growth (as reflected in firms’ share prices, market capitalizations, and P/E ratios). This growth gap, as we call it, springs from the fact that companies are pouring money into their insular R&D labs instead of working to understand what the customer wants and then using that understanding to drive innovation. More often than not, the traditional approach thrills R&D teams, but not customers or investors. As a result, even companies that spend the most on R&D remain starved for both customer innovation and market-capitalization growth.