This is the final blog in a four-part series that answers questions very much on the minds of government: What is innovation? What does it mean for government to innovate? And why innovate, anyway?
The first blog defined innovation as doing something different to add value for a customer. It differentiated innovation from some close cousins such as invention and improvement. And it addressed the question of why innovate. The second blog looked at what it means to do something different, and the third blog looked at what it meant to add value. In this blog, let’s look more closely at the last part of the definition – for the customer.
For The Customer
Government talks and acts with increasingly explicit reference to the customer, which is good. But what really is a government customer? Government has big missions and many customers – U.S. citizens and non-citizens, businesses, not-for-profit organizations, other governments in the U.S. and abroad – so what does that mean for innovation?
Primary and Supporting Customers
It’s useful to distinguish between primary and supporting customers. Primary customers are the entities which benefit by what your organization does. The programs, products and services you provide directly benefit primary customers, and innovation targets doing something different to add value for them. Supporting customers are the entities who care about how you serve primary customers. Government has many of these: Sister organizations, partner organizations, other federal/state/local government agencies, congressional members and committees, NGOs, watch dog groups, media/trade press – the list goes on. Innovating for primary stakeholders usually satisfies secondary customers’ interests.
Among primary customers, it’s also useful to distinguish customer segments. A segment is a subset of your customer which justifies a product or service distinct from others. Segments are reached by different channels and require different types of relationships with your organization. Some benefits you offer through government programs add value for all customers, some add value for one segment and perhaps none at all for others. All Veterans value benefits, for example, but Veterans with disabilities value different benefits than Veterans without disabilities. Rural Veterans with disabilities value some things differently than suburban Veterans. We can go on by type and severity of disability, income, education and more but you get the point.
Customers embody characteristics and attributes which determine what they value in your organization’s products and services and why. When you see groupings of characteristics and attributes, ask yourself if they constitute a customer segment. That will help your organization choose what it might do differently to add some specific value for exactly whom.
Internal and External Customers
Finally, let’s distinguish between internal and external customers. Organizations have both and innovation can add value for either. External customers offer the obvious example. When a mission office does something different to add value for a citizen or a business, everyone would agree that’s innovation. Improving Veteran health care. Making air travel safe. Making market rules fair. No question.
But innovation also applies to internal customers. Support offices can innovate to add value for their primary customers – the mission, program, or functional units. Doing something different to add value for the warfighter, TSA screener, border guard, investigator, local government drinking water facility, etc. absolutely is innovation. Adding value for these customers adds to the value chain which ultimately benefits citizens and businesses. Because many government officials act on behalf of missions to deliver a government good, excluding them as customers of innovation misses a huge and critical part of the market.
Conversations About The Customer
How do you know what your customers value, and what value to add? Facilitate conversations using these starters and customers, partners, management and staff will generate plenty of ideas.
Who are your primary customers? Are they internal to your organization or external? What customer segments are relevant? Do they justify different value propositions (the blend of product and service which delivers a benefit)? Do they justify different relationships with your organization? By what channels do you reach each segment? Is anything about your primary customers changing over time?
Who are your supporting customers for each segment? Some will overlap and some will be unique to segments. How does your organization communicate and work with them? Is that changing, or should it? How would they view answers to questions above? How might you work with supporting customers – especially those outside your organization such as professional associations, universities, not-for-profits, Congressional members and staff, etc. – to support innovation?
Customer Relationships and Organizational Culture
How would you describe the relationship between your organization and the customer? Customer segments? How do various cultures in your organization view the customer? Do feelings or attitudes exist which affect customer relationships? How so, and how much? Does that present innovation barriers or opportunities, or both?