Customer Ins I ght s des I gn 128 Companies invest heavily in market research, yet often wind up neglecting the customer perspective when designing products, services—and business models. Good business model design avoids this error. It views the business model through customers' eyes, an approach that can lead to the discovery of completely new opportunities. This does not mean that customer thinking is the only place from which to start an innovation initiative, but it does mean that we should include the customer perspective when evaluating a business model. Successful innovation requires a deep understanding of customers, including environment, daily routines, concerns, and aspirations. Apple’s iPod media player provides an example. Apple understood that people were uninterested in digital media players per se. The company perceived that consumers wanted a seamless way to search, find, download, and listen to digital content, including music, and were willing to pay for a successful solution. Apple’s view was unique at a time when illegal downloading was rampant and most companies argued that nobody would be willing to pay for digital music online. Apple dismissed these views and created a seamless music experience for customers, integrating the iTunes music and media software, the iTunes online store, and the iPod media player. With this Value Proposition as the kernel of its business model, Apple went on to dominate the online digital music market The challenge is to develop a sound understanding of customers on which to base business model design choices. In the field of product and service design, several leading companies work with social scientists to achieve this understanding. At Intel, Nokia, and Telenor, teams of anthropologists and sociologists work to develop new and better products and services. The same approach can lead to new or better business models. Many leading consumer companies organize field trips for senior executives to meet customers, talk to sales teams, or visit outlets. In other industries, particularly those involving heavy capital investments, talking to customers is part of the daily routine. But the challenge of innovation is developing a deeper understand- ing of customers rather than just asking them what they want. Adopting the customer perspective is a guiding principle for the entire business model design process. Customer perspectives should inform our choices regarding Value Propositions, Distribution Channels, Customer Relationships, and Revenue Streams. Building Business Models on Customer Insights — ‹‹ bmgen_final.indd 128 6/15/10 5:39 PM