When somebody mentions “anthropological research,” you’re more likely to think Margaret Mead than Procter & Gamble—but the latter spends a good bit of time and money on what are essentially anthropological expeditions to see how consumers actually use its products. But P&G is in the minority—most companies have a fairly pervasive lack of knowledge about their customers’ real wants and needs. Institutional barriers are perhaps the biggest reason. Often, engineers are tucked away so far within a company that they don’t see firsthand what customers really need.

Kevin Dehoff of Booz Allen says one of the problems is that engineers often become so focused on solving technical problems that they overlook ways in which the customer actually defines value. Such companies risk getting caught in a development dynamic where innovation is driven not by a focus on what the customer values and is willing to pay for, but on solving an engineering problem. This dynamic leads to an internally focused development cycle Dehoff has nicknamed the “doom loop.” Although no two companies innovate the same way, the successful ones share some characteristics, according to the experts. For one thing, employees use the product. For another, successful companies conduct vigorous market research of customer needs. In the final analysis, the essential ingredients to improve product innovation may be simple human assets: humility and curiosity—humility in thinking that the company may not understand everything about the value of their product in the marketplace, and the curiosity to always want to learn more about customer needs.

Strategy+Business