Sometimes, what makes small businesses popular is their uniqueness, or the specific way in which they differentiate from others. However, this often really relies on the fact that sometimes, these businesses understand their customers and communities very well. They offer them something that is attractive to them and even those beyond the community.
However, although this knowledge may currently be associated with small businesses, large organizations have access to more data about customers’ behaviors, preferred products, and can even predict a customer’s lifestyle. As such, there is a vast array of information held by large organizations that consolidate the bulk of needs/behaviors/activities performed by a customer. Organizations have in the past failed to leverage this information beyond selling it to advertisers. Many rising startups have demonstrated that their service/product can become a pivotal part of a customer’s life such as Apple’s Macintosh computers, or Amazon Prime, or a Netflix subscription. People love these products and they are generating immense amounts of revenue for the companies that created them.
Companies need to use data about their customers and to interact with them to create products they love so they can ideate services around those. It is not sufficient to design the next best computer – it is pivotal that the service understands customers look for efficiency, and comfort, and feel comfortable asking for help. Companies should continuously invest in addressing the needs of customers and solving pain points that will accelerate demand and fuel growth of new business lines. Already possessing economies of scale, established companies should aggressively pursue investments to better understand customers to attain economies of scope.
For more information, see Ch. 3 Open Services Innovation by Henry Chesbrough