I just read a remarkable essay by Venkatesh Rao on “marketing, innovation, and the creation of customers.” It nails the complex relationship between the two functions, examining both similarities and polarities.
Rao opens with what is perhaps the most popular aphorism by venerable management philosopher Peter Drucker:
“Because the purpose of business is to create a customer, the business enterprise has two—and only two—basic functions: marketing and innovation.”
Building upon this, Rao argues that “Marketing and innovation define each other in yin-yang ways,” and that they have in common “a love/hate relationship with a downstream partner function (production and sales respectively) that deals in scale and repetition. One design, a production run of a thousand. One user-story, a thousand registered users. One advertisement, a thousand sales calls. Even in the age of mass customization, you can always tell the two sides apart. Production and sales are always repeating something. (…) Marketing and innovation, on the other hand, depend on novelty and uniqueness to add value. This is necessary. If innovation and marketing did not create repetition opportunities downstream, you would not have a business. You’d have a one-off project.”
For Rao, the “customer isn’t a human being.” Neither is he always right, as some like to claim. User-centered designers and innovators in particular won’t like to hear this, but Rao is certain: “Repeat after me: A customer is a novel and stable pattern of human behavior.” Rao’s conclusion is convincing: “Customers need to be created (…) Innovation isn’t about creating novel products or services. An innovation is a stimulus that causes a novel and stable pattern of human behavior to emerge.” As an example, he cites Google, which he considers “a stimulus that creates a novel pattern of information-discovery behavior known as ‘Googling’ that is different from what ‘searching’ used to be before Google.”
And further: “This is why marketing and innovation are deeply linked in a yin-yang pattern. They are both exploring the same uncertainties in free human behavior, and seeking ways to stabilize it into predictable patterns. When both look at uncertainties in human behavior, or uncertainties in potential stimuli, you get similarities and harmonies. When they are looking in different directions (typically, marketing looking at the customer, while innovation is looking at the stimulus), you get polarities. This tension is necessary. If ever innovation became truly “’customer-led’ you’ll be in a universe of faster horses. If ever marketing becomes truly ‘product-led,’ you’ll be in a universe of stuff nobody will buy.”
It is the same point Roberto Verganti makes when he rejects the value of market and consumer research and instead touts “design-driven innovation” as a way to “radically innovate the meaning of products.” Verganti claims that for truly breakthrough products and services, one must look beyond customers and users to those he calls “interpreters” – the experts who see and grasp the unique but repeatable “stimuli that cause a novel and stable pattern of human behavior to emerge” (in Rao’s words). Instead of being user-driven and product-centric, both marketing and innovation begin and end with meaning, and they’re both tasked with its production. It is a creative act, an art not a science, and a story not a process.