“Innovate or die,” the saying goes. But as companies try to sharpen their competitive edge with new product and service ideas, many don’t realize that their efforts are fundamentally misguided.

Executive Summary

Idea labs, brainstorming sessions and ideation off-sites are some of the tools carriers think will spur the creation of innovative products and services. But truly game-changing insights come from observing actual customers using products, Watermark Consulting's Jon Picoult writes. Insurance customers use our industry's products when they research and purchase, receive bills, make payments, and during premium audits and loss control reviews.

That’s because their innovation process is often missing one essential ingredient: their customers.

Companies establish innovation incubators and idea labs. They hold brainstorming sessions and ideation off-sites. They produce and analyze reams of market research.

But if you wander through any of these innovation-fostering instruments, you’d be hard-pressed to run into an actual customer. What you would see are lots of executives and employees discussing what they think customers need and what products or services will help them.

Seldom, however, do companies directly include customers in the innovation process, and that is a dangerous misstep.

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