Turning Insight into Innovation

Innovation success hinges on understanding customers – not just listening to them. Yet many firms fall short, underutilizing valuable customer insights in their product development and innovation strategies. A recent study by emlyon, Erasmus University, and IESEG faculty sheds light on how companies can close this gap, offering a practical roadmap grounded in evidence from both research and practice.

Why Customer Insights Matter

Most executives acknowledge the importance of customer insights, but many struggle to generate, share, and apply them effectively. A 2022 Kantar study found that 61% of product launches fail within two years – often due to insufficient customer understanding. The disconnect between recognition and execution has clear consequences: innovation underperformance and missed market opportunities.

One challenge is inconsistent terminology. What exactly counts as a “customer insight”? The research defines it as a “reasoned understanding of customers’ attitudes and behaviors that firms can innovate upon.” This means moving beyond gut feeling to data-driven reasoning – seeing patterns, making sense of them, and translating them into innovation decisions.

From Data to Action: A Six-Step Process

Our study introduces a framework (see Figure 1 below) that maps how customer insights are produced and used in innovation. It outlines six activities:

1. Generating customer data
2. Confronting new and existing information
3. Sensemaking (or interpreting meaning)
4. Visualizing insights for decision-makers
5. Applying them in innovation
6. Tracking outcomes to learn and adapt

This isn’t a rigid process. Firms can loop back between steps to refine their understanding and improve decisions.

Ten Ways to Gain Insight

The authors organize the field into ten domains – methods or activities firms use to produce and act on customer insights:

• Crowdsourcing: Inviting a broad customer base to share ideas
• Co-creating: Collaborating directly with selected customers
• Imagining: Mentally simulating how customers might react
• Observing: Watching customers in real-life or digital contexts
• Testing: Experimenting with prototypes or concepts
• Intruding: Asking customers directly via surveys or interviews
• Interpreting: Analyzing and extracting meaning from data
• Organizing: Structuring teams and systems to use insights
• Deciding: Applying evidence to drive innovation choices
• Tracking: Monitoring how innovations perform post-launch

Each domain offers a different angle. For instance, observing behavior yields rich, contextual insights, while testing allows faster iteration. Yet not all are used equally.

A Gap Between Value and Use

The authors interviewed 12 executives from market research firms and surveyed 305 managers across industries. Both groups identified a disconnect: firms underuse insight methods that require active customer involvement – especially crowdsourcing, co-creation, imagining, and observing.

This is problematic because those very methods are strongly linked to innovation success. Firms that neglect them may miss valuable opportunities to create customer-aligned products.

Why don’t firms use these tools more? Several reasons emerged. Observing customers can raise privacy concerns. Testing can be slow or resource-intensive. Some firms are simply too focused on the product and neglect the customer until late in the process. Smaller companies, in particular, often rely on instinct rather than data.

An executive summed up the issue:

“Many companies are too R&D focused. They start with the product, then do prototypes, and only later see if there is a customer.”

Recommendations for Managers

To better harness customer insights, companies should:

• Adopt agile testing: Run small-scale, iterative experiments early in the process.
• Invest in upskilling: Train staff in new tools like data scraping, A/B testing, and customer journey mapping.
• Break silos: Ensure marketing and innovation teams collaborate throughout the process.
• Leverage underused methods: Embrace crowdsourcing, co-creation, and imagining – even if they feel unfamiliar.

Looking Ahead: The Role of AI

The study also points to future trends. Artificial intelligence (AI), and especially generative AI, could transform how firms generate and interpret customer insights. For example, AI tools can simulate customer reactions (“synthetic market research”) or analyze large volumes of customer feedback. But researchers warn that firms need to understand the limits and potential biases of such tools.

Customer insights are no longer just a function of market research – they are a strategic asset. By systematizing how they are generated and applied, firms can improve their innovation outcomes. Yet many are leaving value on the table by failing to engage with customers early and deeply.