Home > Articles

Innovate the Future: Who Owns Your Customer Now?

If your 'recipe for success' includes expanding your offerings, listen to David Croslin before you take that step! The author of Innovate the Future: A Radical New Approach to IT Innovation explains why giving your customers more may just chase them out the door.

See all of David Croslin's articles here.

Like this article? We recommend

Many companies feel that as long as they continue to deliver new features, their customers will remain loyal, even as prices rise. But at some point, customers seem to ignore new features and loyalty, and their willingness to pay goes out the window. This article discusses how ownership of intellectual property isn't all it's cracked up to be. An unseen pressure devalues intellectual property and the transformative value of your products, even to the most loyal customers. Then your competitor owns your customer.

Everyone Eats

I'm sure that some people wonder why I use food so often as an example when I'm discussing innovation. Well, I'll tell you:

  • I like food.
  • Everyone I know eats.
  • People have their own opinions about the foods they like.
  • People can disagree about food, and yet normally they avoid killing each other over those opinions.
  • People can often find at least one food that all agree they love or hate.
  • It's easy to make good food into bad food.
  • It's hard to make bad food into good food.
  • Having a successful restaurant is one of the biggest business challenges.

Hot-and-Sour Soup with an Eggroll

Some people love a really good hot dog with all kinds of bizarre trimmings. Some folks are crazy about an out-of-this-world Philly cheese steak sandwich. Some go for more upscale foods. I prefer Asian foods, and I usually crave a delicious bowl of hot-and-sour soup and a crispy eggroll.

It seems as if every time I find a great Asian restaurant, it closes. I don't tend to try new restaurants (or even notice that they exist) until they've been around for a year or so. Once I find one I really like, I try not to get emotionally attached to it, because within a year or so it'll be gone. Invariably, the most stable Asian restaurants with the best food are small hole-in-the-wall places.

What makes seemingly very successful restaurants fail in that two-year window? I can tell you right now that, at least in my case, it has nothing to do with the quality of the hot-and-sour soup or the eggrolls! The food is still fantastic. But, over time, the number of customers coming in starts to decrease, and then the restaurant closes. And then I'm on the hunt again.

Here's what seems to happen, in a logical sequence:

  1. New restaurant opens. (I won't see it for a year or so. How sad—I missed all that great soup!)
    • Food is excellent. (I found them! Especially the hot-and-sour soup.)
    • Service is great. Friendly and prompt. (One of those "let's visit" atmospheres.)
  2. Customers knock down the door. (Kind of irritating when they take my preferred table.)
  3. Variety of food expands. Prices increase slightly. (I tend to stick with my favorites.)
  4. Service starts to falter. (The real danger is the empty water glass and "hot spicy mustard" combo.)
  5. Prices start to go up. (Not much—fifty cents here, a dollar there.)
  6. Customers start to vanish. (My table is available!)
  7. Quality begins to stumble. (Soup and eggrolls still great. But smaller quantities. And less meat.)
  8. Prices continue to rise. (Now I go just for the soup and eggrolls.)
  9. Customers are gone. (Sad. I don't go much myself anymore. The atmosphere is gone.)
  10. Restaurant closes. (Sometimes I don't notice for a month or two.)

Now, don't get me wrong. This is probably not a universal description of the life of a restaurant. But I think it's pretty darn close.

Success Is a Killer

Not being a restaurateur, I've always been amazed that they survive at all. But I've never bought food wholesale, and didn't really know the margins. It's kind of like my kids wanting to sell lemonade on the street for 25 cents a cup. I want them to learn the value of working for their money and the principles of commerce. Every cup they sell, I seem to lose money. Yet I can go to 7-Eleven and get a half-gallon cup of lemonade with infinite refills for a buck! Yes, I'm being a little bit facetious. Not much, though—it really is almost that broad of a difference. Now, maybe 7-Eleven is selling lemonade as a loss leader. But I don't think so. Everything I read says that the drinks are their big moneymakers.

I talked to a friend who owns two successful restaurants, and proposed my logical restaurant sequence (above) to her. I wanted to understand what was happening behind the scenes that drove this sequence. Or was I missing it entirely? She concurred with my description of the life of a typical restaurant, and she was able to provide the details that I was missing.

What did we determine? We found that the very success of the restaurant is what killed the place. The key step in my sequence that represents the tipping point from success to failure happens early: "Variety of food expands." These are the reasons:

  • Underlying costs of maintaining a larger variety of ingredients
  • Volume of daily waste caused by an expanded menu
  • Complexity of serving a broader menu accurately
  • Increase in kitchen staff needed to prepare a broader range of dishes within an acceptable timeframe and level of quality

Compare a fast-food restaurant like McDonald's:

  • Limited number of ingredients
  • Food that's easy to prepare in a timely manner
  • No extensive training required for food preparation
  • Limited waste at the end of the day, since meats remain frozen until needed. (I wonder how much meat Wendy's stocks, since they say it's "never frozen"?)

Every time McDonald's tries to introduce a new dish, the chain (smartly) remains within these constraints. Otherwise, we'd see McDonald's restaurants closing their doors everywhere.

Too Much Salt in the Soup

Where did all those restaurant customers come from in the first place, and why did they shove their way into my favorite booth? They came because the food at the new restaurant satisfied several requirements extremely well:

  • Consumption priority: People have to eat, and they want to eat good food.
  • Time priority: People want to use their time efficiently.
  • Money priority: People want to spend their money wisely.

Let's track our fictitious Asian restaurant (oh, man, that soup!) and see how these priorities play out during the logical sequence discussed earlier, and how each stage affects these priorities:

  1. New restaurant opens. Impact: Coupons satisfy the initial risk for the "money" priority.
    • Food is excellent. Impact: The food satisfies the "consumption" and "money" priorities.
    • Service is great. Friendly and prompt. Impact: Service satisfies the "time" priority.
  2. Customers knock down the door. Impact: Transformative value of the restaurant is maximized. (I'll talk about transformative value in the next section.)
  3. Variety of food expands. Prices increase slightly. Impact: Complexity of choice starts to muddy the water in the "consumption" priority. Higher prices start to impact the "money" priority. Transformative value starts to slide, and it continues to decline for the rest of the sequence.
  4. Service starts to falter. Impact: Customers start to question whether the restaurant maximally satisfies their "consumption" priority. Is the food worth the service issues? Also, is the customer's time worth more than sitting in the restaurant waiting for service? This directly impacts the "time" priority.
  5. Prices start to go up. Impact: Is the food worth the increasing price, considering the service issues? Direct impact on the "money" priority.
  6. Customers start to vanish. Impact: The decreasing number of customers starts making the remaining customers question whether they're spending their time and money optimally, or if there are better options elsewhere. All three priorities—"consumption," "time," and "money"—are impacted.
  7. Quality begins to stumble. Impact: The restaurant is trying to avoid raising prices by lowering quality. Direct impact on both the "consumption" and "money" priorities.
  8. Prices continue to rise. Impact: Customers begin to order less, which severely damages their "consumption" priority. Ever-increasing prices (which we all notice and remember) destroy the "money" priority.
  9. Customers are gone. Impact: Nobody wants to be the only person in the restaurant. The air seems to be filled with desperation, rather than the previous "let's visit" atmosphere. Even very loyal customers don't want to be depressed by watching the restaurant die. All three priorities are impacted, as the customer wants a more pleasant, less expensive, and timelier eating experience.
  10. Restaurant closes. Impact: The transformative value of the restaurant's food had reached a level too low to bring the customer back in the door. Customers have shifted all three priorities to alternative restaurants and foods.

Eventually the restaurant pushed its customers out the door. It wasn't as simple as too much salt in the soup. The restaurant failed because the owners forgot that the customer was buying their soup for a set of very specific reasons—and the restaurant damaged all of those reasons.

Transformative Value

How customers perceive and utilize a product—and then subsequently value the deployed product—determines whether the product is merely competitive with existing products, or is innovative to some degree. The result could be summarized as the product's "transformative value" or "transformative impact." In other words, how much does the new product transform the consumer's life or business? This transformative value can be broken down into different priorities, such as the "consumption," "time," and "money" priorities discussed earlier.

The restaurant I described in the preceding sequence repeatedly took actions to shore up its revenues, rather than taking actions to shore up the transformative value of its food and service to the customer. I refer to these actions as negative and destructive inventions. By expanding its menu (a potentially destructive invention), the restaurant created a cascade of events that eventually destroyed the transformative value of its food and dining experience.

Success Breeds Assumptions

Once the restaurant became successful, the owners began to assume that their model could handle an expansion of new menu items at a higher price. This is just like a software company adding new features each year and then increasing upgrade, support, and maintenance costs. Initially, these incremental innovations appear to be successful. The restaurant is making more money and getting more customers. But the impacts on the transformative value to the customer are hidden at these early stages. As time progresses and competition enters the market, the transformative value will begin to plummet. Customers will begin to reassess their priorities and will shift their consumption.

The restaurant reacted to business pressures and made what appeared to be sound business decisions based on the current atmosphere: "If income is increasing, you should expand your market penetration. If income is decreasing, you should cut your costs." But each of these decisions destroys the very foundation that made the restaurant initially successful. The assumption that the larger menu was still needed in order to succeed became a driver of all business decisions and killed the restaurant. The restaurant had gone beyond what the customer considered a "good enough" product.

Stop Being Great, and Start Being 'Good Enough'

Companies assume that their ever-expanding intellectual properties (for the restaurant, its recipes) are the foundation of their success, and the reason that their customers think they're great. But in reality, the customer is balancing a set of priorities that must be met optimally for the customer to continue to make a positive buying decision.

To recapture their success, many companies continue trying to create an ever-increasing number of features (for the restaurant, menu items). In the process, they severely damage the transformative value of their products to their customers. Each step the company takes creates another assumption that hides the true cause of its problems: the expanded feature set (menu).

To find your success, you must strip away existing assumptions, locating the foundational intellectual property that made your company great in the first place. Go back to being "good enough." Then you can make some damned fine hot-and-sour soup.

InformIT Promotional Mailings & Special Offers

I would like to receive exclusive offers and hear about products from InformIT and its family of brands. I can unsubscribe at any time.


Pearson Education, Inc., 221 River Street, Hoboken, New Jersey 07030, (Pearson) presents this site to provide information about products and services that can be purchased through this site.

This privacy notice provides an overview of our commitment to privacy and describes how we collect, protect, use and share personal information collected through this site. Please note that other Pearson websites and online products and services have their own separate privacy policies.

Collection and Use of Information

To conduct business and deliver products and services, Pearson collects and uses personal information in several ways in connection with this site, including:

Questions and Inquiries

For inquiries and questions, we collect the inquiry or question, together with name, contact details (email address, phone number and mailing address) and any other additional information voluntarily submitted to us through a Contact Us form or an email. We use this information to address the inquiry and respond to the question.

Online Store

For orders and purchases placed through our online store on this site, we collect order details, name, institution name and address (if applicable), email address, phone number, shipping and billing addresses, credit/debit card information, shipping options and any instructions. We use this information to complete transactions, fulfill orders, communicate with individuals placing orders or visiting the online store, and for related purposes.


Pearson may offer opportunities to provide feedback or participate in surveys, including surveys evaluating Pearson products, services or sites. Participation is voluntary. Pearson collects information requested in the survey questions and uses the information to evaluate, support, maintain and improve products, services or sites, develop new products and services, conduct educational research and for other purposes specified in the survey.

Contests and Drawings

Occasionally, we may sponsor a contest or drawing. Participation is optional. Pearson collects name, contact information and other information specified on the entry form for the contest or drawing to conduct the contest or drawing. Pearson may collect additional personal information from the winners of a contest or drawing in order to award the prize and for tax reporting purposes, as required by law.


If you have elected to receive email newsletters or promotional mailings and special offers but want to unsubscribe, simply email information@informit.com.

Service Announcements

On rare occasions it is necessary to send out a strictly service related announcement. For instance, if our service is temporarily suspended for maintenance we might send users an email. Generally, users may not opt-out of these communications, though they can deactivate their account information. However, these communications are not promotional in nature.

Customer Service

We communicate with users on a regular basis to provide requested services and in regard to issues relating to their account we reply via email or phone in accordance with the users' wishes when a user submits their information through our Contact Us form.

Other Collection and Use of Information

Application and System Logs

Pearson automatically collects log data to help ensure the delivery, availability and security of this site. Log data may include technical information about how a user or visitor connected to this site, such as browser type, type of computer/device, operating system, internet service provider and IP address. We use this information for support purposes and to monitor the health of the site, identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents and appropriately scale computing resources.

Web Analytics

Pearson may use third party web trend analytical services, including Google Analytics, to collect visitor information, such as IP addresses, browser types, referring pages, pages visited and time spent on a particular site. While these analytical services collect and report information on an anonymous basis, they may use cookies to gather web trend information. The information gathered may enable Pearson (but not the third party web trend services) to link information with application and system log data. Pearson uses this information for system administration and to identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents, appropriately scale computing resources and otherwise support and deliver this site and its services.

Cookies and Related Technologies

This site uses cookies and similar technologies to personalize content, measure traffic patterns, control security, track use and access of information on this site, and provide interest-based messages and advertising. Users can manage and block the use of cookies through their browser. Disabling or blocking certain cookies may limit the functionality of this site.

Do Not Track

This site currently does not respond to Do Not Track signals.


Pearson uses appropriate physical, administrative and technical security measures to protect personal information from unauthorized access, use and disclosure.


This site is not directed to children under the age of 13.


Pearson may send or direct marketing communications to users, provided that

  • Pearson will not use personal information collected or processed as a K-12 school service provider for the purpose of directed or targeted advertising.
  • Such marketing is consistent with applicable law and Pearson's legal obligations.
  • Pearson will not knowingly direct or send marketing communications to an individual who has expressed a preference not to receive marketing.
  • Where required by applicable law, express or implied consent to marketing exists and has not been withdrawn.

Pearson may provide personal information to a third party service provider on a restricted basis to provide marketing solely on behalf of Pearson or an affiliate or customer for whom Pearson is a service provider. Marketing preferences may be changed at any time.

Correcting/Updating Personal Information

If a user's personally identifiable information changes (such as your postal address or email address), we provide a way to correct or update that user's personal data provided to us. This can be done on the Account page. If a user no longer desires our service and desires to delete his or her account, please contact us at customer-service@informit.com and we will process the deletion of a user's account.


Users can always make an informed choice as to whether they should proceed with certain services offered by InformIT. If you choose to remove yourself from our mailing list(s) simply visit the following page and uncheck any communication you no longer want to receive: www.informit.com/u.aspx.

Sale of Personal Information

Pearson does not rent or sell personal information in exchange for any payment of money.

While Pearson does not sell personal information, as defined in Nevada law, Nevada residents may email a request for no sale of their personal information to NevadaDesignatedRequest@pearson.com.

Supplemental Privacy Statement for California Residents

California residents should read our Supplemental privacy statement for California residents in conjunction with this Privacy Notice. The Supplemental privacy statement for California residents explains Pearson's commitment to comply with California law and applies to personal information of California residents collected in connection with this site and the Services.

Sharing and Disclosure

Pearson may disclose personal information, as follows:

  • As required by law.
  • With the consent of the individual (or their parent, if the individual is a minor)
  • In response to a subpoena, court order or legal process, to the extent permitted or required by law
  • To protect the security and safety of individuals, data, assets and systems, consistent with applicable law
  • In connection the sale, joint venture or other transfer of some or all of its company or assets, subject to the provisions of this Privacy Notice
  • To investigate or address actual or suspected fraud or other illegal activities
  • To exercise its legal rights, including enforcement of the Terms of Use for this site or another contract
  • To affiliated Pearson companies and other companies and organizations who perform work for Pearson and are obligated to protect the privacy of personal information consistent with this Privacy Notice
  • To a school, organization, company or government agency, where Pearson collects or processes the personal information in a school setting or on behalf of such organization, company or government agency.


This web site contains links to other sites. Please be aware that we are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of each and every web site that collects Personal Information. This privacy statement applies solely to information collected by this web site.

Requests and Contact

Please contact us about this Privacy Notice or if you have any requests or questions relating to the privacy of your personal information.

Changes to this Privacy Notice

We may revise this Privacy Notice through an updated posting. We will identify the effective date of the revision in the posting. Often, updates are made to provide greater clarity or to comply with changes in regulatory requirements. If the updates involve material changes to the collection, protection, use or disclosure of Personal Information, Pearson will provide notice of the change through a conspicuous notice on this site or other appropriate way. Continued use of the site after the effective date of a posted revision evidences acceptance. Please contact us if you have questions or concerns about the Privacy Notice or any objection to any revisions.

Last Update: November 17, 2020