"Innovaro, an European consulting firm, released an interesting briefing around the subject. According to the article “all of the varied approaches to customer-centered innovation are seeking to gain greater focus around what are the true needs of target users and how can they best be met, or even exceeded, through the product or service being developed”.
The briefing also lists four main approaches to handle customer centred innovation:
Personas: involves the creation of fiction characters to guide our perception about customer’s future needs and wants. Through a combination of interviews and market research companies using this approach try to understand how products or technological concepts might fit into tomorrow’s context.
Ethnography: the basic idea is to observe customers when they are experiencing the product or service. This indirect method has some benefits because customers are not always able to express what kind of product they are looking for or what service would suit him best.
Fan Bases: this approach tries to identify and leverage the so called “lead users” to foster new product developments and innovation. Those customers are usually very participative and eager to engage into development communities. Participation can be generated through focus groups, online platforms, peer reviews and so on.
Participatory design: with this method customers are invited to participate directly in the product or service development. Companies can bring together designer, engineers, project managers and customers to form the development team.
You can read the full briefing clicking here."