STEP 4: Get cozy with customers

"You can't be too close to your customers," says David Fields, managing director of Ascendant Consulting in Ridgefield, Conn. "Your customers are your lifeblood. The heart of innovation is understanding what problems they have that you can solve."

Keene Addington, president of Flat Top Grill, a Chicago-based restaurant chain, takes that philosophy to heart. In January he assigned a full-time marketing person to chat via e-mail and Twitter with as many of the chain's 75,000 customers as possible.

One customer suggested serving make-your-own wraps prepared with lettuce. These wraps are now the chain's most popular appetizer. Amid hard times for the restaurant industry, Flat Top Grill's same-store sales climbed 6.5% last year. Addington expects sales to grow by an additional 3.9% in 2009.

"Your guests are going to tell you how to be successful," he says.

For Canadian shoemaker John Fluevog, customers do more than make suggestions -- they design the products. Fluevog runs an "open-source footwear" project. Anyone can submit shoe designs to an online community of customers who vote on their favorites. In the past six years Fluevog has received more than 1,000 design ideas and turned a dozen of them into marketable shoes.

Fluevog took the open-source concept one step further by asking customers to vote on which of his existing lines should be cut or retained and which print ads to run. Whatever the majority says, the company does. After customers voted on color combinations for the Sencha T-strap high heel, it became one of the best-selling shoes of the fall 2007 season. Despite the recession, the 115-employee company continues to grow its same-store and wholesale sales.

For companies in serious need of fresh ideas, Cincinnati consulting firm SpencerHall organizes intensive three-day online brainstorming sessions with an unusual group of thinkers, including artist Alyce Gottesman, science fiction writer Alma Alexander, consumer psychologist Steve Hoeffler and "science of happiness" expert Shawn Anchoto.

Each session costs $75,000, and here's the twist: To avoid inhibition, each guru's words are presented anonymously in a secure online chat room.

"It's a blast," says H. Scott Nesbitt, executive vice president at Healthy Advice Networks, a Cincinnati firm that hired SpencerHall last year to help revamp the consumer displays it provides for medical offices. On the first day, the panel discussed ideas that Healthy Advice Networks was already considering, such as showing product information on digital screens.

"Once you get past that and build on these ideas, that's when you get creative," Nesbitt says.

The conversation ebbed and flowed for 72 hours (with breaks). At 3 a.m. a participant suggested distributing printed handouts that patients could take home. A few hours later: How about a wallet-size card showing each patient's cholesterol information and prescription history? What about interactive CDs with information on how to use those tricky new Advair inhalers?

SpencerHall helped prioritize the hundreds of ideas, took the top 30 and distilled them into a 16-page report. Healthy Advice Networks shopped the report to doctors and pharmaceutical companies. A year later several of those ideas are in the works, including the interactive CDs and a digital tablet that delivers medical journal news to doctors. Nesbitt says it could be a game-changer for the $50 million company.

"It's so easy to get yourself in a rut with conventional wisdom," says SpencerHall managing partner Jon Hall. "Creative thinking from outside your company challenges the status quo."

If brainstorming with authors and artists sounds too much like a liberal arts college seminar, there are harder-edged alternatives. Companies can tap the brainpower of thousands of scientists and researchers at Innocentive.com, an online forum for R&D problems that has typically catered to big companies like Procter & Gamble (PG, Fortune 500).

Here's how it works: A large company may pay $85,000 to consult a network of 180,000 academics, research organizations and scientists who sign nondisclosure agreements, then brainstorm solutions. Participants can win up to $50,000 if the company adopts their ideas.

Innocentive will soon roll out a cheaper service for small businesses, says Dwayne Spradlin, CEO of the Boston company. "Our service levels the playing field for small businesses," he adds. "It allows them to innovate better, faster and more cost-effectively."