Category Archives: Communities

The Problem with Open Innovation

A recent article by Randall Wright in MIT Technology Review discussed the problems with open innovation. There has been lots of articles recently about how open innovation is the next big thing in innovation. In a nutshell, it involves open up your innovation to a large group of people in order to find new ideas.  It’s popular, and has been adopted by lots of well known organizations, such as Starbucks, Coke, and Nike.  Coke purportedly used this methodology, and came up with ideas that were very successful.  However, most of the ideas were based on consumer marketing.  In other words, they got the people that drink Coke (a large percentage of the population is at least familiar with what it is), and had them design a campaign to more effectively sell the product.  The results rivaled the quality and appeal of ads produced by top advertising agencies.  But did they innovate?  No, they “reverse surveyed.”  Instead of surveying consumers with a set of questions, taste tests, etc., to determine the best way to market, they just asked a whole bunch of people to give them the best way to market.  This is similar to asking every customer who leaves a restaurant, “How could we improve our appeal/food/restaurant?” except you do it all at once.

I think this method works well for consumer-oriented organizations.  It can help you select the best new paint colors, catch phrases, and product packaging.  It works in areas where the problems are well known and understandable, i.e., what is your favorite color.  However, when you talk about ground-breaking innovation, you’re referring to areas where the average person has no experience.  Consider Linux, the darling of open innovation, is still outpaced by the commercial products.

According to Wright, “real innovation is always the outcome of ongoing discourse among a small group of innovators who truly understand the importance of what they’re working on.”  Read his article for more insight.

 

Innovation: Do customers really know what they want?

In an article by Tim Kastelle, entitled, “Innovation Opportunity: People Don’t Know What They Want” uses the example of selling Coke to demonstrate how people (when solicited) don’t really know why they are buying something. This hits at the heart of crowdsourcing which taps the knowledge of this same group of people to innovate.  You decide.

Opposites don’t Attract

There is some convincing research that demonstrates that opposites don’t attract. Is this a problem? From a relationship perspective, this might be alright, but from an innovation perspective it isn’t.

Scientists studied a couple of different groups, but the main one was college students. They compared student relationships in a large college (25,000 students) and several smaller colleges (about 500 students) and determined whether “friends” were more or less similar. The researchers employed a variety of personality tests and questions to come to conclusions. The research showed that the friends at the larger college were very similar in ideas, tastes, beliefs, etc., whereas the smaller college had significantly less similarity. The researchers believe that a large reason for this is that at the larger college, you’re more likely to find someone who matches you more perfectly than at a smaller school.

In another study, researchers examined the question of whether people actually “mix” at mixers. Their model was a networking party for approximately 100 people associated with a school’s business program. In similar results, the researchers found that people where more likely to associate with people who they already were familiar with or where there was a third-party connection (two strangers have a mutual friend). One interesting conclusion was that people who came to the mixer with few friends were more likely to meet new people.

From an innovation perspective, you need to be careful that you don’t create a grouping of similar people when trying to solve complex, creative problems, or else you’ll lose the dynamic range of experience and opinions. While no ones to go on a long car ride with people we don’t get along with, from an innovation perspective, it might make more sense.

Mastering the consumer experience

The consumer experience is not something that a lot of companies fully understand. Most companies consider a product or service to be their first priority, and the consumer experience of interacting with their company to be secondary. This is an entirely dated mindset and one that stifles innovation within the company and does not promote consumer loyalty.

Customer loyalty is where it’s at these days. Most fields are crowded with competition therefore it’s important to capitalize on loyal customers and ensure that they remain loyal to the company for the foreseeable future. Of course the best way to do this is by offering a great product, but it doesn’t end there. Customers need to feel a personal connection with the company and know that should something go awry with their purchase the company is there to hold their hand through the process of having the problem corrected.

Recently Microsoft made great moves in this arena by extending their Xbox 360 warranty an additional two years to help correct design flaws that were showing up over halfway through the council’s lifecycle. Microsoft had no legal obligation to do this however their actions helped create an entire generation of gamers who now have feelings of loyalty towards a large corporation due to the customer experience that they received.

Is Twitter worth it?

Businesses are turning in droves towards using Twitter as a means of interacting with their customers on a more personal level. However, with all this interaction comes additional costs; and in the end one has to wonder if all this tweeting is really worth it for the company, and it actually adds value for the consumer.

There have been noted cases where companies have made use of twitter to their benefit and tangible results could be expressed. However are these cases flukes or do they represent a sustainable business trend that can serve other companies well?

Zappos.com is are being the first companies that use twitter to help drive sales to the site. By acting as an avenue for promotional offers and increased personalized interaction with the company’s CEO, twitter has without a doubt adding value to this company by increasing sales and turning him into a real presence. Other sites like dell.com have reported that their Twitter coupons have resulted in millions of dollars worth of online sales.

At the end of the day Twitter isn’t right for everybody or every situation; however the success of these companies cannot be ignored and industry leaders are now forced to take a good hard look at their social media infrastructure in order to prevent themselves from being left behind.

IBM champions international diversity

One of the keys to innovation is making sure that your company is exposed to as many potential growth areas as possible. Almost everyone would consider IBM to be a successful company, and much of their success is due in no small part to the company’s ability capitalize on new technologies and emerging trend faster than the competition. It’s no surprise then that IBM is a company that’s willing to make plays on the global stage and find markets that are ripe or growth.

IBM is now planning on extending into Brazil which is considered to have stable and large economy ready for increases in technological development. As the country’s infrastructure modernizes and more companies begin integrating increasing amounts of information technology assets into their fold, IBM has positioned itself in a manner that allows them to grow with the burgeoning IT sector of Brazil.

It’s important to remember that in today’s recession plagued economy it’s still important to play on a global scale when applicable and find new streams of revenue. It may be nerve-racking, especially for a company that is experiencing contractions, however growth should always be at the forefront of company managers minds; and by identifying new economies to grow into companies can find unique opportunities for growth.

Go interactive like REI to engage consumers with your products

REI is known for their engaging stores and wide variety of outdoor product lines. What most consumers don’t realize when they step into REI store however is that they are walking into a tightly controlled experiment that aims to get at the heart of what consumers really want out of their shopping experience.

Rather than being confronted by static displays and dead products, REI has taken the shopping experience to a whole new level for their consumers and created an interactive playpen where consumers are encouraged and expected to play with a number of different products that are being highlighted and sold. This not only allows consumers to try before they buy, but also creates a brand loyalty towards the REI Corporation in the fact that consumers now associate became REI with a fun and rewarding shopping experience.

Supermarkets have made small inroads into this technique by offering product samples interspersed throughout their aisles; however no store seems to have gone headfirst into this mentality more so than Apple stores. Whereas the REI is one part consumer experience two parts retail space, Apple stores are almost entirely based upon the consumer experience and have thus proven that an engaging in store experience can drive sales in a dramatic way.

Fixing broken windows

So much of business is caught up on the idea of innovating that sometimes we forget how important it is to do a little bit of housecleaning and preventative maintenance to ensure that small problems can be nipped in the bud before they transform into large problems.

This is the idea behind the broken windows theory. Essentially the theory states that in neighborhood with broken windows people perpetuate the idea that nobody cares about their property and thus crime rates increase. As crime rates increase more windows are broken and thus the cycle perpetuates. By fixing windows and exhibiting that indeed someone does care about the neighborhood crime rates will decrease, thus giving the opportunity for more windows to be fixed and even less crime to take place.

It’s important to apply this concept to small and large businesses as well. Your customers take stock of everything when they interact with your company; and if they start to notice little things that are broken or not going as well as they should be going your customers will infer that because you don’t care about the small things you don’t care about the large things either. This can be a death knell for a company, so fix those broken windows as they happen.

Embrace change, don’t fight it

We often hear the same story every few weeks. An artist or content producer is upset at someone on the Internet for infringing on their copyright and using their material in an unlicensed way. The material is then quickly pulled and the infringer is oftentimes taken to court for monetary damages. Unfortunately this desire to maintain a stranglehold on pieces of digital creativity has the end result of stifling innovation and limiting growth.

Digital content producers need to understand and respect the fact that their work is going to be repurposed a number of different ways as soon as it hits the Internet in digital form. Rather than fight this new paradigm is a far better idea to embrace it and not look a gift horse in the mouth. This is essentially free advertising, and so long as the third party is not using your material in an objectionable way only good can come of their interest in your piece of work.

Very few artists and companies understand this paradigm shift however we are very slowly beginning to see the acceptance of the fact that the Internet can’t be placed back in the bottle from which it came and rather than fight the oncoming tsunami it’s better to just ride the wave and see how far the free publicity can take you.

Creating brand evangelists to let your customers do the hard work for you

Brand evangelism is not a new concept however it’s one that is growing quite quickly. While this was once a niche topic often used for very specific clients, marketing agencies are now focusing a great deal of effort on helping companies produce brand evangelists across the board. Everything from clothing manufacturers to software providers are looking to create brand evangelists to help propel their growth without expensive marketing materials.

One of the great leaders in brand evangelism is Apple computers. No one would say that Apple doesn’t spend a lot of money on marketing strategies; however their expensive television commercials are only half of the story. Apple has managed to create a personal relationship with a great deal of their customers with very minimal effort. A combination of easy-to-use products, welcoming stores and readily available technical support has engendered a feeling of community among Apple consumers and between the company and the consumer.

This community has had the end result of producing a large number of consumers who are loyal to Apple products and waste no time explaining to their friends and families how pleased they are with their Apple purchase. Word-of-mouth marketing like this is invaluable to any company, and Apple has shown great innovation by encouraging people to become brand evangelists.