Open Innovation Communities – where companies and customers collaborate on ideas for new products and services – can be one of the most valuable ways to invest in community engagement. Unfortunately, this type of community is also one of the most difficult to get right. Many companies have experimented with this type of Open Innovation – Lego Ideas, Dell’s IdeaStorm, Starbucks’ My Starbucks Idea – and each of these companies have seen value from the communities. The bad news is that most companies fail because they lack the vision and commitment to see beyond the initial tactic of just soliciting customer ideas.
In my community practice, I’ve seen 4 stages that are typical in the maturation of an Open Innovation Community.
- The Social Suggestion Box – Launch an open space for customers to give feedback or make suggestions
- Overwhelming Backlog – Period where the company can no longer process the backlog and may abandon the community
- Managed Sprints – Develop a strategy to shape feedback and ideas by introducing a more formal process and constraining topics & time
- Collaborative Innovation – A significant evolution of programs and platforms that layer ongoing ideation into all design and decision making
The Four Stages of Open Innovation Communities
Stage 1. The Social Suggestion Box
Most companies start their Open Innovation Community with an open-ended call for ideas and feedback. Community members are welcome to submit any idea, and the broader community (hopefully) comments on the idea and rates the idea using a simple scale or upvote. Community managers take the most highly rated ideas to the product team for discussion, and eventually some ideas are chosen for production.
The Social Suggestion Box phase is valuable in the short term, as customers will likely have suggestions they have been holding on to since they began their relationship with the company – essentially a communal backlog, if you will. Companies become stuck in this phase when they are unable to process the backlog of ideas, manage the growing community and deliver quality ideas to internal teams (typically product) in a format and within a timeline that aligns with product roadmaps. This break between the promise of a constant stream of new ideas, and the lack of a process and the ability to shape ideas into a usable format is the key challenge.
Stage 2. Overwhelming Backlog
The equivalent of the “trough of disillusionment” from the Gartner Hype Cycle, companies in the Overwhelming Backlog phase can often find themselves with a large pile of unread ideas, a community platform in need of a serious overhaul, an innovation program that no one really values and a community in revolt.
This situation may sound extreme, but it was exactly the one I walked in to when I joined Dell in 2010. IdeaStorm, Dell’s Open Innovation Community, had launched in 2007. After enjoying 2 years of valuable idea contributions, positive PR and internal support, year 3 found IdeaStorm as a “ghost ship” community, with no leadership, vision or community management. Things became so bad that a community member posted the idea that Dell should shut IdeaStorm down. The community quickly upvoted that idea, it caught the attention of Michael Dell and my team was given the task of “making it better, fast”. I eventually hired the community member who posted the “take it down” idea to become the new community manager for IdeaStorm.
To navigate out of the mess we were in, the team immediately began research to inform our new strategy. I wanted to know the financial impact of IdeaStorm to date, understand why ideas weren’t being responded to, and to understand what the barriers were in getting ideas from the Community into the the product teams at Dell. We found that the financial impact from IdeaStorm was really high ($100s of Millions), that we lacked an agreed upon internal process for scoring and prioritizing ideas, and that we needed to create a new type of community management role to help facilitate the new process – an Idea partner that lived on the product team. The final piece of the puzzle was implementing an archiving policy for ideas that didn’t score well in the community. Within a few months we had processed the ideas backlog, started design on a new platform (with the community), and had reengaged most internal product teams.
Stage 3. Managed Sprints
Companies come out of the Overwhelming Backlog phase with the key insight that shaping the topic, type and form of ideas they would like to receive is critical to realizing value and long term success. Many companies will implement a sprint-like approach to ideation, using phased ideation and design sessions to focus on a single topic or product.
This approach involves developing a clear business or design problem, and then breaking solution development in to smaller ideation projects that are facilitated, in sequence, over a number of weeks. The output of each sub-project helps shape the proceeding sub-project. Ideas and design concepts are generally of higher quality because the problem definition is clear, product teams participate, and community members get real-time feedback from the product team.
Dell did this successfully on IdeaStorm with Project Sputnik, co-creating a Linux-based laptop with and for developers. Other examples of the Managed Sprint stage include Unilever and General Mills. Jovoto (client), an “On Demand Creative Community”, has on of the best Managed Sprint approaches I have seen – you can find more information on their site, and in the book their CEO Bastian Unterberg coauthored, “Crowdstorm“.
Stage 4. Collaborative Innovation
In many ways, moving through Stages 1-3 are a necessary process for companies to undertake in order to develop the strategy, process, alignment, platforms and business models to move beyond what are essentially sporadic innovation campaigns.
Collaborative Innovation is an ideal state where an organization and its community of customer, partners and employees are engaged in an ongoing process to perfect existing products & services and to bring new products and services to market. We’ve talked for years about the boundaries between companies and customers disappearing – in the Collaborative Innovation stage, the boundary is permeable – customers create new products & services with the companies assets, and receive value in return (use, compensation, reputation, etc.).
There are examples of large companies partially engaged in the Collaborative Innovation stage, but none that have extended this to every part of their business.
Some examples include:
- IP Sharing: Tesla & Mozilla opening their patents
- Product Co-Development: Lego Ideas, Firstbuild
- Pretailing: Kickstarter, Barnraiser (previous client),
- Customer Lab: Autodesk’s Pier 9, Firstbuild’s Microfactory
- XIR (X in Residence): Autodesk’s Artist in Residence, MAKE’s Maker in Residence
Opportunity While Other Stall
The truth is, most companies never make it beyond stage 2, “Overwhelming Backlog”. Dell, an early pioneer in the space (and my former employer) had been regressing back from Stage 3 for a few years (unfortunately) and the IdeaStorm site now appears to be offline. The other notable pioneer, Starbucks, has essentially taken My Starbucks Idea offline as well. While Communities at each stage offers some dimension of value, companies progressing through to Stages 3 & 4 will discover the most value and innovation.
The potential opportunity for the next wave of Open Innovation Communities is incredible. Why?
- Customers have shown they are willing to collaborate & create
- Customers are willing to buy products still in the conceptual phase (millions of examples of crowdfunding)
- The tools to create & share complex designs are free and relatively easy to use – see Fusion 360 & OnShape
- Innovation platform companies have an opportunity to move beyond text / pictures / video into immersive & real-time 2d & 3d collaboration. PS – Platform companies – I would LOVE to work on this and have a ton of ideas.
Many companies could realize tremendous value from Open Innovation Communities. Most don’t because they don’t experiment, or do a poor job of planning their initiatives. Companies that commit, support and evolve their Communities see value. Beyond the current practice examples of Open Innovation Communities, the next wave will feature immersive and real-time design as a key feature. Those who wish to innovate need to be evolving their platform, programs and internal process now.
This week I am participating in Crowdsourcing Week Europe 2015 in Brussels. The conference has an amazing range of speakers from both the public and private sector sharing their ideas about, and experiences from, the Crowd Economy.
My session focused on the critical role of Communities in the Crowd / Collaborative Economy, and covered:
- Why 20th century businesses aren’t adapting to 21st century realities;
- Why we need a fundamentally new and more expansive approach to building online communities in our evolving global economy;
- Emerging opportunities for businesses to create and exchange new forms of value with their communities and in the process, become more sustainable.
Key points detailed below:
- Networked Companies Thrive
- Connected Customers Create More Value
- A Lens on the Collaborative (Crowd) Economy
- Crowd, Communities & Collaborative Organization
- An Example of a Market Network
1. Networked Companies Thrive
In a recent article from Harvard Business Review, a study between Deloitte and a team of independent researchers examined 40 years of S&P 500 data to examine how business models have evolved with emerging technologies. The study had 3 key findings, including the emergence of a distinct new business model of “Network Orchestrator”. As defined by the study:
Network Orchestrators. These companies create a network of peers in which the participants interact and share in the value creation. They may sell products or services, build relationships, share advice, give reviews, collaborate, co-create and more. Examples include eBay, Red Hat, and Visa, Uber, Tripadvisor, and Alibaba.
Network Orchestrators outperform their peers on revenue and profitability.
2. Connected Customers Create More Value
The 1:1 relationship between a company and a customer is increasingly perishable. The customer is blessed by an abundance of choice in the market, and increasingly (especially for technology) the lifespan of a relationship can last only days, weeks or months — not years. As an example: most software companies are moving from a perpetual license to term-based licensing that can be as short as 24 hours. Creating a great customer experience and minimizing churn are key. One key strategy is to develop customer communities where customers connect to people in the business (as hosts) as well as other customers and prospects (as peers). This creates a network of many to many connections, where bonds strengthen over time and value is exchanged in the form of knowledge, content, advice and help. These communities translate into real value for the customer and for the host business. When I led communities at Autodesk, we found that community members were more loyal and more likely to recommend than non-members. We also were able to quantify cost savings from our support community to be several million dollars. When I led communities at Dell, we discovered our IdeaStorm community members spent 50% more than non-members, and members’ purchase frequency was 33% higher than non-members. Community member ideas from IdeaStorm created $100’s of millions of dollars in revenue in the period between 2007–2011.
3. A Lens on the Collaborative (Crowd) Economy
My POV on the Collaborative Economy is that it is a set of trends, movements and technologies reshaping how we make, market, discover and use products and services. It was born out of the global financial crisis of 2008, enabled by global communications networks and digital technologies, and powered by people. I would also assert that Collaborative Economy initiatives should be focused on sustainable methods and equitable outcomes for all stakeholders.
The purpose of defining, identifying and studying the collaborative economy is to understand how business models need to evolve to thrive in this new economic context. Based on my experience building online communities and collaborative experiences, as well as research I’ve conducted, I’m convinced that a new and comprehensive approach to online communities is the way forward.
An approach where:
- What we thought of as “social” is really the networked marketplace
- Your market is synonymous with your crowd
- Online communities build lasting relationships amongst your customers, prospects, employees and partners and
- Collaboration looks like a partnership with customers, not an internal social network no one really uses.
There are two great resources I would recommend to see the range of sectors and technologies that make up the Collaborative Economy:
Collaborative Economy Honeycomb – via Jeremiah Owyang / Crowd Companies
The 14 Parts of The Crowd Economy– via Sean Moffitt / CSW2
4. Crowd, Communities & Collaborative Organization
In order to begin exploring business opportunities in the collaborative economy, businesses need to shift their mindset to think about markets as networks. Their total addressable market(s), connected via platforms & social networks.
There are three important contexts to think about in the Network Marketplace:
- Crowd: A group within a Market Network that has:
- A shared interest or goal
- The ability and assets to participate in a shared marketplace, task or activity via common platforms
- Community A connected & hosted group within a Market Network that has:
- 1 or more shared interests or goals, leading to shared identity & purpose
- The ability, motivation and assets to work towards a common purpose over time
- A host with intention to support & manage community over time
- Collaborative Organization Collaboration amongst organizations, partners and customers essentially functioning as one organization:
- Shared IP & Common resources
- Shared vision of activities and outcomes
- Shared risks and equitable outcomes
These contexts are not mutually exclusive, meaning, a Collaborative Economy initiative could engage a crowd, community and a collaborative organization context.
The three key opportunities I see for Levi’s:
1. Hosting a peer to peer marketplace where customers can sell / trade used and custom goods, possibly partnering or including listings from external marketplaces.
2. Extending their innovation function online (think a more modern IdeaStorm for apparel), as well as partnering with other communities to develop specific crowdsourcing and challenge initiatives. An example would be partnering with Hackster.io on a smart apparel.
3. Hosting their global fan and denim connoisseur community, while continuing to develop great content on their Unzipped blog. The community feeds all digital activity.
My slide deck from my Crowdsourcing Week session:
Networked companies are more valuable and resilient. Connected customers are more valuable to companies. To create long-term growth in a sustainable way, companies need to evolve their business models to address the “networked marketplace”. A new approach to online communities can provide a path for business model transformation.
Next Steps: I have developed a worksheet, based on my business model innovation workshop, to help businesses begin to explore new Crowd / Collaborative Economy initiatives. Please email me for the worksheet or to discuss participating in a facilitated workshop.
These are my slides from the Intranet Reloaded Conference in Berlin on April 17th. My presentation was on the evolution of Dell’s IdeaStorm open innovation community.