Collaborative 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 soliciting customer ideas.
With the right programs, platforms, community ecosystem design and internal alignment, Collaborative Innovation communities can produce incredible value.
Intense Pressure to Innovate
In an updated version of their famous “Creative Destruction” Report, research firm Innosight predicts that the average tenure of a company in the S&P 500 index will drop from 24 years (2016) to just 12 years by 2027. In a recent survey of Corporate Innovation Executives, research firm CB Insights found that ~41% of executives said that felt their companies were “extremely” or “very” at risk of being disrupted.
Spectrum of Innovation Communities
In studying the types of innovation communities, we feel the range can be narrowed down to 3 categories:
- Brand-Hosted Communities: Where a single brand hosts an innovation community focused on the brand’s products, services or business model
- Project-Based Communities: Communities of experts that come together to solve problems or challenges around a particular domain.
- Grand Challenges: A challenge-based community that convenes a diverse ecosystem of smaller communities to solve massively complex problems.
In practice, most corporate innovation initiatives ignore the value communities and networks can provide. The chart below is a simple illustration of how community could support different innovation types:
The full slide deck, with examples of Brand and Project-Based communities can be found here:
The companion worksheet for planning your Collaborative Innovation initiative can be found here:
The working list of Brand-based communities, Project-based communities and host platforms can be found here:
I’ve developed a workshop to help organizations learn about, ideate on and plan their Collaborative Innovation strategy. I’m also creating a small work group (mastermind style) to help non-competitive organizations share their progress and lessons learned. If you would be interested in discussing either of these, please feel free to reach out: firstname.lastname@example.org
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.
In March I embarked on a series of qualitative research projects to help organizations prepare for the disruption and opportunity emerging from the Collaborative Economy, and understand what resources they need to be successful. Wave 1 responses are in and the analysis is almost finished. I wanted to share a preview of the results to date. The full set of results will be published in June.
The pool of organizations that completed the survey ranged from Fortune 500 software, media and retail companies to small startups in the sharing economy space. A handful of non-profits also participated.
- A shared understanding of the Collaborative Economy is still forming.
- The Collaborative Economy is relevant to organizations, but the level of urgency isn’t high (yet).
- The most interesting sectors are Learning, Services and Corporate (“Sectors” as described by Crowd Companies Honeycomb model).
- Many organizations see online communities, social networks and collaboration platforms as “enablers” and areas to begin experimentation.
Getting to a crisp definition and shared understanding of the Collaborative Economy is challenging because the concept describes the interplay of a number of other large trends and movements, including (but not limited to) the Sharing Economy, Sustainable Development, Digital Transformation, the Maker Movement, Internet of Things, Future of Making Things and more. In the context of this research project, when asked to describe their understanding of the Collaborative Economy, respondents mainly spoke to 3 key themes of the Collaborative Economy as:An economic model…
“A model in which the creation and exchange of value (of goods, services, knowledge, etc) occurs through human interactions versus (solely) financial transactions. Asset allocation is optimized such that resources are jointly consumed and assets rarely stand idle.”
A social movement…
“Where brands and people start thinking more cooperatively for the greater good…instead of competitively & businesses go back to being more sociable and people-focused.”
A technical platform…
“Coordination of mobile devices, cashless payment systems, reliable rating mechanisms to get value from each other as opposed to centralized corporation of assets.”
- Don’t understand how to formulate a strategy
- Don’t have the necessary vision, leadership and resources to engage
- Don’t see a burning platform of missed opportunity or competitive threat
- Aren’t willing (yet) to make the investments in platforms, partnerships, open collaboration and the making corporate assets available.
The respondents who did indicate a high level of urgency, and had active pilots, were engaging in activities ranging from: investment in or partnership with complimentary startups, development of platforms and marketplaces, evolving existing social business programs, and re-developing the value exchanges of their online communities. These pilot programs will be covered in more detail in the final report.
3. Emerging Sectors
Research participants were asked to rank certain sectors of the Collaborative Economy by level of interest. The sector categories were sourced from the Crowd Companies Honeycomb model.
Survey participants were asked to rank the following systems, technologies and engagements based upon their perceived value in enabling an organization to engage in the Collaborative Economy.
The full Brands and the Collaborative Economy report will be released in June, going in to further detail on the topics above, as well as:
- An overview of current pilot programs being conducted by the respondents;
- Key sources of information and data about the Collaborative Economy;
- An overview of missing or underdeveloped resources and services needed by organizations for their Collaborative Economy initiatives.
Wave 2 Research begins June 1st.
Wave 2 research will begin the week of June 1st, and will cover:
- Lessons learned from early successes and failures
- Organizational resources needed to develop and sustain pilot programs
- Development of a simple framework for Collaborative Economy pilot programs
If you are interested in participating in the research (via survey), being interviewed or profiled for the report, or sponsoring a future report, please send me an note.
Private Briefings & Advisory Sessions
I am also doing a limited number of private briefings on the Collaborative Economy research and how a modern approach to online communities can support innovation, customer acquisition and retention.
I’m available for online session booking via Popexpert, or feel free to drop me a note.