The Changing Face of Open Innovation

I was thinking back to the Business 2.0 article I read three years ago that sparked the idea for this blog.  It was called "Companies Tap Into Consumer Passion", and this exerpt offers a good summary:

Let's face it: Your best customers, as a collective, are probably better informed than you are. In the time it takes you to organize a meeting about a new product, they can devour enough information to develop a more sophisticated understanding of your products and competitors than you could possibly imagine.  They will always be more passionate than you, because you just work for a paycheck and they actually use your products day in and day out. Nobody knows better what to love about your products, and nobody knows better what failures need to be fixed.  So why not harness that insight and use it to your advantage?

The tricky part for companies isn't discovering whether such passion for their products exists--if eBay has taught us anything, it's that there are enthusiasts for just about everything--but where those customers can be found.

Business 2.0 was looking forward, speculating on ways companies would locate, communicate with, and co-create with their passionate consumers.  That article really got my juices flowing, because I've always been an engaged consumer in search of brands who 'get it'. If I love a brand (Honda an example), I'm happy to tell others why, and even more happy to share ideas and thoughts with the brand ... especially if there's incentive to do so. I was a fan of Open Innovation before I heard those words or knew what they meant.  In a nutshell, Open Innovation is looking 'outward' for innovative ideas ... to your customers, clients and employees.  Employees, you say, are technically 'on the inside'.  But how many companies effectively reach out to employees from top to bottom to tap their collective knowledge?  So the act of soliciting ideas from people you'd normally leave out of the equation - whether inside (employee) or outside (consumer/client) - is all part of being 'open for innovation'.  And that October, 2005 Business 2.0 article was all about this emerging, disruptive and fatastic trend.

My mind - for better or worse - explodes like a bag of popcorn when I walk into a business, use products, read articles, or - and this is the worse part part - try to sleep at night.  "Why don't they do this ...", "what if I came up with a mobile app to connect companies and consumer generated ideas ...", "What if clowns weren't so creepy ...", etc.  If you relate, when those idea kernels start bouncing around and filling up your head, you start looking for ways to unload them.  Through the years, however, I've encountered plenty of closed doors and few welcome mats whenever I've tried to share or pitch ideas and suggestions.  There simply weren't channels in place to do so - in part a problem of technology, and in larger part a problem of close-minded company cultures.

On the technology end, As Web 1.0 fizzled and the seeds of Web 2.0 were being planted, some open-innovative minded outfits began to emerge.  Threadless, birthed in 2000, built its entire t-shirt business model around the ideas and choices of its design community.  An Inc.com article in June of this year sums up the story of Threadless with the title: The Customer is the Company.  Threadless is the epitome of co-creation, where the line between being a consumer and a producer is blurred. 

Innocentive emerged on the scene around the same time, offering a global innovation marketplace where companies, or 'seekers', could tap the expertise of tens of thousands of 'solvers', as community members are known.  Big players like Proctor and Gamble have used Innocentive for years to try and maintain an innovation edge, meshing Open Innovation into company culture.  The upside for Innocentive:  it attracts heavy hitter solvers and seekers (rewards range to tens of thousands of dollars for best solutions/ideas).  The downside:  Innocentive has had trouble extending it's platform beyond the R&D/Engineer/Science crowd. 

Over the years, numerous players large and small have entered the Open Innovation arena, including BrightIdea, Mzinga, Imaginatik, Spigit, Salesforce, Kluster, CrowdSpring, UserVoice, GetSatisfaction, SuggestionBox and Fellowforce (I was Director, N. America for Fellowforce for a season).  Some have been open for business for a few months, others for a few years.  Salesforce powers two of the best known consumer co-creation platforms:  Dell's IdeaStorm, and Starbucks' MyStarbucksIdea site.    

Wikinomics hit bookstores less than two years ago, and is regarded as the definitive source and guide for all things Open Innovation.  The subtitle of the book, How Mass Collaboration Changes Everything, sums up the disruptive forces emerging from the empowerment of consumers, and how companies that fail to recognize and act on this shift do so at great risk.  The Wikinomics blog is worth adding to your list of preferred reading. We Are Smarter Than Me (How To Unleash The Power of Crowds in Your Business), came out in the past year.  We Are Smarter, also with a blog, is more than a book about  crowdsourcing;  the material in it was gathered through crowdsourcing.

All of this brings us to September 2008.  The concept of Open Innovation is still a new one to many, and the education period will continue for some time.  But the technology part is, for the most part, solved.  There are numerous ways for brands and consumers to connect and communicate and co-create.  In fact, I see a new shift underway, one that's meshing a variety of social media channels with more traditional Open Innovation platforms and methods.  For instance, Dell has deployed a small army of employees across multiple social media sites to connect with consumers.  In addition to its main idea/co-creation hub, IdeaStorm, Dell recently launched a site called DigitalNomads, aimed at "individuals that work or play without regard for their physical location".  Digital Nomads was launched in conjuction with a new line of laptops that were designed in part with feedback from the IdeaStorm community.  Still with me?  And at any given moment, you can find and connect with a Dell employee on Twitter, Facebook or any number of other social networking destinations.  Dell understands that at the heart of Open Innovation is communication and conversation.  Savvy brands are part of the conversation taking place on hot sites like Twitter each day.  Those same brands can use various tools to monitor conversations across the web, so when they're mentioned (good or bad light), they can jump in and respond when able and appropriate.   

And that brings me full circle to the main point I want to make.  Ultimately, companies have to decide if they want to lower the drawbridge and let consumers and their ideas and suggestions in the door.  And they have to decide if they're going to leave the castle and hang out with the people as well.  The technology's in place, so there's no excuse there.  Solutions vary and can be very affordable, so any size business can decide today that it wants to embrace the social media, open innovation, consumer powered revolution.  Twitter and Facebook are free, but time and energy are involved.   SuggestionBox.com offers a delightfully simple and buttery smooth feedback management system for about $40 per month (I'm a reseller).  And if you need an IdeaStorm-like site, you can choose from offerings from the other companies mentioned (I specialize in a platform called Webforce, from Fellowforce).   

I think we're on the verge of a full-on brand stampede into Open Innovation and Social Media engagement with consumers.  Every week, every day, I'm finding clues pointing to this being the case.  Twitter is simply buzzing with brands now, and this wasn't the case just months ago.  Innocentive just announced it received a capital infusion from SAP, and has opened a special SAP Technology and Innovation Pavilion.  This should help address the issue I brought up earlier, helping Innocentive branch out into a wider variety of business innovation opportunities for companies and consumers alike.  Yesterday, Whole Foods Market announced a website re-design to extend its "interactive relationship online, launching a newly designed Web site that is not only easier to use, but offers new avenues for shoppers to interact transparently with Team Members as they do in the store."  And like Dell, you can find Whole Foods chatting away with consumers on Twitter each day, which has become my favorite channel to connect with many brands.  And you can't find a major technology event - TechCrunch 50 the latest example - without an Open Innovation company providing a feedback system for the startups and sponsors involved (SuggestionBox.com in this case).

A lot has changed since that Business 2.0 article three years ago.  But one question remains, and each business has to ask itself:  Are we Open (and willing) for (consumer/employee/client) Innovation? 

Comments

[Ross Kimbarovsky]

Hi Jeff,

This is a really nice summary of the activity in this space (and thanks so much for mentioning crowdSPRING). I agree that we're on the verge of a stampede into Open Innovation and Social Media engagement with consumers. We're seeing this everywhere, in almost every media. Pioneering businesses have been doing this for some time, and it's clear that major brands have heard the call. Comcast is doing customer service on Twitter - and so are many other companies. We hired a person specifically to focus on our community (our Community Manager) because we understand that we can't build a successful creative marketplace without a great community. I question, however, whether tools like Twitter have staying power for commercial marketing, especially for large companies. For the moment, it's cool and different, but so were fax machines when they were first invented, and so was email...

Best,

Ross Kimbarovsky
co-Founder
http://www.crowdspring.com

[Liz Moise]

Jeff,

As always, great thoughts from you on open innovation. We are excited to be truly expanding our reach into the Computer Science and IT space with our collaboration with SAP, it's a chance for us to really grow our Solver community in a new discipline, and also offer clients the chance to post Challenges in this sector.

Regards,
Liz Moise
Marketing Manager
InnoCentive

[Jeff Crites]

Ross:

Thanks for the compliment ... though I didn't capitalize the word SPRING correctly :-)

You're right there in the thick of all of this, so your observations are really valuable. As for Twitter, I'm a little more optimistic it'll have staying power. But it's just one of many social media channels or platforms that people use to communicate and 'watercooler chat' each day. The key for brands will be to monitor the key channels and conversations across the web, whatever those channels are now, or will be in the future.

You'll also find me in the camp rooting for outfits like yours. So many like to declare crowdsourcing 'dead', but I believe it's still in its infant stages.

[Jeff Crites]

Liz:

I was jazzed to see that announcement about the relationship with SAP. I'll definitely check out their Pavillion on Innocentive. Can I have a Pavillion too? I'll fill it with SME clients and their challenges :-)

[Marcus Nelson]

Hello Jeff -
Thank you for the mention. There truly is a "land grab" for consumer-grade crowd-sourcing tools like the ones you've mentioned above.

An interesting question might be, can these tools translate to the Enterprise? Or better yet, will the Enterprise receive them?

Good article, thank you Jeff.

[Tom Hochstatter]

Hey Jeff,
Thanks for revisiting the histrionics - always important to give context to the newly initiated.

Two quick points:
First, I agree many firms are reticent to open their doors (wide) in a committed and institutional manner to allow the ideas of others to drive new products and services. We see some from your examples above, but what will it take to make this a strategic line item of every business plan? My take: it's a bit of a generational thing. Most of us in a position of strategic influence are not "native" in social commerce - the twitter and facebook era. That is something "our kids do". Understand, a 50-something tenured executive won't change overnight, nor will they risk an annual bonus or their retirement on "the ideas of outsiders". P&G made headway because the CEO said so. He remains the minority for some time...

Second, I challenge even the most open of corporations on their overall commitment to the entirety of Open Innovation. Focus on the word "open". How many of the Dells and P&Gs are opening their back doors and allowing innovations and ideas to flow out to other firms that can/will take the innovation to market? If the funnel up front is to be strategic why not the back end of the process too? What are these same firms doing to encourage others to take their unwanted ideas to market? Check in on Microsoft or Lockheed Martin to see how they are embracing both ends of the OI process.

Our business at Fluid Innovation is to help big firms identify existing ideas and find others who want to commercialize them.
(aside: today we focus solely on software innovation but that will change as we grow.)

Third (bonus point): I am witnessing first hand, in our core business, a huge amount of ideas and technology which already exists that is prime for offering up to other companies - to fill their funnel. We see stellar innovation in IT, R&D, and products orphaned from M&A activity.

While this innovation is not "core" or a new product innovation, it remains important that the Open Innovation Enterprises - open both sides of their business. It's that old adage "it's better to give than to receive". The good news is these firms are making serious (and highly profitable) revenues from this view.

That orientation to OI will absolutely lead us to a step function advancement in the industry we all call Open Innovation. Also, it is a much safer bet for the tenured executive to start here (in the middle) and work outwards.

Thanks,
Tom Hochstatter
Vice President, Business Development
Fluid Innovation
www.fluidinnovation.com

[Paul Pluschkell]

Jeff,
I enjoyed your article and would like to elaborate. Spigit's experience has been that enterprise social networks for innovation and idea management are being adopted at much faster rate than anyone predicted. The need to get every employee closer to their customers has never been greater. When was the last time you bought anything without first checking multiple sources on the internet? The need for listening to your customers and creating brand loyalty is driving enterprises to adopt "consumer co-creation platforms" which in turn leads to open innovation. All of this by simply allowing the free flow of information between large masses of people directly connected to each other with the aid of a platform that filters out the noise and produces meaningful information.

Companies have always known that their number one asset is their employees and today the technology exists to take advantage of a companies scale. Spigit's unique approach has been to combine web 2.0 tools with principles of game theory and proprietary algorithms to ensure mass participation and productive results.

This is a very exciting time for all of us - as together we can educate the marketplace and create the next big thing in enterprise software.

Regards,
Paul Pluschkell
Co-founder & CEO
spigit
www.spigit.com