How Open Innovation Gives Rise to Brand Ambassadors

I think R&D and an investment in a “Labs” strategy can drive any business forward. I’ve surveyed a total of 1000 agencies & marketers from North America to find out one thing: What do you do with your R&D budget?

Although many respondents have a substantial R&D budget, only about 25% have formalized a “Labs” department that drives company-wide innovation. Of those respondents that do have a “Labs” department, less than 1% encourage innovation from outside the organization.

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Open innovation can do something almost magical for businesses; it can give perceived ownership to customers. The pervasiveness of open innovation can reach every facet of of business, from marketing, to product development, to human resources, and administration.

Some companies like Dell & Best Buy make affordances for open innovation, but very few do an adequate job at following the cycle of open innovation. If you get your customers involved with core business strategy & product development; you need to explicitly show the results of their involvement, and support the outcome in an ongoing iterative way.

Introducing “The Cycle of Open Innovation”

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(Full Size)

 

Understanding: A Great Place to Begin

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Social media represents an invaluable resource for developing a deep understanding of your customers. The simple act of engaging and communicating with communities on social networks can reveal powerful user insights that can change the way you approach business.

The best way to gain these insights is to listen to what your customers are interested in, and probe them on the identified subject to find out how your business can take advantage of their interest.

Don’t patronize your community members by asking them inane questions; demonstrate that you’ve been listening & ask them questions that link back to your company; or at least your industry.

Example: The way Steve Jobs described the reason for introducing the iPad was that a market gap was identified & the iPad was created to fill the gap. Then Apple (theoretically) went through the process of producing the iPad (designing it, sourcing the production with Foxconn, and beta testing it.)

What if Apple followed an open innovation model of product development? Would there have been a camera on the iPad, a finger print resistant screen, a usb port, near field communications, a fold-able keyboard?

Better yet, what if Samsung followed an open innovation model for the Galaxy Tab? Could they have figured out how to better compete against Apple?

BIG QUESTION: Why do companies think they need to identify and solve business problems internally?

 

Identification: An Expert Analysis

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Business strategists, market analysts, brand managers, and all those well-paid titles are still valuable, and often essential, for open innovation to work. Being able to interpret user needs, market requirements, and business goals is best left to those people who understand them.

The better you understand your customer, the more likely it’ll be that the experts will craft successful strategies and create products/ services that work.

 

Test: The Missing Link

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I understand the value of being first-to-market, but strongly believe the value of open innovation outweighs the risk of potentially not being first-to-market.

I know that spending three months experimenting, testing, and analyzing feature sets costs additional money, but think the value of doing this is worth it. These types of activities can often be conducted without revealing the end product.

Example: You don’t need to reveal that you’re making an iPad in order to test & facilitate recommendations on gesture-based text input. If this was experimented with, and open to the community, it’s possible that Swype might exist as the native text input method for the iPad.

 

Produce: Standard Model, Opened

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The standard production model wouldn’t change, but there are opportunities to accept innovations surrounding production from an public, or semi-public community. I’ve seen examples of sourcing influencing design. An example could be the shift from plastic casings to aluminum casings. If materials affect price, and material quality affects purchasing behaviour, than innovations surrounding the ability to use materials that can be perceived as higher in quality, while maintaining price, will affect design. (This is all too true with web development. User experience architecture is often influenced by the technology being used to create the site, app, or software. There are things that work well in HTML5 that wont work at all in Flash. There are designs that produce a positive user experience when created using AJAX that produce a negative experience when created using Javascript.)

So, if one manufacturer can produce a higher quality product for the same price through an innovation in their production process, designs can be reexamined to be optimized. (Example – Using micro-dimpled glass decreases glare & fingerprint smudges. However, creating a mass production system specifically designed to create the glass would be expensive unless the sourcing is opened to the community & a production facility already equipped to produce the glass comes forward – or is open to sharing their technology.)

 

Adoption: Integrate or Abandon

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Rather than simply making a decision to keep or scrap a product or service based on preliminary business data, an open innovation model would allow for community input. There’s been instances where communities rallied to save a product, service or idea just as is was about to be scrapped.

There’s also the potential of being able to use the community to identify why the product or service is either successful or failing. Working together, the community and business leaders might be able to turn a failing product into a successful one through iterative design improvement; additionally, they might be able to identify keys to success that can propel future products/ services to success.

 

 

Key Takeaways:

1. Don’t assume you know what your customer wants
2. Fostering personal ownership of product/service development can create powerful brand advocates
3. Innovation can come from many sources; tap into them
4. Using social media to encourage & utilize innovative ideas is one of the most powerful methods of communication and one of the most relevant uses of social media
5. If you’re investing your R&D budget building & investigating ideas & technologies that already exist, and are well established, you’re doing your business a disservice. Labs should not be about training, they should be about innovation.
6. Experiment with the Open Innovation Life Cycle model. Even in small-scale, it will work.

I’d love to hear your thoughts, comments, feedback & questions. @thejordanrules

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