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  Written by Tom Powell: MBA student at Duke; Abnormal interest in innovative applications of technology, design, outside innovation, crowdsourcing, and social computing. tom@coinnovative.com
  
  
  
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My former employer Forrester and my former co-worker Chris Townsend recently wrote a report called Tapping The Wisdom of Experts. This is an extension or subset of the concept of Innovation Networks which Navi Radjou has been writing about for years at Forrester and can be seen as a subset as well, in a certain sense, of crowdsourcing. It is also a good summary of the topic covered in Part 6 of this series.

(To be sure we’re on the same page:
Innovation networks = “Firms seamlessly weave internally and externally available invention and innovation services to optimize the profitability of their products, services, and business models.”
Crowdsourcing = sourcing small and large jobs from anyone and everyone.
Expert sourcing = sourcing from specialized, professional-grade, vetted experts.
Wisdom of crowds = the wisdom of the crowd’s collective intelligence outweighs any individuals.)

Expert sourcing involves several actors that fall into the mold of innovation networks:
Inventor: the experts (enterprise R&D, academics, government labs, retired technicians, you know, experts.)
Transformers and Financiers: corporations who buy, develop, and fund the innovations
Broker: expert sourcing providers who bring together the experts and corporations.

Innovation networks and expert sourcing further erode the purpose and importance of the large corporation and a massive, closed R&D facility. With the aggregation, moderation and policing of transactions, NineSigma and Innocentive facilitate this possibility. Along with online collaboration improvements, the need to have a large building or organization under which a multitude of people need to sit are further eroded. Smaller, more focused enterprises are made possible as transaction and search costs between inventor and transformers/financiers decrease (lower transaction costs, after all, are the reason companies formed in the first place).

While it appears this market is pretty small in the grand scheme of things, companies large and small will not be able to afford to only look for internally for innovations, they must search the horizon, getting input and help from customers, suppliers, and experts around the world. Tool providers are and will continue to emerge on all fronts, but if firms do not weave these tools and innovation sources into their processes, they will eventually be left behind. The key, of course, is not to hand over the reigns to outside innovators or customer whims but to incorporate the knowledge gained into your own expertise and discretion to mold it into real, profitable innovation.

Companies in the space:
Innocentive (Problems issued to recruited scientists)
NineSigma (Sends out RFPs to network of universities, inventors, businesses)
YourEncore (Posts projects to retired technical people)
yet2 (Matching and providing services/resources to IP buyers/sellers)

Further reading:
HBR: Getting Unusual Suspects to Solve R&D Puzzles
If You Have a Problem, Ask Everyone
Nine Sigma - Expert Response to Innocentive Post
Open Innovation Becoming Key to R&D Success

If you can imagine an object. Someone can build it. How does personal manufacturing relate to the various topics covered here? Well it democratizes manufacturing and design choices to everyone, everywhere. It decouples the design, manufacturing, assembly, and marketing of products like never before. I have categorized these related concepts into three levels of increasing complexity: 1) Mass customization, 2) 2D and 3D object printers, 3) Home manufacturing.

Level 1: Mass customization.
Mass customization puts a certain level of choice in the hands of the customer starting with a base, unchanging object. It allows you to customize a mass produced product to your specification along certain pre-defined configurations. Anyone can do this. There are thousands of examples of it and most people have experienced this in one form or another. Buying a Dell. Uploading an image for a product on CafePress. Designing a Nike shoe. Even your own tea.

Level 2: 2D and 3D printing.
Ponoko is, in my opinion, one of the best examples of personal manufacturing in the 2D realm. Users can upload image files (whether that be CAD or scanned in free-hand drawing), specify any of a number of flat materials, and Ponoko will input it into their magic laser cutters and send you the result. It doesn’t stop there: you can also sell your resulting products through the site. Ponoko has been improving and releasing new features at an impressive clip over the last 2 years or so. Keep an eye on them. Manufacturing as a service.

Going from 2D to 3D: While Ponoko seems farthest along in democratizing 2D printing of objects, Shapeways seems to have the best, most user friendly, option for 3D printing and distribution of objects.

Confused about the various 2D and 3D printing technologies available? Check out this great compendium of videos on much of the tech.

Level 3: Home Fabbing
For the power-geek: home fabbing (with self-replicating machines, of course) you too can build a CNC machine that creates 3D objects or cuts flat materials. Just download the design and let your machine have at it.

Of course, the current adoption of these various technologies stand at about the same level as personal computers in the late 70s: expensive, geared towards geeks, inconvenient, and a small market.

Bringing this all together you have a decoupling of the design, manufacturing, assembly, and marketing of physical objects down to the individual level. As this evolves further the options expand incredibly; here’s a scenario (And Shapeways comes pretty close to this today). I post a design, then there are many paths:

- I can then order a copy for myself.
- Someone else orders the physical object which is printed in a one-off run.
- Another person licenses the design for the right to produce the object for personal use and downloads it to their home-fabber where they can tweak the design and actually create it.
- Someone licenses the design for 100 copies and sells them locally after having them produced at their local personal manufacturing facility.
- A large retailer licenses the design for distribution in their stores.

Pretty rad, right?

Resources and examples:
Level 1:
Mass Customization and Open Innovation News by Frank Piller
Configurator database
Design a Tea
Dell
List of mass customization providers

Level 2:
Ponoko
Design Democracy ‘08
List of Personal Manufacturing providers
FigurePrints (print out avatars in 3D)
That’s My Face
Fabjectory: Virtual Objects in Real Life
Shapeways
ZapFab
Design My Idea
eMachineShop

Level 3:
Some Rights Reserved
Fab@Home
TechShop
Breaking the mould
Fab: The Coming Revolution on Your Desktop–from Personal Computers to Personal Fabrication

One aspect of many crowdsourced efforts is the ever-present competition. From the X-Prize to Innocentive, prizes for innovation, new ideas, designs, and problem solving are SO hot right now. Sometimes its simply a publicity stunt other times it is the core business strategy of a firm. The model has been around for centuries in various forms, in the arena of architecture for example: a slew of architects produce concepts for a building and the owner decides whose design wins. And of course, competitions in general are everywhere in which one might put forth a huge amount of effort, lose, and have nothing to show for it. What I focus on here are newer incarnations which the Internet has helped to flourish.

Prizes are generally set up such that someone posts an issue they want resolved or work they want done or a community of enthusiasts works to give an award for work around a specific area on an ongoing basis (Threadless). They set their price for successful completion and anyone can contribute – professional, amateur, moron, and genius alike — that is where the power arises. A winner is chosen and the prize awarded. The issue, though, that many have with this approach is that it can be exploitative and opens up businesses to… let’s say ethical challenges, in that the work is completed in some cases and the company can abscond with your work without paying.

Further, looking at it from an economic perspective: if you post a $300 reward for a logo and 50 people do, say, $150 worth of work each, that is a total of $7500 worth of effort. Or $7200 worth of “wasted” effort. (Of course many of these people might be doing this for fun as a hobby or with free time in which case it’s not technically wasted effort but effort that would not have been utilized in the first place.)

Some controversy has arisen around these, particularly in the design worlds: Pros hate it because it lowers prices paid for work and potentially the quality of the work (in their view), amateurs love it given that this creates a way to make a few extra dollars doing something they love anyway, and small businesses who might not have been able to afford professional prices obviously benefit. It is distinct from spec work in that spec work entails one professional or company creating a work in the hopes of selling it but without any guarantee or prior commitment from anyone that it will be bought.

A variety of sites which will be and have been covered in the past here employ this strategy so here are a sampling of them:

Competition examples:
99designs
Threadless
Crowdspring
Idea Crossing
Fujitsu-Siemens Innovation Contest
Netflix Prize

Related:
Derek Powazek - Pixish, Spec Work, and Graggers
The Power of the Prize

I finally got around to reading a great report out of Swinburne University of Technology written by Darren Sharp & Mandy Salomon called “User-led Innovation: A New Framework for Co-creating Business and Social Value“. It does a great job of tying together many of the themes discussed on co>innovative. A variety of innovations over the last couple of decades have been improving in parallel as well as building off of each other to create this… this thing that is going on, whatever you want to call it:

Open source software, citizen journalism, crowdsourcing, user-generated content, social networks, the sharing economy, peer production, Multi-User Virtual Environments, participatory media, collaborative creativity. Distributed capitalism. These are all terms in the rapidly expanding lexicon of the field of ‘user-led innovation’. For much of the 20th century business operated on an enterprise logic of ‘managerial capitalism’ which maintains that value is created by organisational producers and is stored inside the products and services they sell.

Quoting Eric von Hippel:

Historically the assumption has been that manufacturers are the innovators, they go and they look at users, understand what they need and then develop something in response. We then went and looked at the histories of innovation and found out that very often, very commercially successful products actually had been developed by users at the leading edge of a market-based trend first. So it appeared that in fact innovation was user-led, which means that the users actually develop prototype products and show their value and use of what they really want.

These lead users (who can be viewed as pre-early adopters, creating their own solutions) have entered into an increasingly ideal epoch in which more and more tools are available every day to innovate: tools of media production and distribution, rapid fabrication tools such as widely available laser cutters and 3D printers, communication with other enthusiasts, etc. This distributed capitalism is the result of the democratization of innovation that Eric Von Hippel wrote about in the aptly titled Democratizing Innovation

.

Below is a great classification of four successful and productive user-led niches:

Social Currency Niche — Myspace, Flickr, YouTube: people create content and gain attention and connect with others.

Collaborative Niche — Wikipedia, open source software: people come together and perform part of a larger task to reach a common goal.

Extractive niche — sort of the unpleasant side of all this in which companies try to exploit free revealing from the crowd, attempting to get something for nothing or next to nothing while ignoring the desires of the crowd.

Hybrid niche — combines elements of the above.

If you ever find yourself scratching your head about exactly what I am talking about, I would highly recommend reading the report.
(Also wanted to say Hi to Paul.)

I dislike the terms crowdsourcing and wisdom of crowds. First of all because the terms, particularly the former, have become the worst of buzzwords, meaning many things to many people and applied in far too many places. Apparently everything online now has some relation to Web 2.0, crowdsourcing, or user generated content. Depending on your definition you can call both YouTube (crowd submitted videos) and Innocentive (open calls for corporate problem solving jobs) crowdsourcing. Now, the original, official definition put forth by Jeff Howe (who coined the term) is “the act of a company or institution taking a function once performed by employees and outsourcing it to an undefined (and generally large) network of people in the form of an open call.”

This is not to denigrate any of these areas, it is simply to say that they have been applied to so many areas since then as to make them essentially meaningless. Of course, Web 2.0 itself never had a narrow, well-defined meaning — O’Reilly’s initial description of it was a slide with about 25 bubbles on it each with a different concept in it.

It is not the crowds producing the wisdom but the individuals in the crowd whose collective wisdom creates value. Dave Winer agrees saying “I am not part of a crowd, I am an individual” There seem to be two distinct things going on: tapping into the collective individual intelligence of a group of people (prediction markets, Threadless picks, popularity, ratings) and tapping into individual contributors or empowering individual contributors to participate in something that would classically be taken care of within the firm, via a contract with another firm, or via a professional relationship (what Jeff Howe would consider true crowdsourcing).

So, unless you are tapping into a crowd and, in the end, paying someone in that crowd to produce work that you would classically outsource or hire externally for, you are not crowdsourcing. You are likely creating a community, tapping into the wisdom of crowds, getting feedback, and on and on. The very fact that there are so many different things going on, is why I am — VERY slowly — working my way through a multi-part look at every different aspect of what is going on and how it will effect business and communication.

co>innovative has been lying dormant for far too long, I realize. My intent was never to write all the time but to create more substantive posts and articles every once in a while in order to think through and consider the goings on around the topics of crowdsourcing, lead users, outside innovation, and customer co-design. That being said, 3 months is far too long for the site to go un-updated.

Thus, I have returned to the site in an attempt to revitalize it with a new, cleaner, less bug prone design and to begin posting once every couple of weeks again. The content may evolve a bit as well… we’ll see. My next post will be Part 4 of my on-going series covering the overarching topics of this site.

Be sure to subscribe and enjoy.

Taking a break from the multi-part series, I thought I would cover a bunch of interesting goings on in the areas of crowdsourcing, lead users, and outside innovation.  Read and enjoy.

Eric von Hippel speaks at MIT about Lead Users (Video: Part 1 and Part 2):
Lead users in certain segments are working together to drive the manufacturers out of the innovation process.  Companies are freely revealing to others so that others can improve on it. An example of lead users in action: Kitesurfing, which was developed by users.  First, manufacturers stepped in, then Saul Griffith posted his designs online and others did too. Each manufacturer had 1 or 2 engineers, but then aerodynamicists from NASA started joining in and brought their tools with them.  These lead users drove manufacturers back out of the design busines.  Users collaboratively built tools and designs.

Linus’ law: the reason you want a lot of people looking at a problem is that they all look at it in different ways.  Given enough eyeballs all bugs are shallow.

Users innovated historically but collaborative user design is becoming so efficient it will drive manufacturers out of design.

Johnny Chung Lee: A perfect example of lead user innovation: 
Not only has he dones these wicked things with nothing more than cheap parts and a Wii, he is the creator of the poor man’s steadycam, and wowed the audience at TED.

Freakin awesome Future of Making Map from the Institute for the Future:
Check this out for an incredible overview of many of the topics and companies covered on this blog.  Categories covered are: Networked artisans (Threadless); Citizen R&D (Lego Mindstorms, Innocentive); Lightweight manufacturing (Ponoko); Personal design and fabrication (reprap); From closed IP to open innovation (theoscarproject.org).

Listening to customers is nothing new, but the technology and transparency it enables are. Recently, companies like Dell, Starbucks, and SalesForce have implemented forum-like sites for users to submit, discuss, and vote on product enhancements and product extensions. (The technology under the hood of Starbucks’ site is actually provided by SalesForce, called SalesForce Ideas.) This is customer co-innovation and customer co-creation at its purest: submitters to the site are not compensated for their contributions, they are simply doing it for the love of the brand and its products – or at least out of the desire to see the company improve.

This type of technology is similar in spirit to that found at Crowdspirit, Spigit, and Kluster, to be discussed in a future installment of this series, but the aim is different – and much more difficult to pull off. While these are unestablished companies looking to the wisdom of crowds to create totally new products and work up the design, the Dell’s and Starbuck’s of the world are looking for popular ideas to use as jumping off points for their internal experts to mold and launch.

As Charlene Li and Josh Bernoff would say, this is the “Embracing” portion of the Groundswell – though I would argue it is also a “Listening” activity on the companys’ part. As a commenter on the Groundswell blog mentioned, the only way this works is if it is supported and promoted within and outside of the company. The fact that a company follows up on ideas is an essential way to improve contributions and return visits. Simply slapping your own SalesForce Ideas up on your company’s site will do nothing for you if you don’t promote it and actually incorporate it into the regular functioning of your company.

Getting feedback without some kind of action, whether that be an explanation why the company can’t implement it or examples of successful implementations, will lead to failure.

(I have included below a set of companies that, while they do not have an open process available for voting, they do accept submissions over the web from anyone with an idea or relevant intellectual property. Not quite there, but interesting that companies are opening up, nonetheless.)

Examples of open, digital suggestion boxes:
Dell IdeaStorm
SalesForce IdeaExchange
My StarbucksIdea
IBM ThinkPlace
Cool Software

Throw it over the wall and hope they buy it:
P&G Connect+Develop
Ideas4Unilever
Staples Invention Quest (closed idea competition project)
Kraft
Shell’s GameChanger

 

Read previous posts:

Part 1: Figuring out crowdsourcing: What does it mean? What’s working? What isn’t?
Part 2: Crowdfunding, Investing and Donation 2.0

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