co>innovative

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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I lack a specific definition or term for what I have been writing about here — mainly because there isn’t one. “Crowdsourcing” comes close, but it is a bit constraining in that it connotes outsourcing work to the crowd, which is only part of the story. Thus, in light of that, I will be posting a series covering the various aspects of whatever the hell this is that I am talking about with examples of each portion in action. It will by no means be exhaustive, but it should provide a good overview of some interesting orgs that are leveraging these principles.

So, let’s set out with a few of the current names for it and related concepts that feed into it:

The overarching themes revolve around: Crowdsourcing; Outside Innovation; Innovation Networks; the Wisdom of crowds; and Customer co-creation.

These larger initiatives are supported by: Web 2.0/Social Computing; Mass Customization; the Long Tail; Open Innovation; Peer production; Prediction markets; Voting and ratings; Competitions and prizes; Lead users; Transparent business practices; and Democratized content creation and distribution.

(Don’t forget, Sami Viitamaki has a pretty generalized but effective take on how to think about Crowdsourcing in particular with his FLIRT model.)

So, going forward I am going to touch on a variety of topics that will hopefully clear things up a bit. Some of the topics I will cover:

• Crowdfunding
• Prediction markets
• Crowdsourcing: Graphic design
• Customer co-creation and crowdsourcing: New product development
• Home Fabbing and Crowdsourcing: Physical product design and development
• Crowdsourcing: Content creation
• Crowd feedback; or, Business starts to listen
• Crowdsourcing: Problem solving
  
• Many hands make light work: The atomization of work resulting in the completion of massive jobs.
  
• Crowdcooperation
  

All of this stuff is connected somehow, is undergirded by similar philosophies, tools and technology, and methodologies — and I love geeking out about it. There are some powerful changes hidden in all of this and, while many of the concepts have been with us and operating for some time — centuries even — only recently has a confluence of developments led to the ability to really harness it all.

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This post by Francois Gossieaux on Marketing 2.0 echoes some of my thoughts in a previous post in which I mulled over the balancing act between providing a platform for interested users and creating a paid marketplace for extracting feedback, ideas, work.

Would you rather have feedback from a person who is filling out 10 surveys to gain points towards a gift certificate? Or someone who has sought you out to tell you something they think about your product?

Thus, it seems, unfortunately, that it is generally an either/or proposition.   Either you provide a platform for a group of people who LOVE to contribute — seek you out in order to contribute — or you have a robust marketplace for creating extrinsic incentives for user contribution.

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BMW has what is basically the equivelant to P&G’s Connect + Develop in which anyone can submit a technical spec for an innovation in which BMW would be interested.  They like it, they’ll buy it.

ReDesignMe is a minimalist, simple implementation of user submitted design improvements and suggestions for existing products. Companies or users submit products which they would like improved along with a description of what they feel is lacking.  A Pro Challenge feature is also available whereby companies may post one of their products or websites for comment and redesign and the most creative or useful submissions win a prize. Here’s one from Vodafone.  Okay, basically this is simply an open blog in which anyone can post a picture of a product with a problem and anyone can upload comments or photos of a redesign.  (Via Springwise.)

Both of these point yet again to what seems to be a no-brainer: Companies should solicit ideas and innovation from everyone, everywhere.  Employees, partners, customers, non-customers, haters.  It doesn’t bind you to anything and doesn’t cost a whole lot, but it could open up your company to any number of innovations that never would have come about otherwise.

Unless you figure out how to run a fascist state (Apple) that produces breathtaking products and services, why not solicit ideas from everyone?

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You want to know what Spigit is?  Read my last post about Kluster and imagine a more powerful, enterprise version of the service.

A friend of mine asked recently whether this crowdsourcing stuff works; if I could point to a single product that had resulted from “crowdsourcing”.  The answer is yes and no.  It depends on what you’re talking about.  Is it potentially overhyped? Absolutely. Is there one monster “Crowdsourcing Success”?  No.  Are there projects out there that are attempting to leech off of the crowd for their own gain? Yup. (I like to call these “failures”.)

It’s not a magic bullet and it definitely won’t replace a vast majority of processes for product development/design/refinement or classic freelancing/outsourcing work. But it’s an alternative, niche way to develop things and get certain things done.  (Crowdsourcing has become an umbrella term to describe a whole bunch of crap going on, so it’s a bit of a fuzzy term, similar to Web 2.0.)

But there are tons of examples of various areas that have been successful that can be called crowdsourcing in one way or another:

Open source:
No examples necessary.

Funding:
Sellaband, crowdfunding of several album recordings.
A Swarm of Angels, crowdfuding and voting to create a film.
SliceThePie, funding, investing in bands
Prosper: P2P loans

Graphic Design:
Threadless, awesome tshirt designs submitted and voted on by anyone. Top 7 get made each week. I think their revenues are like 20 or 30 million a year.
Sitepoint: this is more of a design contest, you post what you want and how much you’ll pay. Dozens of people submit designs and you pick your favorite. Still, it’s crowdsourcing.

Product enhancements and new product development:
Dell’s Ideastorm, customer suggestions for new products and enhancements
P&G Connect+Develop, throw your ideas/products over the P&G wall and see if they want to buy it
Lego Mindstorms Community,

Writing:
Assignment Zero, crowdsourced research and interviewing for a Wired article

Small tasks done by many people:
Amazon’s Mechanical turk.

Complex scientific/chemistry/engineering problem solving:
Innocentive, used by large companies, post a complex problem, put a price on it, and open it up to people. This has been pretty successful.  Companies get to tap into resources that they don’t have internally.

Just plain crazy:
MyFootballClub: crowd ownership and control via voting of a soccer team in europe.
Tribewanted, crowd voting, building, eco-tourism Fijian island vacation. I highly recommend it.

Yet to be proven
Crowdspirit, consumer electronics development, which is probably the closest thing to what you’re envisioning.
Cambrian House, focused on website/software ideas and creation: a good example of a ton of talk with little to show for it from what I can tell.
Kluster
Spigit

And, of course, there are myriad closed, high-powered, complex collaboration platforms that allow people to interact across teams/geographies to design and engineer complex equipment.

In terms of Kluster: Ben Kaufman’s first company was called Mophie and they did actually use many crowdsourcing/outside innovation concepts to develop real, successful products (specifically iPod accessories).  At Macworld last year, they had an intense, in-person version in which people submitted ideas or drawings, these were voted on, etc, and by the end of the event Mophie’s industrial designers had created a CAD mockup of the most popular designs/ideas.  They took preorders and then eventually sold them as real products.  They are taking that core concept and creating a platform for anyone to do it, digitally.  And they also had in place an early version of kluster that was actually used successfully to create products called Illuminator.  (They did a similar thing this year at TED.)

Bottom line: the basic philosophy has been applied in many cases successfully, but it is still a nascent idea that hasn’t been fully worked out yet.  (Not to mention that there have been and will continue to be many failed attempts and companies who attempt to exploit the crowd for their own gain, which will fail as well.)  Sort of reminds me of the early days of search: search engines were largely crap dependent on just counting the words on a site to see if it was relevent, then, of course, people just repeated the word they wanted to be top search for over and over again. It wasn’t until Google came in with PageRank that search took a drastic leap forward: the signal to noise ratio went way up.

(On a side note: the concept of lead users http://en.wikipedia.org/wiki/Lead_user has been around for 20 years and successful harnassing of lead user innovations for the creation of real products is well documented.)

The thing that really intrigues me about kluster is: can you create a platform that can hit the required scale and quality of participation and actually create a marketplace (with real money involved) in which users are rewarded for their creativity and judgement (both intrinsically, because they are interested in it and want the products, and extrinsically, financially.) They need to: get scale and quality of participation and have a high signal to noise ratio.  My thought is that they should focus on a more narrowly defined category of goods, instead of such a wide range.

Three main points:
1) This is not magic. It still requires the hard work of individual people designing, engineering, innovating, and — my new favorite word — ideating.

2) It’s difficult to do right.

3) And most important: There is a vast difference between tapping into the innovation and ideas of your most passionate customers and attempting to incent outsiders to contribute who do not have a stake or love for your product. Projects that will most readily succeed are those that tap into passion that already exists rather than attempting to create it via incentives. 

– If you have any other examples of successful crowdsourcing-ish implementations, let me know and I’ll update the list.–

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I wrote previously about Mophie, a ridiculously cool iPod accessories company started by another one of those fantastically young entrepreneurs (he’s 21 now).  Ben Kaufman has moved on to a new venture, Kluster, after selling Mophie to mStation. Kluster is similar in philosophy to other idea generation and product development sites (Cambrian House, Crowdspirit, Dell IdeaStorm, Threadless), but they seem to be going about it in a different and superior way. Here’s how it works:

Anyone can post projects whether that be a “new product, an event, a marketing campaign, or virtually any goal that is better served by engaging a group of people”.

Break the project into phases, bite sized portions of smaller tasks to complete the project.

Sparks: anyone can post proposed solutions to a phase in whatever form of media they feel necessary.

Amps: anyone can propose enhancements or refinements to amps.

Watts: the coolest aspect. Anyone can invest watts, accumulated through participation in the site, into any of the sparks. The better your investments in sparks pay off (i.e. the more of your investments that win, are accepted, and taken forward) the more watts you accumulate. And, something I haven’t completely grasped yet, companies can offer actual dollars for specific sparks and then the winning logo/design/etc. gets money as well as the people who invested watts in that spark.  Should be very interesting to see the dynamics of this market play out, should kluster get some good uptake.

Decision making: kluster then analyzes the data, not just the most popular, to see how well each spark and participant does.

Besides being ridiculously cool (and located in Burlington, VT), this can also be an internal platform for companies to work on designs and new product ideas.

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Another wicked old post from another blog that I wanted to mention regarding Amazon’s potential to facilitate user manufacturing. Frank Pillar discusses user manufacturing which he defines as:

User manufacturing… is a business model where users (customers) are becoming not only co-designers, but also manufacturers, using an infrastructure provided by some specialized companies.

As things stand now, concieving, designing, sourcing, manufacturing, promoting, and distributing a product of any kind remains a challenge. Things have progressed rapidly over the last few years and will continue to at a rapid pace. Within a few years, with companies such as Ponoko, eMachineShop (and many other built to order manufacturing shops), Threadless, and, potentiall, Amazon refining their processes and services, the most difficult portions of physical product production will become much easier.

You can rent space on Amazon’s computers to run a business, or rent out its transaction capabilities to sell things and collect money, or rent pieces of its warehouses and distribution system to store and ship items — or all of the above. So, with almost no start-up costs, anyone anywhere could become a retailer. It’s not just contracting with Amazon to sell your stuff, the way Target does. It’s leasing pieces of Amazon to create something totally unrelated to Amazon.

Complexity is hidden. Interactions between companies are standardized. Customers become more comfortable with more control through crowdsourcing, customer co-design, and mass customization. You can sit at home, use a freely available CAD system to design a product, get feedback from users, send the design to a made to order shop (or stop there and sell the design on Ponoko), promote it using online tools like Ad-words, and distribute using something like UPS’s outsourced distribution services.

One might imagine a network of local manufacturers with a certain set of skills and specializations. Just upload your design to an imagined site which lists providers, the system automatically matches your design to potential manufacturers (maybe it’s a guy down the street with a great laser cutting setup…), and perhaps you put the work up for bid.

With such incredible flexibility and standardization built into a networked and interlocking system of vendors and services, there are bound to be huge disruptions and an explosion of creativity in the physical product space.

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I meant to write about this a while ago, but am just getting to it. Sami Viitamaki has an interesting, exhaustive overview of what one needs to consider when implementing crowdsourcing.

He looks in detail at five areas:

• Focus
• Language
• Incentives
• Rules
• Tools

In addition he makes the important distinction between the various levels of participation to whom the service needs to be tailored:

• Creators,
• Critics
• Connectors
• Crowds
• Non-participating consumers

Successful efforts follow these guidelines and you’ll see the ones that fail missing on one or many of these dimensions. Lacking transparency. Ignoring incentives (both extrinsic and intrinsic). Being exploitative. Taking as a given that your customers will care.

There is so much opportunity here, but we are sure to see many failures as companies ignore these considerations and fail miserably. Should be fun to watch.

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