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Customer co-creation in 2012: How are social technologies supporting Open Innovation?
5th Dec 2012
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Open Innovation efforts have been taken up a notch in 2012, with new social technologies making easier than ever to collaborate with customers and partners for greater business success, says Stephen Danelutti.
Open Innovation (OI) as a concept was popularised by Henry Chesbrough in the early part of this century but stretches as far back as the 1960's.
It has been enthusiastically received by many corporations (and most notably by Procter & Gamble) who realised that their R&D efforts would be far more effective if they outsourced some of it to other companies, most often smaller more nimble organisations. They also realised that involving customers to get first hand insights into what they may or may not want or need was more effective (an early form of crowdsourcing).
Over the years its adoption has evolved and grown. At its heart has always lain the need to support these efforts with effective collaboration or ultimately co-creation systems, since many efforts are concentrated around the creation of new products or services. Especially with the advent of social media in the mid 2000's and its emphasis on collaboration, OI efforts have been accelerated and broadened beyond its original scope. This article provides a snapshot of latest trends and technologies in general and specifically how Yammer's external networks (EN's) are being used as OI or co-creation platforms.
I've written about the role that social technologies play in OI efforts before, but of course this goes far beyond technology and the path is not clear, nor entirely fruitful. I've experienced many frustrations with OI at an implementation level. I've not worked in any official capacity in innovation roles but have always had more than a passing interest and have worked on new product or service developments most of my working life. I believe innovation is the grease on the tracks of change and what allows us to cope with accelerating change which is so intrinsic to modern day business and especially to the adaptive organisation. The fact that the web and more recently the social web has "opened" it up has strengthened my interest. I've seen many jump on the open innovation bandwagon but most efforts have been given lip service (not unlike innovation itself).
In my view, many have adhered too strictly to the principles of the concept. I've seen this with Science Parks I've worked with who are perfectly positioned to deliver on the promise of Open Innovation as I described here, but most have failed to implement meaningful programmes.
Mostly the reasons (broadly applicable) were:
- Fear of letting go and losing control, especially with regard to intellectual property.
- Ignorance of the new tools and practices available to support efforts.
- An overly rigid application to the letter of the OI law in their efforts, i.e. not allowing for creative and serendipitous evolution of outcomes.
Social and Open Innovation - what's the word?
Since OI and social media have grown in adoption, you can imagine that there has been a commensurate growth in experts. There are many out there, not all quacks, so I wanted to take a quick pulse on some of the more prominent or better pieces of work out there. Here are three:
- In a study by Scott Ward (The power of dialogue: How organizations leverage social media to drive innovation and create value) he cites several other studies that identify and validate the brokerage model which essentially contextualises innovation as a result of a healthy market place in which ideas can be easily exchanged (with the internet as a key platform). He then goes on to explore ways that, by socialising via the Internet, companies are able to drive innovation further.
- Innocentive, a leading facilitator of open innovation efforts on behalf of leading global organisations, commissioned research firm Forrester to conduct a study. The result of the question on what initiatives are characteristic of OI led to 46% of executives citing social collaboration as key. Granted this was low in comparison to others but still it features and I would bet this will increase in the future.
- According to Stefan Lindegaard in his report on the subject, since social media is growing at an unprecedented pace, we can expect new platforms to continue emerging that support open innovation. Companies of all sizes need to start working on the intersection of social media and open innovation now in order to reap future benefits.
How businesses are applying and broadening the concept
Considering my point that open innovation has had too strict a focus and broader applications have not been sufficiently considered, lets now look at how businesses have been applying the concept. First, a little about external networks (EN's).
In traditional parlance you could see an external network as an extranet. It's simply a way to create an enterprise social network so employees inside the company borders are able to interact with members from outside (customers, partners, suppliers, etc.). It authenticates users with different email addresses as opposed to a company's parent network in which only members with the company email domain are authenticated and would have access for privacy and security reasons. So herewith just a few examples:
- The retail giant Westfield uses 40 EN's to communicate with retailers in its Australian and other shopping centres globally. Centre managers can get retailers in each store on page in terms of activities in the centre but retailers can also collaborate amongst themselves. Benefits have been greater insight by retailers into centre and other retailer activities that they can then integrate and leverage with their own efforts. This has boosted engagement and relationships between retailers and centre managers.
- Seek, an innovation consultancy, has supported a large FMCG firm with an EN, connecting professional hair stylists with the brand team from the firm over the course of a product trial. The stylists can share feedback, stories, pictures of their work, requests for more product, challenges they face and best practices. Benefits have been greater and more speedy access to product feedback for the brand team. As a form of Market Research Online Community (MROC), the project is seen as ultimately more flexible, easier to use, and more cost-effective.
- Earth Hour manages its campaigns via an EN and connects its volunteers from around the world there. Anyone from anywhere in the world can sign up to the EN and start contributing to global activities. A very small team of eight at Earth Hour also collaborate with volunteers in the EN. See this video for more on this. Benefits have been a far more efficient use of limited resources in leveraging and sourcing the efforts of many volunteers around the world - crowdsourcing at its best.
- Tyco has used ENs to coordinate its design, PR and communication agencies during a major business transformation. It has also used EN's to manage global events, facilitating collaboration amongst employees, contractors and organisers. Benefits have been to ensure that all major stakeholders in any initiative always have access to the right information, on time, speeding up project time spans and ensuring success.
Eating our own dogfood
But I can also share a co-creation case study that is closer to home, because while Yammer may enable enterprise networks for customers, when it comes to co-creation efforts we also eat our own dogfood. To start with, user feedback greatly influences how our product develops through AB testing – this is largely data driven. Depending on the readings of the usage data and how positive or negative the results are, we adopt, modify or discard a feature accordingly.
However, we also engage in open dialogue with our customers (and encourage them to do the same amongst themselves) on an external network we have set up called the Yammer Customer Network. We listen very carefully to the discussions they have very openly there amongst themselves and that they provide directly to us. We listen, we incorporate feedback and we evolve our product (and company) through co-creation. If customers love to use Yammer, it is in no small part thanks to this approach.
Stephen Danelutti is customer success manager at enterprise social network Yammer (Microsoft).