The technology that underlies Web 2.0 enables full bi-directional conversations online, putting users into the creation seat for the bulk of new internet content.
This can open innovation to a community of millions of possible innovators
From the perspective of firms creating new products and services, this can open innovation to a community of millions of possible innovators, people who may be more likely to adopt the resulting offering as they had a hand in developing it. This suggests that Web 2.0 might offer firms both more leverage on the enormous global corporate expenditure on innovation – US$879 billion in 2006 and increase the likelihood of innovation adoption at the same time.
The founding principle behind community innovation is the same logic that underlies popular social networking sites such as Facebook and MySpace. If you provide an environment where people can contribute, interact and engage, the community does the creation, regardless of whether they are users, partners, suppliers or employees. There are four core reasons why this approach is working to solve today’s toughest innovation problems.
If you provide an environment where people can contribute the community does the creation
A website can interact with a nearly unlimited number of individuals, each with a potentially innovative idea for the firm, 24 hours a day, 7 days a week. New ideas can come from virtually anyone, anywhere, any time.
In his book “The Wisdom of Crowds”, James Surowiecki offers numerous examples of diversity outperforming expertise. Consider the television game show – Who Wants to Be a Millionaire? Contestants are asked questions and have the option of answering directly, consulting the audience or calling a friend. Calling a friend comes up with the right answer 65% of the time, compared to 91% when asking the audience
Enabling interactive electronic dialogue with user communities is only one way of getting closer to the customer. And while it is not a replacement for face-to-face interaction, we searched the online forums of power tool manufacturer DeWalt and found that even in the blue-collar community of power tool users, thousands of blogs and discussion groups exist ranging from product ratings and discussions on www.amazon.com to directories of parts and repair tips for discontinued machines on www.contractortalk.com
With the low cost of computing and software, these technologies offer a high return on investment, particularly when considered on a cost per individual interaction perspective.
These technologies offer a high return on investment
Dell Computer, an organization recognized for innovation on many dimensions, was an early adopter of online interactive technologies in the innovation area. Its IdeaStorm site (http://www.dellideastorm.com) offers at least three features that other companies might benefit from.
Dell has devoted three employees specially to managing the interaction on IdeaStorm
First, anyone can log on and offer an idea. Second, users can “promote” ideas they think are good, both by offering comments on them and by voting for them. This helps Dell prioritize the inputs it receives every day on IdeaStorm. Third, Dell has devoted three employees specifically to managing the interaction on IdeaStorm.
At the time of writing, the Dell community had contributed 8,958 ideas – a statistic that Dell lists at the top of every page in the IdeaStorm area. This is a good return on an investment of just three employees and a website.
So what are the risks and difficulties of managing innovation communities? Here are three of the most common questions asked:
Much of the complexity lies in the governance issues associated with a community like reviewing new ideas, responding to the community and addressing complaints. Clearly, managers have to think through the range of topics they want to open to the community, and how they might respond to a variety of different inputs.
This depends on the industry. In the software world, where innovation communities are becoming a standard way of doing business, the answer is no. In other industries with less technically sophisticated users, there are still opportunities for competitive advantage.
Not if you plan ahead. One clear guideline is to spend as much time ensuring that you have the rights to ideas coming in as you do to protecting against potential losses. A few conversations with an intellectual property lawyer early on and the posting of the appropriate caveats, assignment of rights, and non-disclosure agreements can save a lot of trouble later.
Some questions to ask when opening up innovation:
By Stuart Read and David Robertson