Social Technologies Spur User Participation And Speed Up Product Innovation

Recently McKinsey published two articles on open innovation. One of them focuses on the business risks, the other on the usage of social technologies for open innovation. With regard to the latter, McKinsey found that “nearly two-thirds of the companies around the world that adopt a social-technology platform aim to collaborate beyond their own walls to share ideas and information with customers and suppliers.”

As Eric von Hippel reports in “Horizontal innovation networks—by and for users”, as many as 30 percent of the Internet users would actively innovate using social technologies. The research by McKinsey suggests that the prospects for open innovation will only improve, as porous company borders increase external participation.

Purpose, sustainment and enablement by social technologies

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As the image above shows, the two most important uses of social technologies are to underpin the processes companies use in scanning the external environment and to help them seek out new ideas.

Not only does it help organizations seek out new ideas, it can also make a comparison between customer’s opinion and non-customer opinion by researching internal/closed communities versus insights available in the open. This can act as a validator as existing customers have different interests (as they’re paying) than non-customers and therefore can be more objective.

The business as a platform

The more networked an organization is, the more it can use the Internet for scanning the external environment and help them seek out new ideas. It’s an holistic process, as shown below, where for instance engagement with external stakeholders enables the organization to identify potential new ideas and insights and can co-innovate involving the people linked to these insights.

90:10 Group’s holistic Open Business approach

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The business becomes a platform where a “standard” product is developed. Due to the advent of online communities, extracting insights and/or directly co-creating with consumers “customized, complementary products and services can therefore be created by the “crowd” and widely distributed, often subsidizing core product offerings.”

Finding full potential of open innovation

McKinsey’s article “Wiring the open-source enterprise” mentions three tenets which leaders need to be ready to respond to:

  1. Start at the grass roots. Our survey research indicates that nearly half of the early adopters of collaborative technologies promoted their use by mobilizing people on lower levels of the organization. Hierarchal, top-down controls rarely succeed, since most creative interactions are tacit and dynamic.
  2. Develop competencies at the edge. Companies best leverage social and knowledge networks by venturing beyond corporate boundaries, as P&G has done. But opening the gates of the enterprise doesn’t guarantee a robust network—and could compromise valuable intellectual property. Success depends upon the ability to gain the trust of users, transparency, and a deft hand in managing interactions.
  3. Understand what makes participants tick. Users and consumers have different motives for contributing their time and skills. For some, the goal is simply recognition; for others, rewards or revenue sharing may be necessary to induce valuable efforts. Determining what matters for your priority constituencies is crucial.

Behavior first, technology second

From an organizational change point of perspective I want to add a fourth. Social technologies do offer the infrastructure for organizations to scale external participation. However, they are the behaviors that are leading, they are the behaviors that define which social technologies should be used, where to open up the organization and where not (that’s the Change cog in the holistic process, organizational adaptation).

The Exhibit 2 image explains the point. There’s a discrepancy in the usage of social technologies for the different purposes. Social technologies are hardly used for “Matching employees to tasks”,”Assessing employee performance” and  “Determining compensation”, but how should video sharing and RSS achieve them? The mentioned technologies are not –effectively- suitable for these processes.

Competitive advantages

By scaling external participation the organization will be able to:

  • Extend innovation to all departments;
  • Scale the range and relevance of its research;
  • Embed the customer throughout business processes.

Shift away from thinking about consumers as ‘just buyers’ see them as partners, take the second-guessing out of business planning and deliver bottom-up innovation. Ultimately the organization markets with the people for whom the products and services are intended – rather than at them.

What challenges do you foresee by opening up the organization’s processes?

Are you involving external stakeholders for the purpose of innovation?

By Gianluigi Cuccureddu

About the author:

Gianluigi CuccuredduGianluigi Cuccureddu, contributing editor, is an experienced writer specializing in innovation, open business, new media and marketing. He is also Managing Partner of the 90:10 Group, a global Open Business consultancy, which helps clients open their activity directly and indirectly to external stakeholders through the use of social media, its data and technologies for the purpose of competitive advantages in marketing, service- and product innovation.