Henry Chesbrough Takes on Open Services Innovation

In his latest book, Open Services Innovation, Henry Chesbrough writes about co-creating with your customers, particularly in services where it’s harder for customers to specify what they want because so much of the experience is tacit. Whereas innovative physical products can excel on objective measurable performance, innovative services often entail a greater degree of subjective perceptions.

What’s exciting for innovators is that precisely because the information is tacit, finding ways to elicit or manage that tacit information will bring strategic advantage. One way that customers can “tell” you this tacit information is through their behavior, which in most cases is through their purchase and usage patterns. If customers have a good subjective experience, they do it again; if the service was bad, they don’t come back. Yet passive observation can be hard to interpret, can miss a lot, and is better at providing feedback on existing offers than for creating true innovation.

A better solution is for companies to actively encourage open feedback and ideas from customers. As Chesbrough says, “When customers tell you – rather than everyone else — their tacit needs, you have a unique insight that can help you differentiate yourself in the market.” Companies that can find ways to engage customers to co-create — or that can create systems that elicit such tacit knowledge — accrue benefits. LEGO, the building-brick toymaker, is one such company.

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