Open Innovation

Lead users, Geeks, and Freaks

November 25, 2009 by Jaap Linssen | 4 Comments

Lead users, geeks, and freaks

Two weeks ago I attended a masterclass on co-creation by Frank Piller. An important part of the day concerned lead user innovation. Piller made a distinction between what 95% of the people call lead users and ‘real lead users’. During the masterclass it didn’t take hold of me, but as time progressed it kept echoing in my head. I’ll share a few thoughts on it with you.

geek2Piller stated that when most people say ‘lead user’ they are actually talking about very early adopters; geeks and freaks. The people that have the latest gadgets and tools are sometimes referred to as lead users. Understandable, because you could say they lead the masses into the adoption of the product. Very often some of these people also write reviews about their latest gadgets and become a subject matter expert (a leader). But they are not lead users.

Another group of people that are also often (wrongly) defined as lead users, are heavy users. It is true that they know your product inside out and they can probably help you improve the usability of your product, but they will not be very effective in finding novel innovations for you.

Lead users, according to Piller, have had a very big problem and have (partly) solved it. If you are able to find people that have (solved) big problems in you domain you can learn how you can design products that solve real problems for people. Furthermore, you can invite these lead users to come and join you to think about innovating your products. Since they have solved one or more problems in your domain before, they are bound to be creative problem solvers.

Here are two examples from the domain of hospital hygiene:
- A veterinarian with exceptional low percentages of infections after his surgery on (not very hygienic) animals.
- A surgeon from a poor hospital in Africa that has achieved exceptionally low infection rates.

So if you are looking to innovate, find yourself people with big problems, find people who have solved their problems, and maybe add some dreamers to the formula.

If you are looking to tweak your product, find heavy users and geeks and freaks.

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Internal or External Idea Management

November 2, 2009 by Jaap Linssen | No Comments

groene eendenOur intern Jan Martijn Everts mentioned a piece of interesting research to me that I would like to share with you.

Poetz and Schreir (2009) present “the first real world comparison of ideas actually generated by a firm’s professionals with those generated by users in the course of an idea generation contest.” Their findings are interesting:
1- Ideas created by professionals score significantly lower in terms of novelty than ideas created by users.
2- Professional ideas are attributed lower customer benefit compared to other ideas.
3- Ideas created by professionals tend to be easier to realize.

Kristensson, Gustafsson and Archer (2004, p. 11) provide the first laboratory-based insights that “professional developers elaborated with informational elements that were not as cognitively remote,“ whereas users seemed to have “access to informational elements that were further apart“. Users are thus able to come up with more novel solutions.

In short: If you want to come up with new and customer beneficial ideas it is good practice to involve diverse people with considerable distance to the company processes.

Get the paper.

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Open Innovation at Nestle

May 5, 2009 by Jaap Linssen | No Comments

I came across a summary of a speech Helmut Traitler, Vice President for Innovation Partnerships at Nestle gave at an Open Innovation Forum in Cambridge.  It is a beautiful example of a company purposely innovating and I have nothing to add to Saul Kaplan’s account of the presentation.

“Embracing open innovation and new business models  Nestle clearly recognizes that to achieve its growth objective it must extend its internal capabilities to establish a large number of strategic partnering relationships.  It has embraced open innovation and works aggressively with strategic partners to co-create significant new market and product opportunities.  Worldwide, Nestle employs approximate 5000 people in 24 R&D centers and over 250 application groups.  It extends its reach by tapping into the technologies and expertise of more than a million researchers around the world.

Importance of strategic focus within target benefit areas  Nestle has a very clear framework to screen new opportunities.  It has identified target benefit areas that relate to nutrition, compliance and quality, and taste.  In order for any idea to be pursued it must be strategically aligned with one of the identified target benefit areas.

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Innovation in the Music Industry

November 5, 2008 by Ebbe Nieuweboer | 1 Comment

In this blogpost we will discuss some examples of how the music industry is innovating, and an important lesson that companies can learn from this.

Recently, Dutch Brazilectro band Zuco 103 launched a crowdsourcing initiative. Through their Myspace they challenged their fans to create a videoclip for the new single Longing (Saudade). Fans can download short clips that were shot in front of a green screen, load them in their video editing software, and “get creative”. The winner will be invited to a concert, and have a meet and greet. But the real winner is of course Zuco 103; they access the creativity of ‘the crowds’, get many free video clips, and above all lots of free publicity for their new album.

So is the music industry becoming more innovative? And are artists expanding their creativity and finding new ways to interact with their fans? I think they are… and I hope to convince you with some more examples after the fold.

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I-Prize: open innovation at Cisco

July 21, 2008 by Jurjan Huisman | No Comments

Cisco’s I-Prize is a good example of an open innovation project. On Fastforwardblog.com a nice description of the I-Prize project is given.

The process of the I-Prize project is well-defined and I think that is one of the main reasons why it is a success. For example the clear communication on how ideas are taken to the next level is a strong point. Contestants know exactly what the next step will be if their idea is good enough to make it to the ‘next round’. So it is not simply an online idea suggestion box where all ideas end up on a big pile. The idea management process is clearly formulated and communicated. The result is that incomming ideas are generally well-formulated and people submitting their ideas will not get frustrated about an unclear process. When people can clearly see what happens with their ideas, they will be happy to contribute again the next time.

Read more about the discussion of Cisco’s I-Prize on Fastforwardblog.com.

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Innovation at Procter & Gamble

June 5, 2008 by Jurjan Huisman | No Comments

The New York Times blog has posted an interesting interview with A. G. Lafley on innovation at Procter & Gamble (registration free but required). The interview is well-worth a read.

I particularly like his answer on the question “…and yet only half of your product innovations succeed. Why isn’t the rate higher?” Lafley states “I don’t really want it to be. Human nature is such that, if we push our people to drive the batting average up, they’ll try to hit more safely, take a shorter swing, go for the singles instead of home runs. But we try to set milestones that innovations must meet at every step along the development process. As soon as they miss one, we allocate the resources to another product moving through the funnel. That’s another difference from the old days, when P. & G. let bad ideas go too far.”

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Open Innovation

May 16, 2008 by Ebbe Nieuweboer | 2 Comments

Open Innovation propagates sharing and collaboration with external parties. The architect of the term Open Innovation, Henry Chesbrough, describes the following principles as being at the foundation of Open Innovation

  • Not all smart people work in-house – need to tap into external knowledge
  • External R&D can generate significant value to us
  • Research does not need to originate from our internal work to be profitable for us
  • A strong business model is more important than first to market
  • Internal as well as external ideas are essential to win
  • We can capitalise on our own Intellectual Property (IP) and we should buy others’ IP when needed

While the term was initially very much related to IP, it has evolved; A recent valuable resource of literature on open innovation has been composed by VINNOVA, the Swedish Governmental Agency for Innovation Systems. It has been made available on openinnovation.nl

In practice, there are many shapes in which Open Innovation can be manifested. So how about some examples?

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Shaping up for the Open Innovation Paradigm

June 25, 2007 by Carl Lens | 2 Comments

William Chesbrough, who was early to detect a paradigmatic change in the domain of Innovation, introduced the term Open Innovation. Chesbrough opens our eyes to see that companies should make use of external resources to reach their full potential. There are basically two reasons why you should take on a more external view on innovation. Firstly because a lot is happening outside of your organization (outside-in), and secondly because there are a lot of opportunities outside of your organization (inside-out).

Definition:

“Open innovation is the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively. [This paradigm] assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as they look to advance their technology.” (Henry Chesbrough; 2006, Open Innovation: Researching a New Paradigm)

Outside-in: Not all smart people work for you.

Your organization might have the brightest of minds working on innovation, but do you think they can outsmart the masses of bright people outside the walls of your R&D department? Smart organizations like P&G give the right example. By 2010, P&G wants 40% of their innovations to be coming from sources outside the company. One of the means P&G uses to accomplish this is Innocentive: a platform where a community of over a 100.000 researchers think about the challenges that are put on the website by companies that will pay for the solution to their problem. Companies don’t have to originate the innovations to profit from them: external R&D can create significant value.

Inside-out: 80% of all patents within companies is never used.

Not only should companies profit from Intellectual Property from outside organizations. Intellectual property that isn’t used by organizations, can still be used by others. About 80% of patents in large organizations remain unused while these patents could earn money in other organizations through licensing. In this respect the strategy and size of a company should also be looked at as an impediment to innovation. Small initiatives often don’t fit the company strategy very well or are initially too small to enjoy the economies of scale that large organizations pursue. For radical innovation to occur however companies should not confine themselves to such limitations as size or strategy. Some initiatives should be given a chance outside organizations in spinoffs or joint ventures.

Where Chesbrough focuses mainly on patents and technological innovations, we can take the concept of open innovation a step further with the insights of MIT professor Eric von Hippel. Von Hippel’s work is focused on the enormous innovation-potential that companies can find with their users. When involving users in the process of innovation, products and services are developed that have an inherent fit with needs in the market.

The open innovation paradigm raises new innovation management issues to cope with. Is your organization ready to work with other companies to innovate? Are you ready for the ideas of your customers? Do you know what’s happening outside of your organization? Are you in shape to open up?

Recommended reading:

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