The Empty Whitecoat

Co-Creation and the 12 Different Ways for Companies to Innovate

There is neat article in latest Sloan MIT Management Review by Mohanbir Sawhney, Robert Wolcott  and Inigo Arroniz, The 12 Different Ways for Companies to Innovate (subscription required): Here is an excerpt:

..what exactly is innovation? Although the subject has risen to the top of the CEO agenda, many companies have a mistakenly narrow view of it. They might see innovation only as synonymous with new product development or traditional R&D. But such myopia can lead to the systematic erosion of competitive advantage, resulting in firms within an industry looking more similar to each other over time. Best practices get copied, encouraged by benchmarking. Consequently, companies within an industry tend to pursue the same customers with similar offerings, using undifferentiated capabilities and processes. And they tend to innovate along the same dimensions. In technology-based industries, for example, most firms focus on product R&D. In the chemical or oil and gas industries, the emphasis is on process innovations. And consumer-packaged goods manufacturers tend to concentrate on branding and distribution. But if all firms in an industry are seeking opportunities in the same places, they tend to come up with the same innovations. Thus, viewing innovation too narrowly blinds companies to opportunities and leaves them vulnerable to competitors with broader perspectives.

How to think differently

Mohan and his co-authors then continue to explain how companies can avoid innovation myopia...

We propose anchoring the discussion on the customer outcomes that result from innovation, and we suggest that managers think holistically in terms of all possible dimensions through which their organisations can innovate. Accordingly, we define innovation as the creation of substantial new value for customers and the firm by creatively changing one or more dimensions of the business system.

The authors define twelve such innovation dimensions in total. These are: Brand, Networking, Presence ("where"), Supply Chain, Organisation, Processes ("how"), Value Capture, Customer Experience, Customers ("who"), Solutions, Platforms and Offerings ("what"), They then continue...

Traditionally, most firms’ innovation strategies are the result of simple inertia or industry convention. But when a company identifies and pursues neglected innovation dimensions, it can change the basis of competition and leave other firms at a distinct disadvantage because each dimension requires a different set of capabilities.

Co-Creation and new theory of Disruptive Innovation

I am particularly interested in how certain of these innovation dimensions are now more capable of disrupting incumbent firms than others. For example, I had a chat with Karl Long about how co-creating firms have the potential to disrupt existing markets in new ways (Clayton Christensen in The Innovators Solution writes only about how simpler, cheaper, more convenient products and technologies can disrupt existing markets). So for example, using the article's dimensions – co-creating firms should seek to innovate along a co-ordinated combination of Brand (Engagement), (Social / Community) Network and Customer Experience (Design / Elements) dimensions. Importantly, to be a successful co-creating open business, it is not enough to excel in one alone but all three simultaneously.

A bank that podcasts!

First Direct, by a country mile the UK's best and most innovative bank, has launched a great new podcast service to help customers stay informed whilst on the move (and all other usual contexts).

They are probably the only bank I know where customers would be willing to "listen in" to what it has to say. But the great thing about the new service is that the podcasts are not polished or crafted by some brand or PR agency and then delivered by a professional "talking head". No, they are given by First Direct staff ... directly..

The first, a podcast on how customers can better manage their online security uses an interview with the Head of E-Commerce, Darren Sugden to get several messages across, most of which are non-banking related.

How brilliantly authentic and a terrific example of customer advocacy.... Hats off to First Direct who continue to drive innovation in UK financial services.  I almost look forward to the next instalment... !

Experience hierarchy and non-market co-creation

Over at Experience Curve, Karl Long is further deepening the analysis of customer experience elements that enable and promote co-creation.

Using the example of Second Life, the online multi-player gaming environment, Karl is doing a good job dissecting the components and catalysts of successful co-creation. These include:

• Developing a foundation of Trust
• Motivating and Educating the Customer to become more active participants
• Extending the emphasis on lean consumption-style, functional usability
• Providing access to peer group knowledge and skill
• Facilitating Individual freedom and control - or autonomy as Karl describes
• ... leading to emotional / aspirational co-creativity and participation

What is interesting is Karl's use of "De-Motivators" and "Motivators" to identify both tablestake elements - those critical foundations upon which co-creative interaction can build -  and motivators - those which speed the rate, frequency and learning intensity of customer co-creation.

I think it is fair to say that my past emphasis on understanding the dynamics of co-creation has had a distinct firm-centric or managerial slant. That is to say that I have been concerned about how firms can evolve from largely closed systems to open, co-creating learning systems. In effect, I have been exploring how old market learning capabilities (e.g. CRM style customer data gathering and profiling, traditional market research, segmentation etc.. ) can be usurped by new co-creative market learning mechanisms that emphasise much greater customer involvement and knowledge. 

I can see now that many of the elements for successful co-creation exist outside the corporate or market mechanism of exchange, no matter how advanced a firm is in enacting new capabilities to learn from customers.

Rather, successful co-creation requires firms to find an appropriate locus of learning between both market and non-market sources of ideas and knowledge. Of course, the latter, founded on self-organising attention and engagement are mostly independent of market mechanisms and industrial age capitalisation altogether (Second Life being a good example). The problem is that many established firms still feel able to enter into these non-market, autonomous idea pools using industrial age logic and rational economic arguments, as well as in some cases tired and outmoded marketing efforts where the emphasis is on surface-level tinkering of the customer engagement model, not its wholesale and holistic realignment and reorientation.

I find that Karl's thinking and summary of co-creation experience elements can help such firms to discover the true meaning and enablers of co-creation through advanced forms of engagement driven by holistic experience elements. I suggest you take a look too...

Google targets mobile future

Great BBC article here about how Google understands the specific user context of mobile search...

Highlights for me are the following quotes by Dipchand "Deep" Nishar, the man in charge of Google Mobile.

"The same search query, because of the context, means very different search results," said Mr Nishar. "Search on mobiles is about finding not browsing.

"It's a smaller form factor and you are not going to sit at it for three hours. Most people in the developed world are within 20 or 30 minutes of broadband and a screen, and that's when they will browse.

"On a mobile it's important that you find it right away."

This means that Google has to slice its huge corpus of data differently for mobile users and tailor results to where people are sitting or standing when they make the query.

For instance, he said, the first result that comes up after typing "film" into a PC browser is the Internet Movie Database.

"But type 'films' into a mobile browser and you are most likely going to see a movie," he told the BBC News website.

In outcome-driven innovation parlance, the article illustrates the importance of understanding the "Jobs" that different customers (from different cultures) are trying to get done when using their mobiles for search. Jobs can be both functional or emotional (social / personal) in nature.

Once these different Jobs are known, then it is possible to identify the different desired outcomes that people are seeking to achieve when using their mobile for search. By identifying important yet unsatisfied outcomes,  companies can spot more precise opportunities for creating breakthrough product and service innovation.

I am running a pre-conference workshop on Outcome Driven Innovation in Telecoms at the IIR Telecoms conference on Churn and Loyalty in Amsterdam on July 10th. More details can be found here.

Kraft tightens filter on customer innovation ... and misses opportunity

Kraft chief executive Roger Deromedi has just announced the second phase of its open innovation strategy, InnovatewithKraft. The invitation, as the new website explains, is as follows:

Do you have a new product or packaging idea that you think might be valuable to Kraft Foods? At Kraft, our Innovations Team welcomes these new ideas, and sincerely hopes that you choose to share your ideas with us.

Looks teriffic in principle until you realise the strict rules that are being applied to the ideas sought and the process for submitting them. I won’t repeat them all here but this statement sums up the general Kraft attitude:

Each year, Kraft receives many ideas from people and organizations outside our company. While we are always interested in new ideas, you should know that most of what we receive (or will receive in the future) is not (or will not be) new to us. This is because, as you might guess, Kraft has a large staff of scientists and marketers who are continuously working to develop and improve our products, packaging and processes. Therefore, many submissions from "outside" Kraft actually duplicate Kraft's current or past research and development efforts. Many other ideas simply fall outside the scope of our business interests.

Doesnt that statement come over as well a tad arrogant? Well, as Kraft receives so many obviously worthless ideas, the company now only wants to receive ideas that are beyond concept stage – that is, ideas for products, packaging and business processes or systems that are almost market-ready. My guess is that the likelihood of anything useful turning up is limited at most.

 

But then again, I see they are inviting invitations for new business processes.  Hmm... maybe I can suggest a new open innovation business process, one in which Kraft:

• Focuses on the co-learning opportunities from active dialogue and engagement with customers, and not just the capturing of fully realised, explicit product and packaging concepts
• Clearly and persuasively motivates individuals and businesses to innovate for Kraft and provides some compelling rewards for them to do so
• Puts some emphasis on the innovation potential of a community of Kraft customers and partners
• Has a mutually advantageous intellectual property sharing programme
• Uses the personality of its chief executive to inspire and champion the ideas programme - not a faceless innovation team
• Is supported by an open conversational marketing and brand communications infrastructure to facilitate new social interactions between Kraft and its customers
• Is not just open to US residents (what about all that global cultural diversity to source ideas from?!)
• Is not obviously a half-hearted and apparently hastily put together programme (the Kraft ideas submission document is a straight .pdf word file – compare that to P&G’s lavish Connect and Develop brochure)

 

Nevertheless, despite my reservations, I can foresee that marketers and business commentators everywhere will use the scheme as further evidence of the corporate shift to openness, inclusivity and co-creation. That is great of course but in this case, I am afraid this isnt such a shift. The Kraft scheme represents a tightening of its open innovation strategy, a reversion to a closed system and not a fundamental transformation in its approach to sourcing new ideas from the market.

 

If you have any additional suggestions for improving the Kraft open innovation programme, let me know. We can make a joint submission….

Right Side Up: Turning Business on its head

21st century economies are being reconfigured around a new goal: improving the economics of individuals (as distinct to improving the economics of companies). Why is this happening? What does it mean for individuals? And what does it mean for the organisations they deal with?

Check out the new website of the UK Buyer Centric Commerce Forum which explores the theme of individual-centric economies. There are a load of free resources, including papers, to download without registration.

(Buyer centric commerce is a new way of doing business. A buyer-centric organisation looks at the creation and exchange of value from the point of view of the individual – ‘the buyer’ – rather than from the point of view of a producer, supplier or seller)