Expand your horizons: why innovation must come from external sources
Alex Allwood suggests open innovation is the key for future-facing brands that put their customers at the heart of their innovation efforts.
It would seem that customer-centric innovation is the new ‘must have’, as customer experience becomes a business imperative leading brands to rethink value creation. In just the past week the Queensland Government and Nestlé launched their respective open innovation platforms to begin collaborating with customers.
The Queensland Government is set to disrupt how it solves community problems using PwC’s new B2B innovation platform. The platform enables scaling of the current narrow tender process to using Open Innovation where businesses will compete to solve the State’s challenges. Already live is the challenge to improve water quality for the Great Barrier Reef.
Open innovation (OI) is also referred to as co-creation and crowdsourcing and is a customer-centric innovation model that can be applied to any sized commercial or social problem to generate ideas from both inside and outside the business.
With rising development costs and shorter product life cycles the model’s inherent value is speed to market and reduced costs in research and development to determine feasibility and market potential.
Ten years ago OI was seen as cutting edge and high risk; what’s emerged is innovation best practice that enables customer collaboration to solve business and social problems with increased speed and efficiency.
Conventionally, multinationals have a traditional paradigm of innovation where value is created ‘inside the company’. The process of customer-centric innovation changes that paradigm to incorporate active participation from outside the organisation in exchange for a voice in what gets designed; the process ultimately delivering shared value.
The power of customer-centric innovation is the way it assists brands to think more broadly about their customer, helping brands see clearly from multiple perspectives in designing products, services and experiences – reducing the risk of innovation efforts not meeting customers’ needs and expectations.
Leading consumer goods company Unilever is a global manufacturer of food, home cleaning and personal care products. Launched in mid 2015, their OI initiative, Foundry IDEAS is a technology platform for crowdsourcing ideas from consumer networks, influencers and innovators to co-create solutions to sustainability challenges in the areas of sanitation, hygiene, and nutrition.
Their corporate website proudly states “Foundry IDEAS is our new platform to meet those people who can be part of the wider solution, working collaboratively to develop their ideas, giving people the opportunity to help change the world.”
This model of customer-centric innovation is based on scaling the organisation’s innovation efforts from a limited number of people and ideas within the innovation ecosystem to accessing infinitely more ideas outside the business.
This approach reduces the risk of innovation efforts not meeting customers’ needs – driving enthusiasm for new product releases, turning communities into brand ambassadors and promoting positive word-of- mouth.
Bringing loyal customers and brand fans together with a shared experience develops a deep sense of community. People participate for many reasons: to be connected to like-minded people, to indulge a shared passion or interest or to contribute to the greater good. Importantly, it gives co-creators a say in what the brand creates using their personal content, knowledge and resources in exchange for shared value.
The Lego community has been co-creating new product design since 2008. The organisation’s objective is to increase the number of product ideas while improving customer engagement. Lego has over 180 designers working on product ideas and crowdsourcing helps with this process.
Using the Lego Ideas platform, brand fans submit their new product ideas. Once a submission reaches 10,000 community votes, Lego evaluates and selects which designs get developed. Fans whose ideas are selected receive a 1% royalty on the net revenue and designer credit in the set material.
Winners have included a miniature version of NASA’s Mars Rover Curiosity, created by a NASA engineer, and the Ghostbusters Lego set created by a 35-year- old Australian fan.
Crowdsourcing for advertising and promotion features as an important strategy in today’s marketing playbook. Unlike other marketing approaches, crowdsourcing enables brands to tell authentic stories from the customer’s point-of-view in an engaging way; with the additional benefits of access to customer data and insights to improve value propositions, content creation and customer interactions.
With the advent of customer-centric innovation driven by brands capitalising on the competitive advantage of customer experience, organisations are redesigning their innovation efforts to boost speed and efficiency.
Open innovation is ‘the new black’ for brands to create high-level customer engagement, leverage the potential of mass intelligence, and in doing so, enrich the process of experience design.
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