Vox Populi (Episode Two)

In the first episode of this new thread I introduced you to Open Innovation, a practice that is rather new and consists of involving outsiders into the act of designing new products, or improving existing goods. Now, why would companies listen to what a bunch of people that is not part of the workforce have to say?

The most immediate reason is, perhaps, the fact that a company’s pool of talents can be expanded without enlarging the size of the workforce. In the last few years, consumers have been connecting through blogs and online forums, sharing their points of view on products’ features, rating them, telling about their experiences when using the products, and even recommending solutions they implemented when they found problems. So why not take advantage of all that energy and orient it towards the creation of new products or the improvement of a brand portfolio? It can be faster and cheaper than conducting focus groups or traditional polls; plus, blogs and similar applications can be used for creating expectation for upcoming launches.

This same phenomenon -groups of customers speaking their minds online- can be translated into another benefit: demand forecast. LEGO invited customers to create new models and then financially rewarded the people whose ideas proved to be marketable. Fluevog and Threadless are websites where members can submit shoes and T-shirt designs respectively, and the ones that get the largest number of votes are manufactured. Some consumer goods brands have designed marketing campaigns where customers could choose among possible flavors or scents for new products, and only the most popular ones made it to the market.

Customers are not the only crowd a company can turn to: in fact, professional and scientific online communities can be more suitable for certain businesses. The pharmaceutical industry is strictly regulated, and the researches that are carried out for the development of new drugs usually take several years. According to a McKinsey study on open innovation, scientists from five universities have accepted a sharing agreement that will let the Myelin Repair Foundation (MRF) retain the rights to license discoveries to pharmaceutical companies. This novel medical-research model is based on co-creation among a closed group of researchers who aim to develop a drug that will treat multiple sclerosis; and MRF hopes to complete its work within five years… 75% faster than the time required by current research models. DuPont, the global chemicals and health care company, is also taking advantage of online networks of researchers and technical experts, awarding cash prizes to people who can provide solutions for R&D problems.

So far, Open Innovation seems to be a fantastic thing: it can reduce the time that is needed to develop new solutions, reduce the uncertainty of demand and bring some new ideas to the table. Of course, it’s not as easy as it sounds to implement an Open Innovation program, but you can find some real-life cases on how and when to apply this practice… in the next post :)