Crowds - Are you harnessing their knowledge?

So you have been tasked with coming up with the next generation killer product by your company. You have mainly two ways of doing this – get a killer team in place (hopefully with diverse skills), freedom to experiment and periodic reviews to ensure that work is progressing OR open out to your customer base and partners to work along with you to come up with the killer design

As you can imagine, the first approach was the traditional way of doing it and is still pretty popular amongst old generation companies. Car companies are the best example that comes to mind for this. Think of it. Every time a new car is launched, there is lots of effort which has gone into it. So it is really a pity if it is not well received by the people and has to be discontinued!!! That is a huge amount of money which is wasted. But companies are still happy to pursue this model and rely on 1 or 2 success stories ignoring all the other failures. You can argue that there are lessons to be learnt from all failures – while that is right; it is a pretty expensive way of learning. Look around and you will find this model being adopted by quite a few industries from software products to banking/insurance products. So what are the problems with this approach? The main one is that customer feedback is got only at a very late stage and can’t really be acted upon.

So, is there an alternative approach? Of course there is and it is slowly catching the imagination of the world. In this approach, the final product is developed by the company but with active participation from the customers and business partners in the design process. The most recent example of this is Nokia who opened up the design of the next generation mobile phone to all their customers or Cisco who has announced the iPrize to get some creative new ideas from the crowd which they will be implementing. The advantage of this approach is that you are getting ideas or suggestions from the people who are ultimately going to use the product and you can rest assured that these are passionate people who are very much interested in the domain. So while you can’t guarantee success every time following this approach, you do increase your chances significantly since you are working on the feedback of your lead customers in an agile kind of environment. While all this sounds good, are there any pitfalls with this approach? The main one is around the management of the various feedbacks received. Companies could find that they are overwhelmed by the response and it is certainly not possible to incorporate all of the feedback to please all customers. Hence companies need to invest in some platform to manage the responses and work with them.

Ideally I think companies should plan to use a mix of both these platforms. While customer feedback may be a very good way of getting incremental innovative ideas, it may not really work when it comes to coming up with radical or blue sky innovative ideas (those involving challenging all existing boundaries or parameters). So these are best approached with a traditional platform and by involving R&D staff (preferably through open innovation but that is the topic of another post). Also a few of the feedback may be totally impractical to implement given our challenging environment (budget constraints, time to market etc). However the strength of the customer feedback platform is the ability to get suggestions from the people who matter. In this context an example worth mentioning is about P&G. Apart from its famed “Connect & Grow” program, which was hugely popular in rewriting most of the rules about partnership, another program which is not talked about so much but is equally popular is the effort taken by P&G to actually design separate products for its new markets (China/India and other low cost economies) rather than trying to fit their existing product lines to these markets. P&G actually had their staff spend times at these different market environments observing how their product is being used by the people in the different countries and tweaking their product line appropriately. The customer feedback platform can be used for the same purpose and there is huge potential if this is used extensively.

So – for all you companies trying to come up with the next iPod killer, there is help at hand. There is a crowd out there whose knowledge can be leveraged to get the best benefit and create win-win situations. In the future I don’t think it is going to be a choice whether you want to use this knowledge or not – the case for using it is pretty compulsive.

A final word of caution – The engagement with the crowd needs to be done with the aim to create win-win situations for the crowd and the company. As I said earlier, the crowd will be happy to participate when they realise that there is something in it for them. It need not always be monetary benefits though that can be a very good starting point. But at the same time, they will be very quick to disappear if they realise that either they are being exploited or their contributions are not being valued. This is a very thin line and so care must be taken to ensure that this line is not crossed during the engagement. This is like an additional channel and these participants are like your extended employees. If you are willing to invest both your time and energy in this, it will prove beneficial in the long term. But it does need nurturing. However at the same time, if you push too hard or try to get too much benefits without demonstrating the value, you will risk closing this channel forever. The choice is yours.

I am sure you will choose wisely.