January 2009 Archives

The emerging disciplines of customer-driven innovation and value co-creation don't enjoy a natural fit with existing mental maps of managers. 

Most marketing executives equate involving customers in the innovation process as ceding control.  They perceive customers' demands for co-creation as a threat, wrongly believing that it weakens and undermines a company's need for controlling transactions with consumers.  Other authors like Charlene Li and Josh Bernoff in Groundswell and C.K. Prahlad and V. Ramaswamy in The Future of Competition have also recognized this reluctance and anxiety on the part of companies.  

Consequently, developing and implementing a customer collaboration capability is not merely a matter of implementing a recipe; it also requires a shift in mindset. The three prerequisites for a new mindset that encourage managers to look beyond traditional models of markets, where markets are disjointed from the value creation process to newer models, where markets are isomorphic with the value creation process, are:

• Authenticity
• Flexibility
• Conviction

Authenticity

Companies have agendas and consumers have agendas.   The difference is that consumer agendas are for the most part transparent.  For example, consumers want safe toys, easy to use plug-and-play products, and hassle free customer service.   Company agendas, on the other hand, are not always unambiguous or easy to understand.

Authenticity, as I conceptualize it, is part ethics, part transparency, and part trust.   It is an orientation, or intent, that a company brings to its collaboration and value creation efforts with consumers.   Over time, if reinforced by right action, it gets transformed into being perceived as a company trait.  It is a heart response on the part of the consumer towards a company, not a head response. 

Few companies wear the badge of authenticity as well as Johnson & Johnson.  Ask the millions of moms who visit its award winning global community BabyCenter.   Somehow, they are convinced that J&J will not compromise their interests.

Flexibility

Today's consumers have a definite point-of-view on a number of issues, ranging from t-shirt designs (Threadless), nutritional value of various foods (Acai fruit berry), appropriateness of diets (South Beach Diet), to issues related to child labor and living conditions of workers in Nike and Levi's factories in Asia.

 Flexibility speaks to a greater willingness on the part of the company to accommodate opposing points of view.  There is no rule that says that companies and customers have to agree all the time.   What is absolutely essential is clear communication about what the company has paid attention to and how it has adjusted its own stand as a result of the customer's opposing point-of-view.

It was the activists who first brought Nike to its knees, drawing attention to child labor in its Asian shoe producing factories. Nike admitted its blunder acknowledging that it blew it.  The company did not close down its Asian factories, but instituted significantly more stringent age monitoring and hiring controls, which it broadcast widely in its corporate responsibility reports.   The activists have yet to give Nike a passing grade, though consumers seem to have accepted Nike's accommodation and self-policing.  Nike boasts of some of the most successful customer-driven innovation programs; just ask the world's football (soccer) fanatics - customer-driven innovation programs have been implemented for shoes, t-shirts, and other team/country related merchandise.

Conviction

Companies have a choice.  They can either treat emerging customer-driven innovation initiatives as a substantively new way of shaking hands with the market, or as a way of keeping up with the powerhouses - Apple, Samsung, P&G, Nike, and Nokia.  Symbolism is likely to be penalized.   

Wal-Mart's attempt at engaging teens in their community The Hub lasted only ten weeks.   The problem was not with Wal-Mart's intentions; they probably meant well and wanted to build a safe environment for teens to interact.   However, whether Wal-Mart was convinced that this was the way of the future is seriously debatable.

Contrast this case with the example of WePC.com, the first community-designed laptop.   A joint venture between ASUS and Intel - it demonstrates that positive outcomes occur when companies approach the new model of customer-driven innovation and value co-creation with conviction.  Even when companies operate outside their zone of comfort!  Intel is a chip company, not a builder of laptops.   

Companies need to recognize that in the absence of a shift in mindset, efforts at implementing customer-driven innovation programs are likely to stall.  It would be far too easy to shoot the messenger, or fault the recommended solution. 

However, as the good bard reminds us - the fault dear Brutus lies in us, not in our stars. 

It is not just a simple matter of adopting newer models of open innovation.  Adoption and implementation of these newer models must also be accompanied by a new and different way of thinking of the relative roles of companies and customers in creating future value.