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Reverse Innovation: A Conversation with Vijay Govindrajan

2012-04-19T02:07:13Z

Meet Vijay Govindrajan, VG to the world.

Widely regarded as a leading expert and thinker on strategy and innovation, he is the Earl C. Daum 1924 Professor of International Business at the Tuck School of Business (Dartmouth). More relevant from a personal perspective, he was my Professor at IIM Ahmedabad, first year, first trimester, Managerial Accounting, summer of 1974.

While his accomplishments and awards are too numerous to list in a blog, two deserve a special round of applause.

First, Thinkers 50 recently awarded him the 2011 Breakthrough Idea Award for sparking a global conversation and challenge to build a $300 house (I was part of the effort), and ranked him number three in the definitive listing of the world's top 50 thinkers

Second, a 2-year stint as Professor in Residence and Chief Innovation Consultant at GE, led to a celebrated HBR article on reverse innovation, co-authored with Jeff Immelt and Chris Trimble, which recently culminated into a book - Reverse Innovation: Create Far From Home, Win Everywhere.

The book was launched globally on April 10, and it is where we pick up the action. He very kindly agreed to visit with the readers of this blog to share his thoughts on Reverse Innovation and the key themes of his book.

VG, hearty congratulations on the Thinkers 50 award, the HBR article with GE's CEO, Jeff Immelt, and the book on Reverse Innovation, must be very heady times?

Thanks Gaurav. Yes, heady and humbling times. The book is the culmination of decades of research, but the reverse innovation journey is just beginning, gaining global momentum, as we speak. All that I can say is I am truly excited about the road ahead and the potential impact of reverse innovation thinking on the growth of multinationals in emerging countries.

Reverse Innovation - in a nutshell?

Historically, large multinationals, residing in rich, developed countries, innovated in their home countries, and then exported that innovation to the not so rich, developing countries. Reverse innovation is exactly the opposite. Innovations are developed and adopted in poorer, emerging economies, and are subsequently adopted by customers and companies in richer, more developed economies.

A few examples please, to illustrate reverse innovation?

GE Ultrasound Machines - we discuss this example in the article and the book. In markets like India, where more than 60% of the population lives in rural areas, without reliable sources of power, you can't have effective health care service models that rely on the patient coming to the hospital, you have to take the hospital to the patient. Large ultrasound machines that are the size of appliances and cost between $100k to $500k are impractical and cost-prohibitive. A light, portable, PC-compatible ultrasound machine, costing as little as $15k, was developed in India to help the local market meet its needs. This equipment is now finding its way to developed markets - an example of reverse innovation.

Gatorade - is another fine example of reverse innovation; it's also the first case study in the book. Quintessentially American, Gatorade actually has its roots in the treatment of cholera patients in Bangladesh and other South Asian countries. To treat severe diarrhea caused by Cholera, patients were kept hydrated by giving them carbohydrate rich concoctions comprising of coconut water, carrot juice, and carob flour. A centuries old tradition on that side of the world, it was a total shock to doctors trained in western medicine, who believed that putting carbohydrates in the stomachs of cholera patients would worsen their condition. But as they say, results speak for themselves. So, it was only a matter of time before the British Journal Lancet covered the story, and a doctor in Florida reasoned that if it is good enough to rehydrate unhealthy cholera patients, surely it must be good enough to rehydrate healthy Football players.

In your book you state that Reverse Innovation requires a clean slate approach - interesting juxtaposition of words, slate and innovation - but that aside, please explain what constitutes a clean slate approach?

(Laughs) Yes, it is interesting, the juxtaposition of slate and innovation, now that you bring it to my attention. By clean slate I mean that winning in emerging markets requires much more than geographic expansion, meaning it requires more than simply ramping up sales, distribution, and production. I recommend looking at these markets with an entirely fresh set of eyes, with an intense amount of curiosity, supported by an abiding admission that the needs of these markets are different than those at home. It will require rewriting the script, away from exporting innovations to emerging markets, to innovating in emerging markets.

You are not a big fan of the word - glocalization?

No, I am not, because at heart glocalization is still about exporting products. Glocalization does not take into account the fact that the structure of markets and customer needs are fundamentally different in emerging markets, and hence require a set of "clean slate solutions." (Smiles, I smile too).

What do you see as the single biggest opportunity in the coming years for multinationals?

Emerging markets becoming more than nominal contributors to the sales and growth of multinational companies. In the next 25 years, the single biggest opportunity I see for multinationals is customers moving from rich countries to emerging/poor countries - reverse innovation should make that possible.

Reverse Innovation is where you live, and Co-Creation is where I live - do the two intersect?

(Smiles) Is that a trick question?

Not at all! (I protest - though asking VG trick questions would be quite cathartic, given all the trick questions he asked us when he taught us Managerial Accounting).

Most definitely they do. The $300 House initiative - you were part of that movement - it also received the Thinkers 50 Breakthrough Idea 2011 award - is an excellent example where Reverse Innovation and Co-Creation intersect. In fact I would go one step further, they don't just intersect, they positively reinforce each other. If the structure of markets and consumer needs are different, then so must be the architecture of solutions and customer experiences, a perfect set up for Reverse Innovation and Co-Creation to work with each other, and for end users and customers to collaborate in co-creating innovative solutions and experiences.

Could you share three key themes from your book for the benefit of busy executives who may not have had a chance to read it yet?

Just three?

Yup, just three.

(Groans) Boy, you sure make it tough, Gaurav. (It's my turn to smile now).

I would say the three key themes are:

You must innovate, not simply export, if you want to capture the mammoth growth opportunities in the developing world.
The stakes in emerging economies are global not local. Passing up an opportunity in the developing world today may invite formidable new competition in your home markets tomorrow.
Legacy multinationals must rethink their dominant organizational logic if they are to win in an era of reverse innovation.

Thanks VG - most gracious of you to have shared your time and thoughts. Hope we can get together again soon for another round.

Absolutely, this was a lot of fun. You know where to find me.

Co-Ceation Stories: A Plea For More Variety!

2012-03-26T18:18:30Z

Have you been to an Innovation conference lately?

Then you must have noticed a peculiar variant of the 20-80 rule at play!

A handful of companies - Apple, Nike, P&G, GE, Google, Walmart - provide virtually all the fodder for industry examples and case studies. Not just at one conference, but several. Net result - we get to hear the same stories, with different spices and seasonings of course (depending on who's presenting), over and over again.

Begs the question, do we really benefit by listening to stories and case studies of just the giants - majority of them from the US? Especially problematic in a global world, wouldn't you say? Is nothing of consequence happening in other parts of the world?

And then why do we only hear wildly successful case studies? Is no one out there failing? Surely there have to be. Just look at the plethora of articles in magazines like Harvard Business Review, Sloan Management Review, Fast Company, and Wired urging companies not be afraid of failure, and to learn from failure.

I am ready, here - the guy with his hand raised - I am ready to learn from failure. But how can I, if case studies dealing with failure and learning from failure are never presented?

And what about the non-hall-of-famers? "Unusual Suspects" (taking liberties with the famous line from Casablanca) tucked away in different parts of the world also have a lot to teach us. Korean companies, Turkish companies, Brazilian, Australian, and Malaysian companies; Indian and Chinese companies too, and not just Tata Nano and Baidu! Its time we heard their stories as well, and celebrated them, the way we celebrate Steve Jobs and Apple, and Jeff Bezos and Amazon.

In that spirit let's celebrate Hyundai, not unknown, but definitely short on conference exposure and attendee applause/recognition.

Cars carrying the Hyundai badge have made impressive sales and market share progress in the US, and have achieved market share leadership in growth markets like India. In the eyes of an everyday auto buyer, the Hyundai line-up may lack the cache of a BMW, Cadillac, or Mercedes, but not when it comes to auto experts. They have been rewarding and recognizing Hyundai models for several years.

Earlier this year, the Hyundai Elantra was chosen as the 2012 North American Car of the Year, an award designed to recognize the most outstanding new vehicle of the year. What made the award unique was that instead of being given by a single media outlet it was awarded by a coalition of automotive journalists from the United States and Canada who represent magazines, television, radio, newspapers and web sites. This was not Hyundai's first trip to the podium - in 2009 the Genesis won, and the Sonata was one of three finalists last year.

If this is not enough, visit Hyundai's website, and click on Awards and Reviews. The website provides a variety of awards not just for its car models, but also for its engines, emissions, green characteristics, and customer loyalty, in a variety of market segments. Surely none of this would have been possible without healthy investments in innovation, and a few (or several) false starts. So, let's hear from Hyundai.

Even in the area of collaboration and co-creation Hyundai has a lot to share.

In Feb. 2009, Hyundai partnered with Passenger, the technology leader in on-demand Customer Collaboration, to create the "Hyundai Think Tank," a private online community for Hyundai owners, to help shape and co-create the future of the brand. Several interesting initiatives have been co-created with the help of this community, notably the Hyundai Assurance Program.

More recently, to usher in its new "breaking-the-mold" compact car, the 2012 Veloster, Hyundai launched an ultra-creative co-creation project. Called Re:Generation, 5 DJs - Premier, Mark Ronson, Skrillex, Pretty Lights and The Crystal Method - turn the tables on the history of music as they collaborate, co-create and reimagine five traditional styles of music, from the classical perfection of the Symphony Orchestra to the bayou jams of New Orleans jazz.

Simultaneously, Hyundai has also launched a global co-creation challenge on eYeka, a co-creation challenge platform, to echo the spirit of the Veloster- a groundbreaking car that challenges all preconceived notions of what a coupe should be. Hyundai is inviting participants to demonstrate how new thinking can challenge conventions for the better and how new possibilities can be created in life, through 30-60 seconds video/animation or illustration.

This is rich material that would stimulate and inspire virtually any professional engaged in innovation and co-creation. I am sure there are others out there, equally brilliant and creative as Hyundai. Can we hear and learn from them?

Hope you are listening dear conference organizers and presenters. Please give us more than just the "usual suspects." In turn, we promise to turn off our smart phones, our i-everything, and stay glued to our seats!

Merci beaucoup!

Ginni Rometty: IBM's New CEO On Customer Centricity and Innovation

2011-12-22T22:18:04Z

CEO successions at large companies, like Unilever and IBM are not spur of the moment decisions. They are carefully orchestrated and managed - with the bulk of the action often taking place back stage.

So are their interviews with the media and analysts - well rehearsed and predictably patterned. Which is what makes Ginni Rometty's interview with Fortune, shortly after her appointment as the new CEO of IBM - no palace coup, Sam Palmisano is retiring - so terribly refreshing.

There was none of the usual pabulum about vision, and globalization, and the new normal; just solid insights.

Allow me to share a few that resonated most with me.

Reinvention: When asked what was the most important thing she had learned from Sam, Ginni replied - "the biggest thing Sam taught me, and not just me but the whole company was: Don't accept inevitable." Meaning, you've got to keep reinventing, constantly making new markets, like Smarter Planet, Analytics, and the Cloud.

Personally, I really like this emphasis on creating new markets. One of the least discussed tenets of customer-centricity is leading the customer, creating new markets, as Swatch, Starbucks, and Tata Nano have done.

Implementation: It helps if you are the author, or co-author, of the company's strategy. Ginni Rometty was an integral part of building IBM's current strategy, the 2015 roadmap. Not surprisingly therefore, her dominant focus will be on implementation and execution. That said, it was still refreshing to hear that reaffirmed - too many companies spend too much time rearranging the furniture, and not enough time following through on their commitments and convictions.

Value Proposition: "What do you stand for" is an easy question to ask. It's a very difficult question to answer, especially for companies as large as IBM. It was very well answered in the interview - IBM stands for client value, R&D, and Innovation.

Several of my blogs have discussed two of these issues in depth - customer value and innovation. Its one thing to know what the right things are - it's another to be committed to them. Given the near death experience IBM had in the 1990s, it's unlikely that they will take either customer value or innovation for granted. Or get smug about their achievements. Both hallmarks of companies primed for long term success.

Learning Mindset-Longer Horizon: In his book "How the Mighty Fall" Jim Collins speaks of the dangers of hubris, the enemy of long-term success. Of all the elements that comprise hubris, thinking that a company knows all that it needs to know to manage both its current and future operations is the most toxic. In short, not having a learning mindset. So one has to take note when Ginni Rometti says rather candidly - there are a lot of things we don't know yet.

Additionally, both academicians and consultants have railed against short-term thinking, favoring quarterly gains, sometimes at the expense of long-term performance. This is especially true for activities that form the spine of the business, such as R&D. Even more pleasing to hear IBM's newly appointed CEO talk of the longer-term horizon for IBM's R&D efforts, and to continue historically aggressive levels of R&D spending.

Business-driven Technology Agenda: This blog has carried several features on customer-driven innovation, on customer-led marketing, and customer centricity. It has even quoted Ted Levitt on a few occasions, especially his classic - customers don't buy ¼" drills, they buy ¼" holes. IBM is a Technology company. But Technology is at best a ¼" drill. The sad part is that several companies still love their products and factories more than they love their customers (courtesy Regis McKenna - Real Time). Based on her interview, it appears that IBM is unlikely to make that mistake any time soon - not just technology for technology's sake, but for the effect it can and will have on the world. Ginny Rometti offered the example of Watson, and its potential to reshape healthcare around the world in our lifetime.

A very dear friend and business associate, Gary Kirby (who used to work for Glaxo/Glaxo Wellcome/Glaxo Smith-Kline, and who is sadly no more), and I used to enjoy asking questions like:

Who reads the HBR?
Who follows the advice of leading management thinkers?
What types of companies are most turned on by implementing next-generation management practices?

Regardless of how we cut it, we came to the same, painful realization that smaller companies were often the hungrier, more eager, and took more risks, perhaps because their survival depended on it.

It's heartening to note - at least based on the interview - that behemoths, like IBM, are hell bent on showing that they too are hungry, keen, and eager. That they can be the fountainheads of next-generation management practices. We applaud them!

Amazon: Building The World's Most Customer-Centric Company

2011-10-21T18:47:26Z

I received an email from Amazon a few days ago informing me that they were refunding me $2.50 on an item that I had preordered. The reason offered for the refund was "pre-order price protection."

Two things about the email got my attention.

First, the company had reached out to me of its own accord. If someone had walked up to me minutes before I read the email and quizzed me on Amazon's "pre-order price protection" feature, I would have got an F, because I would have replied - "what's that?"

Second, and even more interesting was the claim at the bottom of the email - We are building the world's most customer-centric company.

Since customer-centricity is a hot topic and a priority for several business professionals and companies I decided to dig deeper and discover what makes Amazon so customer centric. Amazon's own explanation - a place where you can find and buy anything online - doesn't quite cut it from me. It may serve well as an advertisement for the world's largest online bazaar, or as a vision statement, but not as an explanation.

So, I went digging to understand how Amazon - the entire company - organizes itself around the customer. I decided to use Jay Galbraith's 5-point framework of Strategy, Structure, People, Processes, and Rewards to guide my inquiry.

Strategy and Culture: The true character of a company is revealed by the choices it makes and not by the slogans on the T-shirts it wears. Every company wants to get closer to its customers. Few succeed. Because despite the rhetoric, most companies still love their brands, technologies, and factories more than they love their customers. Not Amazon. It has very successfully crossed this chasm - its strategic choices are directed by a simple dictum, what's good for the customer in the long run is good for us. It is strategically obsessed with continually creating and innovating customer value; it doesn't waste its energy and/or resources obsessing about itself or its competitors.

Structure: Agility and Flexibility are greatly valued traits in organizations. However, without the spinal strength of conviction, agility and flexibility is merely blowing in the wind. As the great poet Kipling advises us:

If you can keep your head when all about you
Are losing theirs and blaming it on you;
If you can trust yourself when all men doubt you,
But make allowance for their doubting too;

Translated, in an organizational setting, it is the balance between the exuberance of the shorts with the pragmatism of the suits that holds the key to future performance. Amazon has done well in striking a balance between when to throw the organization chart out of the window and when to dig in and let experience rule.

Processes: The fundamental goal of most processes should be to provide the customer with a hassle-free experience. Too many companies are so preoccupied with knocking the socks off their customers that they forget the leaky pipes and flooded basements. Companies first need to get the basics right - customer delight will follow. Amazon's processes are transparent and motivated by a single dominant concern - how to help customers buy more intelligently. Its One-click check out, Golden Box, Bottom of the page deals, Look Inside, warning messages if a customer is placing an order for something they have already bought before, its willingness to feature negative customer review on its own site - all point to one very simple motivation - if it makes sense from the customers' point-of-view, give it to them. Simple.

Rewards: So much has been written about the dangers of the next quarter mentality, yet so many companies continue to pursue it zealously. A long-term view is not for the faint of heart. Amazon has very successfully demonstrated the benefits of shunning lollypops and candy for more enduring sustenance and nutrition. By actively deciding against chasing quick bucks Amazon has successfully invested in ongoing customer relationships and built long-term customer equity.

People: I have blogged about and spoken at conferences about the importance of employees to the innovation and customer value creation process on a number of occasions. I am not the only one. Vineet Nayar's book Employees First: Customers Second (a much misunderstood title) is a candidate for the best book award in the Thinkers 50 competition. Without the right people, customer-centricity will remain a slogan; the employees will hear the sirens, no one will move. Amazon is on the move, it is excessively persnickety about who it hires, and rightly so!

The purpose of this blog is not put Amazon on a pedestal. There is too much of that going on in today's business world, too much chest thumping - look at me, look at me, see how great I am. The purpose of this blog is to simply give the reader a behind the scenes understanding of the key factors contributing to Amazon's ongoing drive to becoming the world's most customer-centric company. That's it.

Does this mean that Amazon is forever blessed, destined to succeed for all times to come? Far from it! Building the world's most customer-centric company is a journey, not a destination. Besides, future success is never guaranteed, least of all to today's most successful.

Edison's 150 Questions: A Collaboration and Co-Creation Masterclass

2011-10-07T14:25:48Z

Innovation, especially collaborative innovation, or co-creation, requires the judicious use of collaborators. While it is instructive to recognize and applaud modern pace setters like Apple, P&G, Unilever, Lego, and Nike, it is important to recognize that few achievements, if any, are stand-alone; they usually stand on the shoulders of titans of a previous era.

The purpose of this blog is to pay homage to one such giant, Thomas Alva Edison, to his understanding of the importance of collaboration, to the importance of picking the right collaborators, and building requisite diversity into his invention and innovation programs.

First, some stage setting.

Chapter 5 of my book, Collaboration and Co-Creation: New Platforms for Marketing and Innovation, presents and discusses a framework for implementing co-creation programs. One of the elements of the framework deals with the issue of collaborators. Specifically, who, or which customers should the company select and invite to participate in the co-creation project?

In some cases, the company may not want to impose any restrictions, and all who desire to participate are welcome. Co-creation projects that have the potential to benefit from a diverse set of ideas and skills found in every-day people generally fit this category. For example:

Frito-Lay's Crash the Super Bowl Contest: can benefit from the humor and video creation skills of a large number of consumers and non-consumers of the brand.
Oxford English Dictionary: suggestions for which words to add to the dictionary to keep it current and alive, don't just come from connoisseurs of the English language, they come from simple, every-day readers as well.
Coca-Cola: several hundred thousand people from all over the world helped Coke make open happiness tangible, not just a few Madison Avenue, advertising agency specialists.

There are other times, however, when the nature of the co-creation task demands that the set of collaborators be drawn from a pool of specialists. For example, Nokia Beta Labs makes it intentions very clear, it wants to collaborate with lead users only. To help determine whether if you are a lead user or not the site encourages you to take a test. Similarly, since the goal of TopCoder is helping companies meet their systems, software, and design needs, its collaborators are specialists, those who have software/system development, and design skills.

Additionally, diversity of thinking among collaborators is also important. Not surprisingly, Topcoder's community of 300,000+ software and design professionals come from a diverse set of backgrounds and mindsets, and places, ranging from Ankara to Zagreb!

While the words and labels associated with collaborators, such as early adopters, innovators, lead users, experts, technology mavens, etc., maybe of recent vintage, the concept that in several cases, it is better to be discriminatory in choosing your collaborators has been around a long time. Without that focus and specialized inputs, the targeted co-creation programs would have essentially been non-starters.

Now back to Thomas Edison - extraordinary and brilliant on several dimensions. Not only was he technically brilliant, he also had exceptional business and organizational smarts. Specifically, in terms of collaboration and co-creation:

He realized that in order to implement the many ranging ideas, to "give the world what it needed," he had to have collaborators; going solo was not an option.
Most importantly, he was acutely aware that any odd collaborator would not do - they had to approximately mirror his skills and passions. In order to achieve that goal he devised a ultra-unique 150-question test, to recruit his collaborators, no exception. If you would like to transport yourself back to 1921 to figure out if you would have made Edison's team, visit the Edison museum site. The test is challenging and humbling, so be forewarned!
Interestingly, most of the questions were from areas other than science. Presumably, there was greater faith in the ability of renaissance individuals to do better, no matter what the field of endeavor, than myopic moles. Exactly the opposite of what one observes today.
He also understood the value of diversity, which is why he recruited collaborators from a wide variety of ethnic, cultural, and national backgrounds - a deliberate strategy to invest in wide-ranging perspectives and points-of-view, thereby preventing what we call "groupthink" today.

The brilliance of Edison continues to illuminate, guide, and teach. The reasons why we need to pay homage to Edison are many. In the context of collaboration and co-creation, the brief list presented above will suffice.

It's not the size of the list that matters though - it's the strength of its message. In today's age, often characterized more by spin than substance, the value of Edison's focus on fundamentals in building enduring customer value through innovation is priceless!

Biomimicry and Innovation: A Conversation with Zeynep Arhon

2011-07-20T18:50:23Z

Analogies are a powerful way of stimulating creativity. What better reservoir to draw it from than nature? I met Zeynep Arhon in October last year at the Future Trends 2010 conference in Miami. Zeynep is a biomimicry specialist from Turkey. It was our mutual interest in innovation and collaboration that helped us connect. Since sustainability is such a hot topic, and since biomimicry's key goal is to promote sustainability, I thought a conversation with Zeynep would benefit our readers. So here we are.

Zeynep, can you give us a brief introduction to Biomimicry?

Sure. The term "Biomimicry" is a combination of two words. "Bios" means life and "mimicry" means to imitate. Biomimicry is therefore the conscious emulation of life's genius.

And your belief is that innovation can benefit from this conscious emulation of life's genius?

Absolutely. Understanding how nature and its many organisms solve their specific challenges can greatly help us solve life's challenges in our own world. What we don't realize on a day-to-day basis is that we live in an R&D lab 3.8 billion years young! In this marvellous lab millions of species have already solved and continue to solve many of the problems that we grapple with - energy, food production, temperature control, transportation, packaging, business management and more. So, it makes much sense to look at nature for innovation. Mimicking these time-tested solutions can help us leapfrog to more effective futures, with significantly less failure.

Let's dig a little deeper. When I hear "innovation inspired by nature" Leonardo da Vinci comes to mind. Several hundred years ago he studied nature to come up with breakthrough designs. Is Biomimicry really new?

You are spot on. Leonardo was a genius, and yes his observation of birds in flight led him to think of planes. It is well known that polar bear digging and hibernating habits significantly influenced igloo designs. More recently, Swiss engineer George de Maestral studied burr seeds to invent Velcro. Learning from nature is not new. What is new is the going beyond a few brilliant minds, what is new is the birth of a systematic discipline of learning and application that involves hundreds of designers, engineers, educators, biologists, entrepreneurs, chemists and architects from around the world. One indicator will help set the global interest and relevance of biomimicry in perspective. The number of global patents containing the term "biomimetic" or "bio-inspired" in their title has increased by a factor of 93, from 1985 to 2005, compared to a factor 2.7 increase for non-biomimetic patents.

Let's get specific - please share a few examples of innovative solutions inspired by nature?

Since you are from India, you may like this. HOK Architects and Biomimicry Guild, the consulting firm that incorporates nature's designs into a variety of applications, are building a new city in India, 8,000 acres large. The source of inspiration for this revolutionary city is moist, deciduous forests.

BioPower Systems, an Australian company, creates technologies to convert ocean power into a renewable source of energy. BioPower's wave power system, bioWAVE™, is based on the swaying motion of kelp in the presence of ocean waves. Another new development is The VIVACE hydro energy device that mimics the swimming strategies of schools of fish. VIVACE can harness power from slow moving ocean and river currents to provide new, reliable, and affordable alternative energy sources

Another application that comes to mind which is sure to appeal to urban commuters is Volvo's accident avoidance project; a goal they hope to achieve by the year 2020. Volvo's "Locust Collision Avoidance Detector" project led to the development of a sophisticated, yet affordable, collision avoidance sensor based on the study of locust behavior.

There is an interesting saying this side of the Atlantic - there is no such thing as a free lunch. What are some key roadblocks in developing and implementing biomimicry inspired innovations?

All the big roadblocks have to do with us - human beings; how we think and what we value. As I see it, the biggest challenge is our ability to be humble and learn from even the smallest organisms on this planet. We human beings live with a built-in mindset that we are superior to all other life forms. With that kind of attitude there is slim or little chance for us to learn from other organisms, especially those that we label "insignificant."

Another has to do with our willingness to true risk takers. Most business leaders hanker after breakthrough ideas, but without breakthrough risks. Biomimicry can't guarantee success, what it does have to offer is an abundance of opportunities, waiting to reward those that are willing to be frontier thinkers and doers.

Now you personally operate at the intersection of biomimicry and business innovation. Share a little of your passion and working philosophy with us?

Happy to, but you have to forgive me if I come across as evangelical. I am a biased protagonist! You are very right. I do operate at the intersection of bomimicry and business innovation.

First, I do believe that business has the power to shape the future.
Second, I also believe that biomimicry has the power to change business into a more human, and graceful activity, which it is not at the moment.
Third, I believe in collaboration and co-creation, which is how I got interested in your work. In my opinion, we overvalue competition, but undervalue collaboration.

It is these ingredients that I combine to help my clients develop effective survival and growth strategies.

One for the road - what if someone is looking for good reference sources, what would you recommend?

"Biomimicry: Innovation Inspired by Nature" by Janine Benyus is the iconic book, for those interested in reading more on the subject. The Biomimicry Group provides consulting and educational services. Its sister organizations, Biomimicry Institute and Biomimicry Guild bring together scientists, engineers, architects and innovators for creating sustainable technologies. Finally, the website www.asknature.org is an excellent and free resource developed by The Biomimicry Institute in collaboration with the well-known biologist E.O. Wilson.

Thanks Zeynep, for sharing your ideas and passion; enjoyed the conversation.

Thank you! Enjoyed it. Look forward to continuing our conversation.

What Can The Business World Learn From Rory McIlroy?

2011-06-20T03:27:54Z

Like so many others, I spent Father's Day Weekend watching Rory McIlroy make history at the Congressional. While listening to his story and watching his relatively instant transformation from "self-destructing whiz kid" to "self-assured grand slam champion," I found myself introspecting, and in the process, learning and growing as well. It was only a matter of time before I found myself asking the question - what can the business world learn from Rory McIlroy? Especially as business executives are constantly using examples from the worlds of sports and warfare to inspire and motivate their teams/troops.

I think the Rory story (as has unfolded until now) can teach companies that want to move on from their failures and taste success three very important things.

Resilience

There is an old saying, what matters in life is not how many times you are knocked down, what matters most is how quickly you get up each time you are knocked down. Resilience is an important ingredient of survival and long-term success. On April 10, Rory blew a 4-shot lead to lose the Masters. Two months and a few days on, he dominated the very next major, as few have in the US Open's 100+ year history. Too many executives steer their companies with a "rear-view" mirror mindset. This induces unnecessary post-mortem and mourning, preventing them from bouncing back quickly to take advantage of the next round of opportunities.

Honesty

Several hundred years ago, the good bard advised us - to thine own self be true! But that is something most companies have a short supply of - honesty. Their egos get in the way. All too often, when companies fail - new product failure, a failed reorganization, a stillborn merger - the failed event is used as an occasion to start a blame game. Finger pointing and the search for villains dominate the agenda. Not taking a good hard look at oneself, learning, improving, and moving on. If Rory had indulged in the blame game after the Masters, he would not have made the cut, leave alone win the US Open. As he so refreshingly admitted in his press conference, he was totally honest with himself after the Masters fiasco. Rather than wasting time and energy looking for scapegoats, he spent time and energy looking inwards, trying to understand himself and his game, so that in the future he would know what to do, what not to do, how to play, and how not to play. Without this brazen honesty, athletes, teams, companies, and organizations are doomed to repeating yesterday's mistakes again and again, resulting in hard-to-reverse behavior patterns.

Authenticity

This is a much-bandied word in the business world these days. Suggesting that a company, or a brand, is a surefire formula for setting off rage bombs. Yet we know that companies and brands are not authentic. Every single day the media presents us with plenty of evidence to confirm that. Why else would companies engage in green-washing (claiming that their products are green, when in fact they are not), be more concerned about financial losses than cleaning up oil spills, and not reveal for days that personal data of their credit card holders has been hacked? Authenticity is not about what companies and brands claim for themselves, it is about how they behave. And watching Rory comport himself, both on and off the course, the respectful and direct way he handled questions, even when asked for the umpteenth time, they way he celebrated, or should it be the way he did not over-celebrate while lapping the field, the grace with which he accepted defeat in Augusta, all point to one thing - authenticity. Authenticity is not something that you can be fitted for like golf clubs and balls, or something that you wear on your golf shirt, like an advertisement, or what spin doctors teach you, its something that you consciously cultivate and nurture, because anything less is unacceptable.

Winning is an infinitely poorer teacher than losing. Thank you Rory for showing us that failure can be a stepping-stone to success. Unfortunately, too many of us leave it the way it is, a slogan, and never convert it to an action anthem.

Cheers! Imbibe a pint of Guinness Stout and reflect on it.

Social Innovation: A Growth Market for Collaborative Innovation

2011-05-03T19:35:54Z

In my book "Collaboration and Co-Creation: New Templates for Marketing and Innovation," the last chapter takes the reader beyond the business world. It discusses Norway's Clinic of Innovation and Scotland's NESTA, among other informative case studies. Though I am opposed to making predictions, purely on philosophical grounds, I do believe that social innovations will continue to provide us with some of the more compelling and enlightening collaborative innovation stories in the years to come.

If you would like more evidence, read the April 30^th - May 6^th issue of the Economist - the one with the Statue of Liberty on the cover asking a tired, but provocative, question - "What's wrong with America's economy?" The last story in the box on the top right features the story - "Behold, the $300 home." It is a dialogue that was started by two people I know well; Vijay Govindarajan, who was my Professor at the Indian Institute of Management, Ahmedabad, and Christian Michael Sarkar, a young marketing consultant who has collaborated with me on several projects. I contributed to the discussion as well with my blog which highlighted co-creation challenges in implementing the $300 house program.

The article in the Economist, billed as "Applying the world's business brains to housing the poor" discusses a number of social problems like housing, credit, and rural electrification. It also lists several noteworthy individuals (Muhammad Yunus, Girish Bhardwaj) and organizations (Philips, Habitat for Humanity) that are contributing mightily with ideas and solutions. However, the sentence that caught my eye says - solving these problems will in turn demand a high degree of co-operation (please read as collaboration) between people who do not always get on; companies and NGO's, designers and emerging world governments.

Maybe they didn't in the past. But we live in a different world today - one in which value chains are giving way to value constellations and where blatant pursuit of competition is being replaced by mindsets that favor collaboration and co-opetition. In this new environment, ideas alone can't be the dominant currency. For no idea can fulfill it's intrinsic potential if not adopted and implemented.

Nowhere is this truer than in the field of energy consumption; reducing the carbon footprint of individuals, communities, and cities. And the forward-thinking city of Seattle is leading the way, at least in the USA. The city has started a Community Power Works (CPW) programs. CPW is a neighborhood program in central and southeast Seattle that will make energy efficiency improvements to buildings in six sectors: single-family, multi-family, small commercial, large commercial, hospital and municipal sectors.

To read and learn more about this interesting initiative, please visit my blog posted today at InnovationManagement.se

Beyond HSX and the Oscars: Prediction Markets A Valuable Tool for Decision-Making

2011-03-01T03:15:53Z

HSX traders did well. They correctly predicted the winners for seven of the eight categories for which Award Options could be traded. The only category they got wrong was Best Director. HSX traders predicted the prize would go to David Fincher, for The Social Network. The Oscar went instead to Tom Hooper, for The King's Speech. Interestingly, Tom Hooper actually led the category for most of the trading period. It was only in the last few days that David Fincher pushed ahead.

So, is this an advert for HSX, or its phenomenal track record? Not really. HSX is merely a prop. The purpose of the two blogs, is to demonstrate that in situations where uncertainty and risk are present, there are better ways of making decisions than asking a "so-called panel of experts," or asking the man or woman with the "biggest stick" to make the call.

Divergent opinions carry information, especially when outcomes are uncertain, as is the case with introducing new products, forecasting sales, or formulating a plan to best manage urban traffic congestion. When this divergence is suppressed by authority, or subjugated by experts, companies and organizations actually make riskier and poorer quality decisions.

No wonder smart companies and organizations like Motorola, GE, Google, Best Buy, and Iowa Electronic Markets use some form of prediction markets, or group decision-making platform (like the Delphi technique, or the Nominal Group Technique) to harness and retrieve valuable information that lies scattered in various corners of the company, or among its many stakeholders. And more importantly, they use it to stimulate consensual decision making, not by squashing divergent viewpoints, but by offering them an opportunity to test themselves against the opposition.

So, is the crowd always right and do the fittest ideas always get rewarded and selected for implementation? Not always. But if diverse thinking is encouraged, and diverse thinkers are allowed to collaborate in a decentralized manner, independent of authority, then their collective ideas and recommendations are likely to best those of a single person, the proverbial white knight CEO, or a small group of people, such as the Senior Leadership Team.

A word of caution though. For prediction markets and other group-decision making platforms to flourish, experts and authority figures in companies/organizations need to experience a shift in mindset, from:

focusing on "knowing all the answers" to "asking the right questions"
an obsession with "gathering mountains of information" to "analyzing data in creative ways"
a hierarchical approach to "making decisions" to "guiding decision making."

Hollywood Stock Exchange Traders Predict Oscar Winners

2011-02-27T19:09:17Z

Feb 27 is Oscar night. Pundits have been busy predicting outcomes for the last several weeks now. I am sure you have a few of your own, and may even have bet a few quid with friends, family, and colleagues.

But have you checked out the Hollywood Stock Exchange's (HSX) predictions? The HSE is a digital community that allows members to buy and sell "stock" in the nominees. Each nominee is given a stock symbol. Community members trade the stocks they like and can therefore bid up, or down, the price of various nominees, based on their beliefs and preferences.

So, who's leading the pack? Around 14:00 EST (Feb. 27), the "stock price" leaders for Best Picture, Actor, Actress, and Director, and hence the favorites to win are:

Best Picture - The King's Speech; ticker symbol A1PTKS, has the highest quote, selling at H$17.49. Yup, the HSE has its own currency! The closest competitor - The Social Network (A1PTSN) - is trading at a distant H$2.42. Close to a sure bet, would you say?
Best Director - David Fincher (A1DDF1) for The Social Network, trading at H$13.39. The closest competitor - Tom Hooper (A1DTHO) for The King's Speech, trading at H$8.43 (though on a downward tick).
Best Actress - This one seems to be a no-contest. Natalie Portman (A1CNPO) for the Black Swan is way ahead of the pack; trading at H$20.16 and rising. All other contenders are trading in single digits.
Best Actor - is shaping up as a no-contest as well. Colin Firth (A1ACFI) for his role in The King's Speech, is trading at H$22.19, and rising, and commands a huge lead over his competitors.

There is still time to play and win; play money that is. Those who successfully pick winners will get a play money dividend of H$25. Either way, whether you play or merely watch tonight, I will be back tomorrow comparing the actual results against predictions. The HSX traders seem to be very sure of themselves, they are not hedging their bets.

Consumer-Created Ads Cross The Chasm

2011-02-15T03:10:45Z

Consumer-generated ads may have started off as a curiosity, as light-hearted fun. But they have crossed the chasm and user-generated content (UGC), an umbrella term for all consumer-generated material, including ads, is serious business at a large number of companies today. Its not just Frito Lay, and Pepsi; companies like Coke, HP, and Best Buy have also bought into their uncommon appeal and engagement potential. Across the board this buy-in is being supported by managerial commitment and dedicated resources; exactly how companies would support core business practices, like IT and Purchasing.

Two key factors lend credence to this point of view.

First, the amount of effort - structure, rigor, and resources - to create, select, and air ads has increased significantly, at some of the more established players like Frito Lay.
Second, intermediaries like MOFILM have grown in recent years, to enable implementation at companies that would like to leverage the power of consumer-created ads, but without making significant investments of their own.

Consider first the effort factor. A brief description of the platforms and processes deployed by Doritos and Pepsi Max to create the commercials that were aired during Super Bowl XLV follows:

A dedicated website invited ad submissions from Doritos and Pepsi Max fans in the second half of 2010.
Details regarding the prize money and the airing of the commercials were explained and presented on the landing page itself. Both Frito Lay and Pepsi recognized the power of prize money, and correctly so. The 2011 edition promised $25,000 to the five finalists for each brand, and airing of the commercial for the top 3 for each brand (a total of six).
In addition, they also promised monetary incentives for winning the USA Today Ad Meter contest; $1 million to the winner, $600,000 for second place, $400,000 for third place, and an additional $1million to all three winners if the two sponsors swept the top 3 spots.
All contest rules were clearly explained, including the format of the submissions, the number of submissions per person, and the submission deadline.
Finally, judging criteria, selection of finalists, and voting procedures to determine which ads get aired were also painstakingly explained.

In short, the two sponsors approached the contest exactly as they would any other formal business process. Small-scale experiments, or novel indulgences, don't get this kind of management attention and/or support.

But, what if a company lacks, or is unwilling to invest in, a formal structure, resources, and/or knowledge to implement programs or contests for developing consumer-created ads? That's where organizations like MOFILM come in; co-creation intermediaries.

MOFILM offers a platform for the co-creation of video content. It helps large brands and social causes recruit the services of creative and passionate people from around the globe to create video and film content for a variety of applications and devices, including mobile devices. The company usually stages its global competitions to coincide with world-renowned international film festivals, like New York, Cannes Lions, and London Film Festival. The company carries the support of several marquee names from the world of cinema; heavyweights like Robert Redford and Spike Lee.

Even a cursory look at their clients - Axe, Lego, Hindustan Times, Persil, OMO, Haagen-Dazs, Nokia, Surf - reinforces the principal thesis of this blog. UGC has crossed the chasm and is not just the preserve of a few companies tinkering at the fringes. Consumer-created ads are core business practice at a large number of companies. And their numbers are growing every day.

The Social Benefits of Collaboration and Co-Creation

2011-01-30T16:46:34Z

Large scale citizen protests in Tunisia, Egypt, and earlier in Iran and Mayanmar (aka Burma), are symptomatic of very deep-rooted social diseases. Problems like corruption, neglect of infrastructure, abuse of police and political power are too complex to be handled by one-dimensional solutions, no matter how well intentioned.

However, in each case there is a vicious underlying theme. The citizens have been screaming for several years. Their complaints and grievances are not new. But nobody is listening! Nobody is actively engaging the common citizen in conversations about programs likely to increase the economic well being of those deprived the most. Not surprising, therefore, that not much that needs to be done gets done; the pace of change and economic growth continues to be frustratingly slow, erratic, piecemeal, and hyphenated.

So, what can the governments around the world do to reverse this cycle of absence of listening, leading to inaction, resulting in alienation and helplessness, ultimately leading to violence? Without getting ultra-philosophical, they can start by looking at their populations differently. Rather than view them as a heap of incessant problems, they can start viewing them as a resource, and hence as a part of the solution.

This was also the theme of my last blog, wherein I discussed the excellent opportunities that social arenas and agendas, generally in the care of government and nonprofit bodies, offer for the application of collaboration and co-creation technologies and thinking. This is also how the government of Scotland is thinking. Rather than view their aging population merely as a burden on the exchequer (a problem), the government launched NESTA, a series of investments and programs, that views the aging population as a resource to help create incremental economic value, thereby increasing social well being (a solution).

Programs that listen to citizens and engage them in meaningful conversations on issues involving social and economic welfare, like NESTA, work because they are based on sound psychology and behavioral economics thinking. Listening to citizens and making them part of the solution triggers the following positive consequences:

First, it lays the foundation for change by bringing into question current practices and forcing both citizens and authorities to look for alternatives.
Second, by listening and inviting collaboration, citizens are more likely to find new empowered aspects to themselves; aspects that go beyond whining and complaining to doing, to looking for solutions.
Third, by visibly displaying and acting on their different selves, small groups of empowered citizens are more likely to attract and build relationships with others like themselves, leading to broader community-driven action thinking.
Fourth, these actions are likely to bolster a sense of efficacy amongst citizens, proving to themselves and others that average citizens can make a difference if allowed to, even if the direct consequences of their efforts are small.
Fifth, citizens who believe they can make a difference are more likely to be on the lookout for opportunities to do so, and by definition are more likely to find them, merely because they believe and because they are looking.

There is no rule that says that change has to come in big and huge chunks. In fact, it is this preoccupation with hitting the ball out of the park (sixes if you are a cricket fan, home runs if you are a baseball fan) that prevents governments and citizens alike from acting and making a difference; the mountain of problems seems insurmountable because the preoccupation is with moving the entire mountain all at once.

Structured collaboration activities overcome this problem by focusing on finite gains, small tasks and achievable goals that are valuable and relevant to average citizens. Philanthropy-by-design organizations, like Philips (who co-created an eco-friendly cooking stove for the Indian rural poor; chulha in Hindi) and FINISH (who are working to design a toilet suitable for all types of conditions and environments encountered in rural India) have a lot to teach us in this regard. In the communities these organizations serve, they have very successfully channeled the energy of average citizens towards creating economic value, by focusing on achieving small gains through collaboration. The amount left over for anger and violence is significantly lower in these communities, compared to those where listening, engagement, and the co-creation of relevant economic value are non-existent.

I am not naïve. I do realize that the issues being discussed transcend the mere availability and application of collaboration and co-creation technologies. They will also require a change in heart and mindset, most notably that politicians start viewing themselves as custodians, as opposed to entitled looters. However, this should not detract from the realization that the platforms of collaboration and co-creation can serve as agents of change if implemented authentically, as they offer an opportunity to both citizens and governments to see with a different set of eyes, and hear with a different set of ears.

Collaboration and Co-Creation: Attractive Platforms for Governments and Nonprofit Organizations

2010-12-03T14:45:28Z

A modicum of cynicism is healthy. So, it doesn't surprise me one bit when marketing and innovation executives ask whether collaborative innovation is here to stay, or whether it is a mere fad; here today, gone tomorrow. Personally, I don't like to read tealeaves, but being a betting man, I am putting my money on collaboration and co-creation having a healthy and prosperous decade ahead.

Why? Because whenever a management practice finds applications in non-traditional arenas, it augurs well for its future growth. We are all very familiar with traditional corporate examples of collaboration and co-creation:

Unilever co-creating Marmite XO with the brand's fanatical lovers
IBM co-creating action agendas through its Jams technology - like the recently held Service Jam
P&G's engagement of teen girls through beinggirl.com
Electrolux's annual appliance design innovation challenges conducted through Electrolux Design Labs, etc.

However, how often do we come across case studies demonstrating collaboration and co-creation in the government and non-profit sectors? Not too often. Fortunately there are. Two interesting examples follow, one just taking off and the other already generating interesting success stories.

Collaboration and India's 12th Five-year Plan

Bureaucracies are not known for experimenting with cutting edge thinking. But the Planning Commission of India seems serious about changing that, at least in its sphere of operation. Before the Planning Commission actually starts developing the Plan, it needs to develop what is called an Approach paper, which sets out plan priorities and targets, which subsequently guide resource allocation and later serve as performance measurement benchmarks; an activity typically performed by technocrats, bureaucrats, and politicians.

For the first time however, the Planning Commission is using the platforms of collaboration and co-creation; it is reaching out to the citizens of India to help shape the Plan's priorities and targets. Indian citizens will get to voice their opinions and ideas before the Planning Commission, concerning the contents of the Approach Paper. The Planning Commission is inviting ideas, comments, and suggestions on important themes and topics that are relevant and cut across several sectors, such as:

Innovation and Enterprise - Are we creating enough innovations and enterprise for inclusive and sustainable growth? If not, how can we do so?
Governance and Institutions - How do Government or Public Institutions affect us in different sectors? How can we make them work better?
Financing the Plan - What are the financial requirements, both public
and private of achieving our targets? Can we meet them?

Commenting on this collaborative and inclusive process, Deputy Chairman of Planning Commission, Montek Singh Ahluwalia, said a special portal will be available on the Planning Commission's website where people can drop in their suggestions. "We plan to make the process more inclusive. We invite people to comment and post their approaches on the portal. People's suggestions will be discussed while finalizing the 12th plan."

This program is just taking off, so its too early to tell how the citizens, collaborators in this case, will respond. In my book on Collaboration and Co-Creation, I refer to this type of commitment as a Light-level implementation.

I call it Light for several reasons:

The motivation and onus for collaborating lies with the ordinary citizen. Why should they, especially if they have no confidence or trust in the Planning Commission or its intent?
There is no opportunity for the citizens to debate and discuss different points of view. The opportunity for brainstorming can significantly improve the quality of submissions.
Most importantly, there is no transparency once the ideas have been submitted. To a person submitting an idea or ideas, it is not clear who will read what has been submitted, how the idea(s) will be evaluated, and whether or not they will be accepted or rejected. This will undoubtedly affect the motivation to participate.
There are no rewards for participation monetary or psychological. Imagine the missed opportunity here. Even a small newspaper article or mention of winning ideas on TV, with the person's photo, would cause a huge amount of excitement and commitment.

So, yes, the Planning Commission and the Deputy Chairman need to be applauded for their enlightened thinking. However, much more can be done to transform the inclusiveness into a major creative and innovation force.

The UK Spending Review

Across the Arabian Sea and a continent away, earlier this summer, UK Prime Minister David Cameron kicked off a collaboration and consultation program, Spending Review, focused on ways to reduce government spending. The Prime Minister recognized openly that the biggest challenge UK faces is dealing with huge debts, which means reducing public spending. He also acknowledged that reducing public spending will require innovative and challenging ideas, best developed by those working on the frontline of public services, and not just by his army of economists and policy makers.

Together with Nick Clegg, the Deputy Prime Minister, his office broadcast an appeal to Britain's public service workers asking them to share their ideas on where to make spending cuts.

A Spending Challenge website was launched to solicit suggestions from Britain's 6 million public sector workers. The challenge states that "Every single idea will be considered and the best ones taken forward by departments, the Treasury and the Cabinet Office." The invitation also described, in detail, the process by which ideas would be evaluated and analyzed. By all accounts the Spending Review was the most collaborative ever with an extended period of engagement over the summer between Government, experts, the public sector and the general public.

Response to the Spending Challenge was, as the Brits would say, bloody damn good! Over 100,000 ideas, including 63,000 from the Public Sector were submitted to shape the way Government works, cut the deficit, and eliminate waste. In addition to inviting suggestions, Ministers traveled the country to hear people's ideas and opinions first hand. Finally, The Treasury received several thousand pieces of direct correspondence on specific areas of Government policy - such as health, housing and education - that led to several rounds of
productive meetings with experts in these fields.

Ideas dealing with low hanging fruit dealt with issues such as reducing dependence on paper and migrating to digital media for routine communications, resulting in savings of several million British Pounds. Other ideas dug deeper. A few examples follow:

reforming the Educational Maintenance Allowance (EMA) grant and child benefit
spending money more effectively by introducing a more preventative focus across public services, especially in public health services
building closer links across health and social care
minimising tax fraud, evasion and avoidance; a potential spending of £900 million to combat tax fraud, avoidance and evasion, could raise an estimated £7billion of extra tax revenue by 2014 (no need to compute an ROI on that).

Various government departments will continue to review ideas to identify and implement those that could help deliver further efficiencies. In the interests of transparency and openness, the UK Govt. intends to publish all of the original suggestions that met their moderation policy as a data set on data.gov.uk.

Nothing light about this implementation, very impressive indeed! In fact, to use another British expression, it is as close as you can get to a Full Monty; it meets all the criteria of the Listen-Engage-Respond framework discussed in my new book. I am betting that applications are likely to grow around the world, and in the coming decade we should expect to see some of the most engaging and productive applications of collaboration and co-creation in the government, public, and nonprofit sectors.

Co-Creation and the $300 House

2010-10-17T00:42:30Z

UPDATE: I've posted an entry on the $300 House on the Harvard Business Review site: The $300 House: The Co-creation Challenge >>

One of my professors, the late C.K. [Prahalad], used to say that "managers are so preoccupied with operating efficiently that they don't even think about value in terms of the consumer's experience."

Sadly, despite all the brouhaha about customer-centricity, most companies still operate in a highly product-centric manner. The difference between the two approaches, using C.K.'s words follows:

The traditional company-centric view says: (1) the consumer is outside the domain of the value chain; (2) the enterprise controls where, when, and how value is added in the value chain; (3) value is created in a series of activities controlled by the enterprise before the point of purchase; (4) there is a single point of exchange where value is extracted from the customer for the enterprise.

The consumer-centric view says: (1) the consumer is an integral part of the system for value creation; (2) the consumer can influence where, when, and how value is generated; (3) the consumer need not respect industry boundaries in the search for value; (4) the consumer can compete with companies for value extraction; (5) there are multiple points of exchange where the consumer and the company can co-create value.

All is not dark and bleak of course. Several countries, cities, companies, and nonprofit oranizations are beginning to take the initiative to collaborate with their customers to co-create value in fields as diverse as healthcare innovations (Norway), improving the quality of life of 50+ year olds (Scotland), Swasthaya Chetna; Hindi for creating health awareness (Hindustan Lever), and Crashing the Super Bowl (Frito-Lay).

In my new book, I devote an entire chapter to co-creation beyond the business world. I share case studies of how the new platforms of customer collaboration and co-creation can be applied equally effectively beyond the business world, to drive collaborative innovation efforts in fields such as education, health care, energy, alleviation of poverty, and sustainability. The consumer-centric view is gaining momentum in non-business environments as countries, regions, and cities experiment with collaboration to co-create more promising futures for their people and the environments in which they live.

One example of a project which will be using co-creation at the bottom of the pyramid is the $300 House (disclosure: I'm an advisor).

The project, which came to life based on the remarkable response to a blog entry in Harvard Business Review, will take into account customer needs in various countries - from Haiti to India and the Philippines. I don't expect to see a single house design emerge, but rather a variety of local designs - each designed to meet local needs.

How do you engage the customer at the bottom of the pyramid? By spending time with them, and understanding their experiences, challenges, and frustrations as they tackle everyday tasks and chores that so many of us take for granted. Or like A.G. Lafley was fond of saying - by doing your laundry in 25 countries!

Let's just pause for a moment to acknowledge that your company's customer of the future may well be at the bottom of the pyramid. You would be well advised to adopt a customer-centric mindset and develop a system of initiatives to engage her.

Hallmark's Collaboration and Co-creation Journey: An Interview with Tom Brailsford

2010-09-21T16:36:50Z

Few companies share an emotional bond with their customers as Hallmark - the 100-year old, Kansas city-based, king of personal expressions - does. The company is more than just greeting cards and personal expressions, however. It's a silent companion that is always present at times of our celebrations, laughter, tears, and sorrows. We have shared more of our lives with and through Hallmark than we can remember.

For all its pervasiveness, Hallmark operates quietly, almost as if it were shy of the spotlight. But when it comes to adopting new and emerging management thinking and practices, Hallmark is anything but shy. It can be very aggressive. Consider the case of customer communities and collaborative innovation, topics that top today's management agendas, and which are discussed in my forthcoming book on Collaboration and Co-Creation. Not many people know that Hallmark is a pioneer in these fields. It started experimenting with customer communities in the late 1990's, even before legendary P&G!

Hallmark's collaborative innovation journey with its customer communities is a classic, stuff that makes for excellent B-School case studies. What is even more classical is Tom Brailsford's association with this journey. He was there on day one, when Hallmark decided to invest in customer communities, and has been with the initiative since then, growing and evolving with it. This blog features some of Tom's key experiences and thoughts, as he reflects on his most extraordinary and enriching association with Hallmark's customer communities.

Tom, can you give our readers a bird's eye view of what the customer community landscape looked like in the late '90s/early 2000's, when Hallmark decided to invest in proprietary customer communities?

Happy to. The Internet is everywhere today. But at that time the Internet was still relatively new, especially as a consumer phenomenon. The prevailing wisdom at that time was that you couldn't meaningfully engage with customers and conduct activities like marketing research on the Internet, for a host of reasons. In addition, we had pretty heavy skepticism within our own organization. We were told that people wouldn't participate. We were also told that we are an emotion-based business, and that people would find it difficult to share their emotions on the Internet. So, it was not a very encouraging vista that we were faced with. Fortunately, I had some visionary leadership to work with and the mandate to embrace and try new things. So we moved forward into the headwind, and the rest, as the cliché goes, is history!

It's been a remarkable journey. You have been associated with the initiative for close to a decade. What are the 3-5 things that have left a lasting impression on you?

The most remarkable impression I have to say is how much people want and value having a voice within the companies they love and patronize. And this despite all the hurdles and roadblocks we put in their way like legal agreements, and giving up their intellectual property rights to us. I have been startled at how honest the people in our communities have been, holding back virtually no aspect of their lives. I have gained an abiding appreciation of the power of Trust in fostering bonds among customers, and between consumers and Hallmark. Finally, I have come to truly appreciate the value and importance of passion; passionate people working on something they believe in, which is how we survived the stresses and strains of the early times, and eventually achieved success.

Let's look forward. Recently, Hallmark rebranded its communities. Discuss the implications of rebranding, and how you see the communities evolving over the next 3-5 years?

As you can imagine, during our decade plus experience with online customer communities, we have interacted with our customers in a variety of different ways. Today the communities are an accepted and integral part of the company's consumer insights platform. Not surprisingly, the demand to interact with the communities has increased. The objective of rebranding is to repurpose, clarify, and communicate a different focus; one that moves away from mere validation to exploration and co-creation. We call them Circles of Conversation today, as Hallmark has new needs that involve much closer support for its innovation efforts. Consequently, we wanted to be more purposeful in our usage, and challenge the boundaries of what can be done using online communities. Our goal is to reduce open-ended, in-depth explorations and increase social media activity and engagement. We also want to provide more immersion opportunities for our senior executives and company leadership. The dedicated and proprietary customer communities will continue to provide a source of deeper understanding, but social media-based listening and engagement is going to get more interesting and important.

Share one outstanding success story - an outcome that would never have happened if the communities didn't exist.

This is a tough one for two reasons. First, we are a private company and I am limited in what I can disclose. Second, there is seldom any one study, technique, person, or experience that can be singled out as the cause of an outstanding success. With that in mind, I would say that the biggest contribution our communities have made is change the language we use and the lenses through which we look at consumer behavior. This has led us to ask traditional questions differently, and ask a whole new set of questions. Without exaggeration, the communities have helped us understand how real people talk about the issues and jobs they are trying to accomplish and have helped us become more consumer focused. This has influenced everything from marketing to strategy. I know this isn't as specific as you may have wanted me to get, but it is the best I can do given the limitations.

Tom, there is a lot of cynicism out there, in terms of what's in it for the consumer? What has your experience been in this regard? Do the consumers also benefit, or is it just Hallmark?

We have asked our members over and over again, "Why are you doing this?" The answer we get repeatedly is, "It is so exciting to know that a company wants to know what we think." Some have said, "When I walk into a Hallmark store, I feel happy, because I know that I have made a contribution; there are things in that store that I've had a hand in creating and bringing to life." Aside from that, they love the "closeness" of the walled community that has a code of conduct, so they feel safe sharing. They truly do form close relationships and share a lot/everything with one another. Many lasting friendships have been formed between community members. The communities fill an important social need for the participating women, and we are grateful to provide them the opportunity. No, its not just Hallmark that benefits; the consumers benefit as well. I think that's the main reason the initiative is still healthy and thriving, ten plus years after inception.

As the lyrics of a song on Paul Simon's Graceland album go - who am I to blow against the wind? Well said, Tom. Thank you for reflecting, and sharing your thoughts on a very successful journey. For essentially selfish reasons, it was particularly gratifying to hear Tom speak of the emerging importance of Listening at Hallmark. The Listen-Engage-Respond framework that forms the core and guts of my Collaboration and Co-Creation book is the new marketing. The book features the Hallmark case study, and the collaborative innovation journeys of several other companies, individuals, and organizations.

The last several decades have belonged to the shouting-telling-selling brands. The next several will belong to the listening-engaging-responding brands.