The Customer: An Overlooked Component of the Innovation Process
Where would YouTube be today if not for its millions of users? What good would Wikipedia be without all of those contributors? And how successful could IKEA possibly be if its customers weren't willing to assemble their own furniture?
Stephen Brown says the answer is simple: If not for the contributions of their customers, all three of those remarkable business successes would be anything but successful.
And there's a lesson in that, says Brown, for companies of all kinds.
"Our view is that the customer has been a truly forgotten component of innovation," says Brown, a professor of marketing and executive director of the W. P. Carey School's Center for Services Leadership. "We're not necessarily saying that customers are completely ignored. But we are advocating a much more substantive effort on the part of companies to get their customers involved in the innovation process."
In a new paper that challenges some long-standing theories about both what innovation is and how it's achieved, Brown and co-authors Stefan Michel, an assistant professor of marketing at the Thunderbird School of Global Management and Andrew Gallan, an ASU doctoral candidate, argue that the time has come for companies to rethink the ways they approach the innovation process.
Rethinking the process
Innovation, according to Brown, Michel and Gallan, is no longer solely the domain of techies or engineers working in isolation in a lab. Innovation now includes the collaboration of creative customers, who find ways to address their own wants and needs in the product or service.
In other words, Brown and Michel say, just as users were responsible for making YouTube a global sensation, customers have power to create value for any number of other products and services.
"The premise for this research is that when people typically think about innovation they tend to only think about products," Brown said. "They think of something tangible, and imagine a process that the company undergoes that is somehow completely independent of their customers. … But now, we are seeing that innovations will not be successful unless customers co-create value for it. YouTube is a dramatic example, because YouTube would be nothing if not for what its customers did with it."
Added Michel: "The major question we asked was this: Are there some things out there that are truly innovative, but cannot be explained by the traditional innovation literature -- things that were, for example, not developed by R&D labs but nonetheless changed the lives of millions of people?"
The answer to that question is yes.
The researchers say customer-based innovation has played a role in the development of any number of products, goods and services that, today, people may take for granted.
IKEA, for example, leveraged the power of its customers to create an innovative, completely new and remarkably successful furniture retailing experience. The Swedish company provides hip, exciting and inexpensive furniture, presents those pieces in their all-inclusive destination stores, but then relies on their customers to both transport the furniture home and put it together.
In Switzerland, the newspaper 20 Minuten has changed the newspaper business by crafting something specific to their customer's daily lives. The short, easily digestible newspaper takes just 20 minutes to read -- about as long as the average train commute.
According to Michel, 20 Minuten harnessed customer co-creation of value in a much broader way than co-producing content (YouTube) or assembling chairs (Ikea). 20 Minuten changed the role of the user. Firtst, it altered the anatomy of the transaction; payers became non-payers, because 20 Minuten is free. And obtaining the paper no longer depended on customers making a decision to pick it up. Instead, it is handed to them (a push) when they are boarding the trains. As a result, many non-readers became readers -- the ultimate role transformation.
Another example is the medical technology sector, which has developed revolutionary glucose monitoring systems that employ customers -- in this case, diabetes patients -- to improve diabetes self-care and create long-term value for a useful product.
"In the past, these patients would rely totally on their physicians to measure glucose levels," Brown says. "Now, using this system, patients are self-monitoring. The whole system, the value of it, was co-produced and co-developed by engaging the customers."
All of these products, services and ideas, Michel, Brown and Gallan argue, have enjoyed success -- and have derived much of their value -- because of the way customers used them. All of them are also clearly innovative.
An expanded perspective
According to traditional models of innovation theory, however, they wouldn't be recognized as such.
The old innovation theories, the researchers say, are flawed because they have focused almost solely on products and have ignored service offerings. They've also recognized firm-level innovation -- the work of R&D departments, for example -- while ignoring the value-added contributions of customers.
Brown, Michel and Gallan’s approach breaks down that long-standing wall separating product innovation from service innovation, counting the contributions of customers as every bit as important as those of a company's R&D experts.
"We are basically asking companies to focus a lot more on how customers are actually going to use what they're offering," Brown said. "The tendency of many companies has long been transactional -- 'How can we get the customer to buy this?' -- but we're saying what you want to know is how the customer is going to use the product. It's very powerful for a software vendor to know, for example, how their customers are going to use their products."
The researchers say their new approach to innovation challenges firms "to take a broader view of innovation," looking at customers not just as "payers," as traditional models do, but rather as "payers, buyers and users."
"This expanded perspective," Brown, Michel and Gallan write, "enables managers to see more … innovation opportunities that are not related to the discoveries made in R&D laboratories."
The idea is not all that complicated, nor is it anything new. Customers have been adding value to products for years -- it's just that companies haven't always recognized those contributions as important to their bottom line.
But that may be changing.
"Think about the way you use your PC," Brown says. "Everyone has their own unique way of using their PC, and a PC is basically as innovative as the way a customer uses it. There are millions of customers all over the world using PCs, and they're all using those PCs somewhat differently. … I guess the key idea that we want to get across is that, increasingly today, customers are the ones co-creating the value in what companies and firms offer."
Adds Michel: "The thing that is important is that the customer is not just the receiver of value. But rather, the customer is always co-creating value. The customer is not a passive recipient of value."
Bottom Line:
A new paper from W.P. Carey's Stephen Brown and Andrew Gallan and Thunderbird's Stefan Michel, to be published in the Journal of the Academy of Marketing Science, proposes a new theoretical model for looking at innovation -- a model that takes into account the contributions of customers in the development of innovative products and services.
This new approach also eliminates the distinction between innovative products and innovative services. That distinction, the researchers say, is artificial and outdated.
Among the products that have benefited from customer contributions are YouTube, Wikipedia and the Swiss newspaper 20 Minuten.
The researchers say forward looking companies would be smart to stop thinking about innovation as something that happens only in their R&D labs. Customers, they say, can add value to a product long after they've purchased it.
Companies should not just focus on innovating products; they need to focus on innovating customers.
måndag 8 oktober 2007
Definition web 2.0
Web 2.0 refers to a perceived second generation of web-based communities and hosted services — such as social-networking sites, wikis and folksonomies — which aim to facilitate collaboration and sharing between users. The term became popular following the first O'Reilly Media Web 2.0 conference in 2004.[1][2] Although the term suggests a new version of the World Wide Web, it does not refer to an update to any technical specifications, but to changes in the ways software developers and end-users use the web. According to Tim O'Reilly, "Web 2.0 is the business revolution in the computer industry caused by the move to the internet as platform, and an attempt to understand the rules for success on that new platform."[3]
Some technology experts, notably Tim Berners-Lee, have questioned whether one can use the term in a meaningful way, since many of the technology components of "Web 2.0" have existed since the early days of the Web.[4] [5]
Some technology experts, notably Tim Berners-Lee, have questioned whether one can use the term in a meaningful way, since many of the technology components of "Web 2.0" have existed since the early days of the Web.[4] [5]
fredag 28 september 2007
Veronica from Prag, 15 years old
100 Euro she would buy alcohol
On a free day she riding her horse
In 10 years she will have a family
She doesn´t know what she is scared about...
She would like to go to Mallorca
On a free day she riding her horse
In 10 years she will have a family
She doesn´t know what she is scared about...
She would like to go to Mallorca
Jacob from Prag, 16 years old
100 Euro he would buy cigarettes
On a free day he plays football
In 10 years he will work in a restaurant
Family makes him happy
He is scared of spiders
He would like to go to USA
On a free day he plays football
In 10 years he will work in a restaurant
Family makes him happy
He is scared of spiders
He would like to go to USA
Jacob from Prag, 16 years old
100 Euro he would buy cigaretts
On a free day he plays football
In 10 years he will work in a restaurant
Family makes him happy
He is scared of spiders...
He would like to go to USA
On a free day he plays football
In 10 years he will work in a restaurant
Family makes him happy
He is scared of spiders...
He would like to go to USA
Lukas from Prag, 15 years old
100 Euro he would buy clothes
On a free day he plays football
In 10 years he will work as a bartender
Friends makes him happy
He is scared that his mother will die
He would like to go to London
On a free day he plays football
In 10 years he will work as a bartender
Friends makes him happy
He is scared that his mother will die
He would like to go to London
Last Minute Sales - in the NON digital way!
In Prague they also have travel shops.
Simple, no light, lamps nor flashy signs and digital media to attract customers. Simple A4 peaces of paper in black/white on a large board - filling the whole display in the window!
Online internet penetration amongst the population is at most around 50% - online booking of holidays much smaller.
Oriflame – successful distribution & retention strategy
Why is it interesting to visit Oriflame?- because cosmetics is the fastest growing private consumer goods in the Eastern part of Europe.
- Personal apperance and looks is definetely part of the experience economy
We are in the ”smiling products” business. Likewise selling holidays. The first words coming from managing director Magnus Holm who received us in the headquarter in Prague.
Immediately we “feel” the difference. The dynamic of the company and personalization of staff and customers (who are also somehow considered intermediaries selling Oriflame products).
Observations highlights:
* Multilevel marketing – experiences and people is the key
* Pyramide-model (normal consumers also the main salesforce – paid 30% commission)
* Emotions and closeness to local community are the driving forces for selling
* 80.000 mainly women are both customers and sales force
* Oriflame strongest in the country side (more difficult in big city Prague)
* Online orders are 57% - rest is directly face to face sales. (in Finland 99% online)
* More “homecomsumers” in Tjeck Republic than any other country in the World
* Local famous Tjeck model used as the “face” in all marketing & charity woork. Swedish faces do not work well in marketing – too natural looking….
* High potential for growth amingst the new generation
* Language skills the main barrier in most consumer markets in Tjeck republic. Has to be local language
* Population is withdrawn, unsecure and lacks self confidence (history of the country heavy influence still)
* Younger generation >20 years have a more positive view on the future – potential for Oriflame
* Mass media advertising necessary in the future – to meet the competition from international brands
* Emotions – the key USP for Oriflame (smiling products)
* Multilevel marketing – experiences and people is the key
* Pyramide-model (normal consumers also the main salesforce – paid 30% commission)
* Emotions and closeness to local community are the driving forces for selling
* 80.000 mainly women are both customers and sales force
* Oriflame strongest in the country side (more difficult in big city Prague)
* Online orders are 57% - rest is directly face to face sales. (in Finland 99% online)
* More “homecomsumers” in Tjeck Republic than any other country in the World
* Local famous Tjeck model used as the “face” in all marketing & charity woork. Swedish faces do not work well in marketing – too natural looking….
* High potential for growth amingst the new generation
* Language skills the main barrier in most consumer markets in Tjeck republic. Has to be local language
* Population is withdrawn, unsecure and lacks self confidence (history of the country heavy influence still)
* Younger generation >20 years have a more positive view on the future – potential for Oriflame
* Mass media advertising necessary in the future – to meet the competition from international brands
* Emotions – the key USP for Oriflame (smiling products)
Interview highlights
The three most important trends long termed
1. Cosmetic business infrastructure development (international brands entering the market place)
2. The community driver: Both web 2.0 and local fysical environment (mouth to mouth)
3. Expected growht in “skin care products” – 12% pa
Consumer behavior change
1. New generation more open & selfconfident
2. A hidden “force” within the population waiting to break out…Huge effect on consumption
3. The influence of mass marketing will put the current distribution model under pressure – but it will remain.
1. Cosmetic business infrastructure development (international brands entering the market place)
2. The community driver: Both web 2.0 and local fysical environment (mouth to mouth)
3. Expected growht in “skin care products” – 12% pa
Consumer behavior change
1. New generation more open & selfconfident
2. A hidden “force” within the population waiting to break out…Huge effect on consumption
3. The influence of mass marketing will put the current distribution model under pressure – but it will remain.
Industrial framework changes
1. Advertising change – foreign brands coming in investing in mass media.
2. The salary development I Tjeck Republic is high (10% pa) puts the Oriflame distribution model and margins) under pressure
Innovation in Oriflame
1. 80.000 creators around the country! Free to invent all sorts of happenings themselves
2. Fysical meeeting amongst people the most important thing
3. Innovation brainstorming book used every day: “Six thinking Hats”.
4. Many meetings with the consulents ca. 100 people. Round tables discussions, It council, Crystal Ball, Top Club etc.
The importance of corporate culture & values?
1. Culture & Values THE MOST IMPORTANT THING
2. Ethical values made by the founders (still valid)
3. Charity important
4. Incentive trips & happenings (4000 people have just spend 5 days in TFS)
5. Successstories with personal faces!
Our visit to oriflame raises the question:
Is Oriflame a symbol of the ANTI trends towards the e-com based society & community?
Is the fysical enteraction and meeting amongst people becoming increasing important in a digitalized society?
1. Advertising change – foreign brands coming in investing in mass media.
2. The salary development I Tjeck Republic is high (10% pa) puts the Oriflame distribution model and margins) under pressure
Innovation in Oriflame
1. 80.000 creators around the country! Free to invent all sorts of happenings themselves
2. Fysical meeeting amongst people the most important thing
3. Innovation brainstorming book used every day: “Six thinking Hats”.
4. Many meetings with the consulents ca. 100 people. Round tables discussions, It council, Crystal Ball, Top Club etc.
The importance of corporate culture & values?
1. Culture & Values THE MOST IMPORTANT THING
2. Ethical values made by the founders (still valid)
3. Charity important
4. Incentive trips & happenings (4000 people have just spend 5 days in TFS)
5. Successstories with personal faces!
Our visit to oriflame raises the question:
Is Oriflame a symbol of the ANTI trends towards the e-com based society & community?
Is the fysical enteraction and meeting amongst people becoming increasing important in a digitalized society?
In the States they have Starbuck - in Germany they have Balzac Coffee
The story of a selfconfident German woman who decided to copy paste the most successfull coffee-bar concept in the World: StarBuck. She formed her own chain of coffee bars in Berlin, Hannover, Hamburg and Lübeck called Balzac Coffee.
She did it well. Exepct for the branding colours being brown and golden – this is a true copy of a Starbuck shop. From interior design to the uniforms and service concept. The product portfolio has a few differentiated specialities like different milk products (Soya milk, lactosefreie milk etc.)
An example of an American and worldwide superbrand being transformed into a German national brand. Even the staff talked perfect "american"...
She did it well. Exepct for the branding colours being brown and golden – this is a true copy of a Starbuck shop. From interior design to the uniforms and service concept. The product portfolio has a few differentiated specialities like different milk products (Soya milk, lactosefreie milk etc.)
An example of an American and worldwide superbrand being transformed into a German national brand. Even the staff talked perfect "american"...
Zlata from Prague, 22 years old
100 Euro she would buy school books for. 1000 Euro she would give to someone who really meeds them
A free day she studies or does some sports. She would NOT watch TV.
In 10 years she want to work within law (which she studies) and have a family.
Nice weather makes her happy.
She is scared of negative people.
She would like to travel to India and other places with interesting culture.
torsdag 27 september 2007
German youths in Prague
They are both 16 and touristing in Prague.
For 100 Euro they would shop and eat if getting 1000 Euro they would save half of it and shop for the rest. A scoter says the guy.
A free day they party
In 10 years they want a job and a carriere, the guy would like to have a family when he is 26.
Being with friends makes them happy.
She is scared to die and he is scared for people he is in trouble with.
They want to travel to USA and Russia.
onsdag 26 september 2007
Observation - Behaviour of Check people
We find the Check people very direct in their manners. They are rather closed up and we are sorry to say that we find their service poor. To some extent we believe this has to do with their English language skills as the Check people fluent in English tend to be more open minded.
måndag 24 september 2007
Hotel Josef
This is a a award winning hotel. We are most satisfied with our berakfast which has everything you ever could wish for in the first meal of the day. What catches our attention the most though is the little jogging map we find in our rooms showing 3 different jogging routes, from short to a really long one, in Prague.
Using Beyoncé
A German newspaper writes about the success Sony has earnd using Beyoncé in their campaigns. But it is also stated that companies (record lables) use to little of these stars.
Brand packaging company Cocoon
We meet with Petr Baca, MD and founder of Cocoon.
Most important trends in his business is: 1, The importance of design is growing. 2, Fads change faster. 3, Better selection of well qualified people is needed (need of foreigner competence.
The consumer will become more selective and demanding, he says that companies will have to learn to react faster. His company constanly work with innovation in relation to design.
According to Petr company culture is no. 1 priority for a service company (as he sees them selves) as this is what you "bring".
We start to discuss the Check people and he consider them conservative, he thinks that they will evolve and there is an ongoing internationalization but that they will stay conservative.
Worth to notice is that he says that the country could be called "The island with no religion" and that they have a 50% divorce rate.
Environment exhibition
Down town Prague with it’s stage like houses and milieu we stumble on an exhibition about ecology. Among tourist restaurants and a shopping mall we get thrown back into reality again.
Sport / bech resort in the middle of Prague
We find a beach in the city centre. Available for young people. We take a taxi and from no where a “beach resort” pop ups. This is an area for the whole family to relax and spend a day. You have play ground areas, splash pools for small children, beach volley ball field, area for soccer and Boule and loads of bars and restaurants. The “resort” is called a sports club and an entrance fee is charged. We come here to observe youths but we find people in all ages. What strikes us as amazing is that we find a beach in town.
Länkar från "Digital Boheme Marcus"
http://WeAreWhiteLabel.com
http://kosmar.de/
http://www.openbc.com/go/invite/64461.79bde6
http://www.linkedin.com/in/markusangermeier
http://twitter.com/kosmar
http://kosmar.ipernity.com/
http://kosmar.de/
http://www.openbc.com/go/invite/64461.79bde6
http://www.linkedin.com/in/markusangermeier
http://twitter.com/kosmar
http://kosmar.ipernity.com/
lördag 22 september 2007
Mix of old values & international dreams
German girls age 15 & 16.
Extra money will be spent on material things like hopping clothes & make up. A day without school is about sleeping (!) meeting freinds and hang out in shoppingcentres, discos and chatting on Myspace.com. Getting older they value the old traditional core family stuff like getting hildren, a nice house and a good job, they like. (observation: they do not express prestigious jobs, big carreer nor earning lots of money as the main thing about a "good job" - more a job I like...). Happiness is about being with family at Christmas and birthdays - and hanging out with friends (obersvation: the socialising with close family and friends are core values for them). They fear loosing their parents (observation; war, terrorism, illness, natural disasters etc are NOT their first obsion here - they simply do not worry about these things - similar reaction amongst the other teenagers we met). Travelling is about going to "far away places" where America is top of the list.
They look like the youth lifestyle group: the Emos (black clothes etc)
fredag 21 september 2007
Pubcrawl
Finally, the time we all have been waiting for, time to explore the infamous typical czeck pubs.
We started at our hotellobby at 23.00. Anna came with the suggestion to explore them lunchtime tomorrow instead, but we all agreed that it might be a more suitable time at night compared to midday.
We took a AAA for threehundred metres to a bar we had been recommended.
The bill finished at 50 czeck crownes, and the taxi driver thought it was such a ridicusly amount, so he just mumbled something to us and took off without taking any money.
Birthe was happy.
The first pub we walked in to a big, longhaired man with dirty clothes walked up to me and just stared.
"Hello" I tried
No answer
"Are you open?"
"Closed"
The ladys started to walk around inside the pub to take some pictures. A lot of people, tired of life, was sitting around in different corners drinking staropramen.
Birthe walks up to the man to check if it's not possible to get a drink.
"Closed!" he answers, turns around walks away and adds "bye bye".
We didn't feel welcome so we continued down the street to a "Live music bar"
We walked down some some stairs and in to the "Live music bar"
I don't know the definition of live music i Prague, but this was very loud arabian music from a stereo that a hippie girl played bongo's to.
We walked out. Better luck the third time. We stopped at "Norton's bar club" to get a cola light. It was so packed inside that we had to take the drinks outside.
We observed the bar for a while. No specific music playing, a bright establishment. Packed with a very variated crowd. This bar didn't have any "nisch" at all. I wonered how that much people could end up here.
The people became more and more drunk, and we decided to call it a night when a fat czeck guy walked up and grabbed Christians halsduk.
We started at our hotellobby at 23.00. Anna came with the suggestion to explore them lunchtime tomorrow instead, but we all agreed that it might be a more suitable time at night compared to midday.
We took a AAA for threehundred metres to a bar we had been recommended.
The bill finished at 50 czeck crownes, and the taxi driver thought it was such a ridicusly amount, so he just mumbled something to us and took off without taking any money.
Birthe was happy.
The first pub we walked in to a big, longhaired man with dirty clothes walked up to me and just stared.
"Hello" I tried
No answer
"Are you open?"
"Closed"
The ladys started to walk around inside the pub to take some pictures. A lot of people, tired of life, was sitting around in different corners drinking staropramen.
Birthe walks up to the man to check if it's not possible to get a drink.
"Closed!" he answers, turns around walks away and adds "bye bye".
We didn't feel welcome so we continued down the street to a "Live music bar"
We walked down some some stairs and in to the "Live music bar"
I don't know the definition of live music i Prague, but this was very loud arabian music from a stereo that a hippie girl played bongo's to.
We walked out. Better luck the third time. We stopped at "Norton's bar club" to get a cola light. It was so packed inside that we had to take the drinks outside.
We observed the bar for a while. No specific music playing, a bright establishment. Packed with a very variated crowd. This bar didn't have any "nisch" at all. I wonered how that much people could end up here.
The people became more and more drunk, and we decided to call it a night when a fat czeck guy walked up and grabbed Christians halsduk.
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