Wednesday, June 25, 2008

Cocreation Might Lead to the Next Big Innovation

This week in the McKinsey Quarterly, they took time to detail what might be the next big thing in innovation. In the article The Next Step in Open Innovation, they point out that currently, for most companies, innovation means collaboration within the company throughout a process of managed steps. But recently, companies have seen the benefit of looking outside for their new ideas to places such as their suppliers, investors and university labs. Often, management hopes to get their customers involved, and thinking innovatively for their organization. The technical name for this process is distributed cocreation.

Innovation can come from many places that many companies have not looked at before, specifically for distributive cocreation which relies on others outside the company to develop new ideas. One place is the value chain. With companies looking at those who specialize to help their product, ideas begin to flow in from outside of the organization. Customers are also a key part of this process. Involving them in the innovation process can lead to better marketing campaigns, and can also lead to more attention to the product.

So what are the problems that can arise from this new process? As the McKinsey Quarterly points out, it’s not clear yet what the companies exactly need in order to streamline this process of cocreation. The problems they see arising in the future are:

-Attracting and motivating cocreators – The company must understand what the participants want from the experience, and why the do work with the community.

-Structuring problems for participants -- The participants should world parallel to each other, so it’s easy to gage their work and turn it into effective solutions.

-Governance mechanisms to facilitate cocreation -- In order to function as a community, goals, rules and leadership must be made clear to the participants.

-Maintaining Quality – It assumed by most people that crowds know more than an individual person. Open source has shown this, an example being Wikipedia. But that quality has to be maintained.

The study also found that participants also join communities to innovate because they have an affinity for the product. They study rarely found individuals contributing to a product that they did not like. They also saw that participants who contributed to a project saw their innovations as those of the company. However, companies will need to give incentives to encourage the participation of the customers.


Ash Seha said...

Hi Jennifer, thanks for the link. Speaking as someone who works for a open innovation intermediary, I agree with the first three issues that the article raises (motivation, structuring problems, and governance). The quality issue is a bit of a red herring, though; just as internal innovation turns up a whole lot more duds than stars, open innovation is subject to the same outnumbering of good ideas by bad ones. What it comes back to is the first three issues, which if properly addressed allow the good ideas to flourish, and the bad ones to get resigned to the trash heap of history.

Tony said...

Hi All, this is a very interesting topic which one new company is attempting to tackle. It will be going live soon...check it out:

I am currently working with this company so any thoughts / feedback would be great.

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