Wednesday, December 07, 2011

What the crowd knows

In one of my favorite movies, The Blues Brothers, the guys get themselves into a jam. They are supposed to play at Bob's Country Bunker, and don't really know what kind of music the audience enjoys.  When they ask the waitress she responds, "Both kinds.  Country and Western".  Like the folks at Bob's Country Bunker I happen to enjoy both kinds of innovation, internal "closed" innovation and external "open" innovation.  In fact I wrote a chapter in this book about the different kinds of open innovation.  Both have their uses and both have their limitations.  Understanding when and where to apply the different kinds of innovation will help you find the most relevant and valuable ideas.  Using these innovation types in the wrong way will frustrate your teams and reinforce the image that innovation isn't effective.

I wanted to write today about crowdsourcing, or the instance of open innovation where we ask our clients, customers, partners and channels to submit ideas.  Open innovation is gaining a tremendous amount of awareness. I think this is due to programs like Dell's IdeaStorm and P&G's Connect+Develop program, as well as work by Nine Sigma and Innocentive.  But recognize that each of these "open innovation" programs represents a different approach and method of open innovation.  Only the IdeaStorm model really represents true "crowdsourcing", while Connect+Develop is an open innovation approach based on proprietary networks and trusted partners, and Nine Sigma and Innocentive are a mix of RFPs and contests.

So, if the idea that crowds can help generate ideas, the next question we should ask ourselves is:  what does a crowd know?  What does a crowd of people, who represent our customers, partners, competitors and channels know about new products or services that is relevant, timely and valuable for us?  And, if they have good insights, why would they give them to us with no compensation? 

Crowds, especially large, energized and homogeneous crowds, know a lot about a product or service. They know what they like about the product. They know what they dislike about the product.  They know what substitutes or alternatives exist and the strengths and shortcomings of the substitutes and alternatives.  But, as has been demonstrated time and again, crowds, and individuals have a hard time conceptualizing something completely new and different.  To quote Henry Ford once again, "If I'd asked my customers what they wanted they would have said a better horse".  No one asked for a car, because it wasn't within their worldview or perspective.  Crowds, especially large crowds, revert to the mean, and in this case they revert to the mean of their collective understanding.  What this means in general terms is that crowds are good if you are trying to understand short term needs, short term frustrations and incremental solutions.  On the other hand, crowds and crowdsourcing aren't valuable if you are seeking radical or disruptive ideas, for several reasons:
  1. They can't imagine a major change or the absence of the product or service
  2. They have a vested interest in the existing product. They prefer slight improvements to radical change
  3. They forecast the future to look a lot like the present and can't image a reason for significant change
  4. They don't believe that companies will invest to create something radically new and different
I don't mean to belittle crowdsourcing, and I know a number of firms that have used the tool reasonably well. After all, it is only a tool, and only one method or approach in a range of tools and methods lumped under the open innovation umbrella.  Appropriately used, it can have good value, especially for identifying acceptable incremental innovations or understanding the challenges and frustrations caused by an existing product.

If you are looking for ideas outside of an incremental solution, or hoping that you'll get a lot of ideas that are interesting and radical simply because you are asking more people the question, you'll be disappointed in crowdsourcing unless you invite a lot of people who aren't your customers or don't think they need your product.  But then your team will have to deal with the kind of feedback that may be a bit more difficult to hear. 

If crowdsourcing is an important tool for innovation, then we need to use it effectively and appropriately.  Our first question should be: what is it that the crowd knows that I don't, and how can I use that effectively?  What kinds of ideas and innovations can they imagine, and what kinds of ideas do I want or need?  If you are seeking radical or game changing ideas, or ideas with deep intellectual property, then this particular open innovation tool may not be right for you.
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posted by Jeffrey Phillips at 2:41 PM


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