by Keith Brady
Going to market with a new product can be a daunting endeavor. Product strategists and brand managers know all too well the potential perils that may await as a result of ill-conceived brand extensions (e.g. Life Savers soda, Smith and Wesson mountain bikes), polarizing technological advancements (e.g. Apple Newton MessagePad, DeLorean, etc.) and late-to-market entrants providing little/no added value (e.g. Microsoft Zune, HP TouchPad).
Rigorous research mitigates the risk of a colossal failure. Ideally (and traditionally), this involves careful iterations of ideation, concept testing, product configuration and testing, and pricing and demand analysis. More and more, however, marketers are putting the power to modernize in the hands of customers – through crowdsourced innovation.
What is crowdsourcing?
Though the term “crowdsourcing” (for outsourcing to the crowd) was formulated in 2005 and overtly defined in 2006, the concept of informal sharing of ideas within communities spans back many centuries. With the rise of printed media, more formal and geographically dispersed cases arose. Examples include collaboration around the cause and scale of meteor showers in 19th century astronomy, early 20th century bird watcher census counts, and mid-20th century genealogy efforts by the LDS Church.
The rise of the Internet has made crowdsourcing more prominent, from frivolous endeavors (Hot or Not) to admirable undertakings (Dell’s Social Innovation Challenge). Online crowdsourcing has connected groups previously unconnected to enable distributed workforces, funding of new ventures, and even cybersleuthing to find lost objects, pets, or even people.
One prominent example is Amazon’s Mechanical Turk (MTurk), a crowdsourcing Internet marketplace that enables individuals and businesses (known as Requesters) to coordinate the use of human intelligence to perform tasks that computers are currently unable to do.
Crowdsourcing innovation
Online crowdsourcing has also provided new avenues for many companies to innovate with the customer front and center. Take for instance last year’s Lay’s Do Us a Flavorcampaign, the second annual search for a new flavor of potato chip. Lay’s accepted millions of submissions from consumers for new flavor ideas, picked four finalist entries, and actually produced the four different flavors for limited distribution and in-market testing. Votes were collected via social media and the winning flavor garnered a spot in the Lay’s lineup of products and a $1 million payout to the person who submitted the idea. The formula for this type of campaign yields some very tangible benefits for Lay’s:
They enlist the general public as partners in the innovation effort, and are positioned as a brand who cares about the needs and wants of their customers
There is little risk that a deficient product (like the cappuccino-flavored chips put forward as a finalist this year) will create ill will toward the brand, as consumers KNOW they are being used as guinea pigs and that the flavor technically originated in the mind of another consumer
It spurs social media pass-along, dialogue, controversy, and PR coverage
It allows for flexibility – products can be offered for a limited or indefinite amount of time, without expectation that these flavors (even the winning flavor) will be available in the long run
There are limitations, however, to this type of external and public crowdsourced innovation strategy:
It can only truly work toward rational, incremental innovation. In general, disruptive innovation (which tends to place the most distance between competitors) requires some degree of secrecy.
It is better positioned for communication to existing customers rather than pulling in competitor customers or those not currently in-market for the product.
Therefore, it’s important to actively manage the process.
The Three Golden Rules
We’ve outlined three basic guidelines for crowdsourcing innovation:
1. Establish goals and set boundaries
Having a clear, realistic, measurable goal is essential. Is the goal to increase brand awareness, directly generate additional revenue, grow short-term volume, steal market share, increase customer satisfaction, make existing products more relevant, etc.? By what measure and by how much (e.g. increase brand awareness to 67% of the target audience)?
As a general rule, keep goals focused on a few key performance indicators. Likewise, set boundaries for the initiative. What elements of the initiative will be made public (e.g. overview of all submissions, public voting, etc.)? How often can a customer contribute or how many submissions per customer will be accepted? Is there a guarantee that the company will use innovations sourced through this initiative?
Far too many social media campaigns have backfired due to poor planning and poor controls:
As part of a promotional contest for Energy Sheets, a brand of caffeine-laced breath strips, Rapper Pitbull pledged to visit whichever Wal-Mart location received the most likes on Facebook by July 15, 2012. He ended up performing in Kodiak, Alaska, the most remote Wal-Mart location in the U.S.
Mountain Dew’s Dub the Dew campaign had to be shut down after open Internet nominations and voting to name the brand’s new green apple infused soft drink led to high-ranking submissions like “Hitler did nothing wrong,” “Diabeetus,” “Gushing Granny,” and “Sierra Mist.”
Skittles decided to integrate Twitter onto their website and imported all tweets using the hashtag #skittles. Without a moderator, pranksters soon began contributing text which discussed whether the product caused cancer or was the root of all evil.
Relinquishing power to the public is sometimes tough, especially since modern audiences appreciate transparency and personalization of famous brands. Relinquishing the power to innovate is often even harder, as innovation depends upon the ability to unlock additional value from a product or brand beyond what is currently available, and properly communicating or translating that value. That’s a tall order for John Q. Public, and one that’s fraught with hurdles, though the opportunities uncovered can be worth it. The trick is to give customers some power, but none of it unchecked.
Potential hurdles include crowdsourced innovations that don’t provide meaningful incremental value, that don’t agree with brand personality, that cannibalize existing products, that emulate competitor products, or that infringe upon the “turf” of professional services (there are numerous examples of graphic designers up in arms over a company’s desire to accumulate crowdsourced logos for products/brands).
With the proper boundaries set in advance, most of these risks and hurdles are controllable.
2. Be realistic about incremental vs. disruptive innovation
Crowdsourcing, by definition, is not clandestine. As stated earlier, this makes it more prone to produce only slight incremental innovation rather than true technological advancements or disruptive innovation. Enabling elements of crowdsourced innovation help products and brands to remain relevant, spur social interaction, and reduce downside risk. Consumer packaged goods are best suited for this type of strategy, but that’s not to say that crowdsourced innovation is off-limits to consumer technology, high technology, automotive, entertainment, or financial marketers.
As an example, we know that tech products’ appeal extends much farther than functionality, as evidenced by the use of personalized smartphone cases, the popularity of inferior personal electronics and games endorsed by celebrities, and the wide proliferation of non-functioning automobile air intakes and gaudy chrome wheels.
And while it’s unrealistic to believe that overt, public crowdsourcing efforts will yield truly groundbreaking new technologies or technical competitive advantages, some companies have found worthwhile innovation pursuits through semi-public crowdsourcing initiatives:
GE has a dedicated Open Innovation Unit focused on crowdsourcing innovation, internally and externally, to drive advancements. From the website (http://www.ge.com/about-us/openinnovation) – “GE understands solving the world’s toughest problems through advanced manufacturing techniques and processes requires collaboration. By crowdsourcing innovation … GE is improving customer value and driving advancements across industries. By sourcing and supporting innovative ideas, wherever they might come from, and applying GE’s scale and expertise, GE’s approach to open innovation is helping to address customer needs more efficiently and effectively.”
Taking a cue from successful tech/software companies, Ford is pushing open source connectivity in its vehicles through its OpenXC hardware and software. From the website (http://openxcplatform.com/) – “OpenXC…lets you extend your vehicle with custom applications and pluggable modules. It uses standard, well-known tools to open up a wealth of data from the vehicle to developers.”
These efforts continually crowdsource ideas and technology from people intimately familiar with these industries, and because there are no short-term promotions, contests, and the like, the focus is on technological improvement over earning media and PR. In these venues, disruptive technology is possible, but only marginally protected from competitors.
3. Don’t turn your back on proper methodology
A friend once emailed to solicit my participation in the Atlanta Business Chronicle's“ATL Beer Madness” poll. His microbrewery was facing off in a public vote-based, single-elimination online tournament against other Georgia-based breweries. This was a crowdsourced means by which to determine Georgia’s favorite brewery. To that end, it was a simple and effective campaign which garnered a lot of viral activity. My friend’s brewery lost in the semi-finals. When the results were posted, one of my friends said, “Well at least they are one of the top four breweries in Georgia!”
That statement is potentially false.
I want to be fair here. To date, the Atlanta Business Chronicle has not claimed any kind of ranking ability based on this poll, and the polling section of the site clearly states, “This survey is not a scientific sampling. It offers a quick view of what readers are thinking.”
That said, if the goal WAS to offer a comprehensive ranking of Georgia breweries rather than find the single most-preferred brewery, a single-elimination tournament without seeding is not a methodologically sound approach. In a single-elimination tournament without seeding, awarding anything below first place is unjustified. Any of the competitors knocked out by the tournament champion might have been the second strongest one, but never got the chance to play against the losing finalist. Likewise, my friend’s brewery could have been anywhere between 2nd place and 14th place – as they beat two of the 16 breweries head-on and then lost to the eventual tournament winner. In a case such as this, a forced ranking or maximum difference scaling (MaxDiff) approach would be more applicable.
I show this example simply because the hypothetical situation of poor methodologies applied to crowdsourcing has been demonstrated numerous times. Most notable is the error of misrepresentation – when participants/submissions for a crowdsourced effort do not reflect the geographic or demographic profile of the brand’s target audience, resulting in an innovation that is ill-targeted.
Conclusion
Achieving innovation through crowdsourcing can be a powerful tactic for building deep and meaningful relationships with current and potential customers. It creates a two-way dialogue and a seemingly joint effort to make brands and products more relevant and more receptive to customer feedback and engagement. The risks inherent with such an approach can be eased with proper planning and adherence to the Three Golden Rules:
- Establish goals and set boundaries
- Be realistic about incremental vs. disruptive innovation
- Don’t turn your back on proper methodology
originally posted on LinkedIn
