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Sunday, February 06, 2005

Democratizing Innovation - Focus Groups Meet Digital Age

(Via Todd). MIT's Professor of Management of Innovation and Head of the Innovation and Entrepreneurship Group at the MIT Sloan School of Management,Eric Von Hippel writes, in his new forthcoming book,Democratizing Innovation Innovation is rapidly becoming democratized. Users,aided by improvements in computer and communications technology, increasingly can develop their own new products and services. These innovating users - both individuals and firms - often freely share their innovations with others, creating user innovation communities and a rich intellectual commons. In Democratizing Innovation, Eric von Hippel looks closely at this emerging system of user-centered innovation. He explains why and when users find it profitable to develop new products and services for themselves, and why it often pays users to reveal their innovations freely for the use of all.

The trend toward democratized innovation can be seen in software and information products - most notably in the free and open-source software movement - but also in physical products. Von Hippel's many examples of user innovation in action range from surgical equipment to surfboards to software security features. He shows that product and service development is concentrated among "lead users," who are ahead on marketplace trends and whose innovations are often commercially attractive.Von Hippel argues that manufacturers should redesign their innovation processes and that they should systematically seek out innovations developed by users. He points to businesses - the custom semiconductor industry is one example - that have learned to assist user-innovators by providing them with toolkits for developing new products. User innovation has a positive impact on social welfare, and von Hippel proposes that government policies, including R&D subsidies and tax credits, should be realigned to eliminate biases against it. The goal of a democratized user-centered innovation system, says von Hippel, is well worth striving for.

Forbes magazine writes Whether they are selling cars, toys or fast food, companies are tapping consumers as never before to help them create new products.Excerpts with edits and comments added:
When GM’s Hummer H3 rolls out this spring, it will feature some distinctive touches from an unusual source of inspiration: a bunch of everyday drivers. Now GM hopes this approach can eventually shave six months and millions of dollars off the journey from drawing board to dealership. Should companies let a bunch of amateurs design their products? Up to a point, yes. But they're doing it, letting customers put in their two cents on cars, insurance products, fast food, toys and appliances. Maybe it's an act of desperation, but they have concluded that instant feedback is one way to cope with the pressure for shorter product cycles and with the high failure rate of new products. Of the 36,000-plus new products that will hit the shelves in the U.S. this year, 80% will fail, says New Product News. Consultants screen respondents and develop prototyping software that lets consumers create or modify designs, allowing companies to sort and evaluate the data instantly. FORBES subscribers, selected from e-mail database, picked their favorite cover design from among three Whirlpool Corp. wants to plug into an online community of consumers who, using their PCs, would be able to make changes to digitized renderings of new designs for home appliances and send their suggestions to the company .Whirlpool’s consultant, expects to trim research time by a month and expenses by at least 30%.

Dannon USA, needed a quick read on what features were must-haves – from 11,268 possible combinations, each player in this game was asked to choose among only a few. A statistical algorithm recombined features to highlight frequently selected elements. The test changed as more people took it, and the program determined the most popular configurations. a series of yogurt containers in such a way that respondents could evaluate different combinations of name, package design, nutritional labeling and size. After the product was launched -for the 52 weeks ending Nov. 28 sales hit $70.5 million. Toymaker RC2 Corp. took a different approach. RC2 made those changes based on sample use feedback – captured by notes of association and camera fitted in to monitor It added more shapes, textures and bricks, all mom suggestions. The company shaved eight weeks off the time it would have taken to do conventional research.

Taco Bell, a division of Yum Brands, recently turned to fast-food eaters to help create a hot-selling burrito-hopes were high for a "truly healthy" one. Instead of a low-cal item, most respondents clamored for a three-cheese-soaked "indulgent" burrito, and they were willing to pay extra to get it. "We were looking at a $2 burrito. Our findings suggest we might get 20 cents more for it," says, Taco Bell director of consumer insights. State Farm Insurance recently heard back from its new online community about the idea of offering reduced rates for safe drivers who were willing to have "black boxes" installed in their cars. Customers were wary of the devices, which would have monitored where and how they drove. "Our panel did not like that idea at all; they thought it would be a real invasion of their privacy," says research administrator at State Farm. Feedback fatigue is an issue most of these techniques worry about – making this more innovative and interactive shall make the focus group approach to yield results. Globalisation, competition, convergence technologies force competitive companies to try out all things new in the entire lifecycle of an organization. Competitive enterprises shall include this user centric innovation as part of their routine product/service offering launch program.

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