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Friday, March 18, 2005

Customers, Democratisation & Future Of Innovation

We recently covered in this blog Paul Allen's Views , the fastest Growth Sites are Built on User Generated Content.One of the most powerful ways to develop web site traffic is to enable users to share their content through your web site with others-to create community around user generated content. Many of the fastest growing web sites of all time did this (or do it now): MyFamily.com, eBay, GeoCities, Xoom, Homestead, MySpace, Epinions, Hotshots, LinkedIn.com, Meetup.com, Friendster, and more.If sites are uses to get customers to blog,use message boards,upload photos or reviews, the effect shall be dazzling.With open source software (for message boards, blogs, uploading photos, and more) and with the cost of hard drive storage a tiny fraction of what it was five years ago, the time has never been better to try a user generated content strategy.

The latest issue of The Economist has an article on user-driven innovation. Innovation need not happen just in labs.Recent corporate practice has begun to challenge this old-fashioned notion. Open-source software development is already well-known. Bell, an American bicycle-helmet maker, has collected hundreds of ideas for new products from its customers, and is putting several of them into production.Electronic Arts (EA), a maker of computer games, ships programming tools to its customers, posts their modifications online and works their creations into new games. The customer is the king, market-research head, R&D chief and product-development manager, too.The rise of online communities, together with the development of powerful and easy-to-use design tools, seems to be boosting the phenomenon, as well as bringing it to the attention of a wider audience, says Eric Von Hippel of the Massachusetts Institute of Technology, who is about to publish a book, "Democratising Innovation".User innovations always would have a much higher rate of success.
Traditionally, firms have innovated by sending out market researchers to discover "unmet needs" among their customers. These researchers report back. The firm decides which ideas to develop and hands them over to project-development teams. Studies suggest that about three-quarters of such projects fail. Harnessing customer innovation requires different methods - Instead of taking the temperature of a representative sample of customers, firms must identify the few special customers(named lead users,luminaries etc) who innovate. While many expect innovation to provide monetary rewards to creators,user-led innovation implies customers donating their creativity freely.
A highly recommended reading highlighting important themes. user reinvention, the economics of open source, and technologies of collaboration and early involvement.

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Sadagopan's Weblog on Emerging Technologies, Trends,Thoughts, Ideas & Cyberworld
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