Smart Companies Putting Their Customers to Work

Increasingly, businesses committed to innovation are putting a new spin on the old adage "the customer is always right," and turning their customers' knowledge and needs into new product development. Taking a cue from bottom-up development processes such as open source software, companies are using online communities and the hacker mentality to not only learn from their customers, but to actively involve them in product development.

"Demand-side innovation" (one of its many names) can take many forms. BMW, for example, posted a "toolkit" online allowing customers to model new ideas in telematics and online services; BMW selected the best ideas for development, and invited the contributors to meet with its engineers in Munich. The game developer Electronic Arts monitors and networks with grassroots fan websites for its games, where enthusiasts post game modifications created with tools that are shipped with the games. General Electric routinely pulls together what it calls its "lead users" in meetings to discuss future needs and ideas for its major product lines. The office supply store Staples held a contest for new product ideas, and received 8,300 submissions.

Such customer driven innovation not only leads to better and more useful products, but provides customers with a unique sense of ownership of the end product... even if they didn't personally participate in its development. The concept is nothing new, as customers have been sending compaines product ideas for years (the development of the pickup truck originally grew out of suggestions from farmers), but the Internet is making this kind of networking exponentially easier.

For more ideas on managing innovation, read "Five Key Strategies for Making Open Innovation Work for You" at Innovation.net.

Source: The Economist, Innovation Weblog