When Customers Get Clever: Managerial Approaches to Dealing with Creative Consumers


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Creative consumers (defined as customers who adapt, modify, or transform a proprietary offering) represent an intriguing paradox for business. On one hand, they can signify a black hole for future revenue, with breach of copyright and intellectual property. On the other hand, they represent a gold mine of ideas and business opportunities. Central to business is the need to create and capture value, and creative consumers demand a shift in the mindsets and business models of how firms accomplish both. Based upon their attitude and action toward customer innovation, we develop a typology of firms’ stances toward creative consumers. We
then consider the implications of the stances model for corporate strategy and examine a three-step approach to dealing with creative consumers: awareness, analysis, and response.

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When Customers Get Clever: Managerial Approaches to Dealing with Creative Consumers

  1. 1. WHEN CUSTOMERS GET CLEVER:MANAGERIAL APPROACHES TO DEALING WITH CREATIVE CONSUMERS<br />Based on the following paper:<br />Berthon, P.R., Pitt, L.F., McCarthy, I.P., and Kates, S.M. 2007. When Customers Get Clever: Managerial Approaches to Dealing with Creative Consumers. Business Horizons, 50(1): 39-47. <br />Download a PDF of the paper)<br />
  2. 2. SOME STORIES…….<br />Jim Hill<br />Jose Avila<br />Ron Gremban<br />The BBC<br />
  3. 3. JIM HILL <br />barred from the Magic Kingdom <br />devoted Disney fan writes a blog on Disney<br />Offers guided but unauthorized tours of Disneyland, charging $25 per person<br />March 2005 security at Disneyland in Anaheim, California informed him barred from the park and all other Disney venues<br />
  4. 4. JOSE AVILA<br />Made furniture for his apartment exclusively from Federal Express boxes<br />FedEx promptly overnighted a cease and desist letter <br />consumer comments on weblogs persist: <br />“This really brightened my day! The letters are classic lawyer exchange. My husband and I laughed and laughed. Lawyers jousting at windmills...”,<br />“FedEx needs to lighten up. Jose is a bright and innovative young man, and instead of making his life miserable, they should give him a great job. <br />
  5. 5. RON GREMBAN’S CAR <br />looks like a typical Toyota Prius hybrid<br />an additional stack of 18 brick-sized batteries boosts the car's already high mileage with an extra electrical charge so it can burn even less fuel. <br />spent several months and $3,000 tinkering with his car<br />Toyota initially frowned on people altering their cars<br />now say they may be able to learn from them<br />
  6. 6. THE BBC<br />giving web developers and designers outside of the organization access to its content so that they can "create cool new things". <br />Called backstage.bbc.co.uk, it gives people who create computer programs, applications or graphics the chance to put their stamp on BBC digital content. <br />Build what you want using BBC content<br />backstage.bbc.co.uk is the BBC's developer network to encourage innovation and support new talent. Content feeds are available for people to build with on a non-commercial basis. <br />
  7. 7. CREATIVE CUSTOMERS ARE…….<br />We define the creative consumer as an individual or group, who adapts, modifies or transforms a proprietary product, service or idea<br />Early Model T Ford regularly adapted by farmers as a power source for driving generators, mills and lathes<br />The related concept of ‘lead user’ has been the primary focus of management and researcher attention. <br />
  8. 8. CREATIVE CONSUMERS INCLUDE:<br />Lead users<br />Pirates<br />Ad-generator consumers<br />Hackers<br />Steam punks<br />In fact any “individual or group, who adapts, modifies or transforms a proprietary product, service or idea” (Berthon et al., 2007, page 40)<br />
  9. 9. CREATIVE CONSUMERS<br /> Creative consumers work with all types of products – NOT just novel or enhanced products that are the focus of the lead user<br />Creative consumers don’t necessarily face needs that will become general, often work on personal issues that remain personal, or expand in use to a subset of users. <br />Creative consumers need not benefit directly from their innovations, may obviously benefit indirectly thorough thanks, peer recognition etc. <br />Firms use formal and disciplined process to find, screen and select lead users. Creative consumers rarely ask permission to experiment - they select the product, the firm, the innovation. <br />
  10. 10. CREATIVE CONSUMERS - WHY TREAT THEM STRATEGICALLY:<br />They exist, are here to stay - as technology becomes more digitized, atomized, and interconnected: the potential for consumers to reprogram, adapt, modify and transform becomes greater.<br />Creative consumers are a rich source of innovation.<br />Recognizing and utilizing creative consumers is a form of outsourcing, whereby the process of new product development is informally contracted out to the market<br />
  12. 12. THE DISCOURAGE STANCE<br />Firm’s attitude towards consumer innovation is negative, but the firm’s actions are de facto passive<br />Sony and the PSP<br />Apple and Podcasting<br />
  13. 13. THE RESIST STANCE<br />Attitude towards consumer innovation is negative, but the firm’s responses are active<br />Ford refused to honor warranties on vehicles that had been adapted for alternative farming applications <br />Sony sued consumers who hacked the AiboPet operating system to make their cyberpet dance, jive and perform a wide host of ‘unauthorized’ actions <br />
  14. 14. THE ENCOURAGE STANCE<br />Firm’s attitude towards consumer innovation is primarily positive, but the firm’s actions are again de facto passive<br />Skype and Skypecasting<br />
  15. 15. THE ENABLE STANCE<br />Firm’s attitude towards consumer innovation is positive, but the firm’s posture is overtly active<br />Ford seems to have changed its stance and is working with individuals such as Chip Foose and his own business, Foose Design. <br />
  16. 16. AWARENESS, ANALYSIS AND RESPONSE<br />Be Aware of what’s happening<br />Analyze the phenomenon - this is where the matrix is essential. <br />What are the implications for the firm? <br />Should our attitude be positive or negative?<br />Should we pursue a hands-off approach, or actively engage with the phenomenon?<br />Two key questions that need to be asked during the analysis phase are: <br />what is the path of the value<br />What is the polarity of the value - produced by creative consumers? <br />
  17. 17. DEFINITIONS<br />The path of the value relates to whether the impact on the firm is direct or indirect.<br />The polarity of the value relates to the whether the value to the firm is positive or negative. <br />
  18. 18. CONCLUSION<br />Traditionally firms have paid little attention to the phenomenon of creative consumers - we suggest that this can no longer be the case<br />Creative consumers are likely to be an increasingly important force for change and innovation in many markets. <br />Firms need to enhance awareness of their creative consumers, analyze their impact and formulate an appropriate response. <br />
  19. 19. CONCLUSION<br />Responding to the threats and opportunities of creative consumers will require firms to manage a three way fit between:<br />a specific stance towards creative consumers<br />the relative ability and desire of consumers to adapt, modify and transform their products and,<br />the firm’s ability to scan, track and control consumer produced innovations<br />
  20. 20. THANK YOU<br />