4. 4
Objective
Evaluate the best in class corporate Open Innovation Network (“OIN”) communities, specifically
focusing on how companies are using these communities to “seed innovation”
Examine the latest technological advancements in OIN development
Deliverables
Identify the best in class companies and approaches for seeding innovation through OIN communities
Provide recommendation from our interview and findings
Identify other issues which have arisen during our Key Innovation Leader interviews
Project Scope
5. 5
Best in class companies are using online communities for market research, seeding innovation, community
building, and brand building.
Companies using online communities include:
J&J Toyota Google General Mills
Apple Starbucks Sony Dell
IBM McDonald’s Yahoo BMW
Coca-Cola Chrysler eBay General Motors
Online Communities
6. 6
Communities are being used to seed innovation
Market research from communities has been helpful in developing, beta testing, and enhancing existing
products.
Internal communities help foster a culture of innovation as well as improve employee retention.
Our research has shown that some companies are employing representatives to monitor non-affiliated
company specific blogs.
7. 7
Internal Communities External Communities
Usually those communities are developed to facilitate the
exchange of information between employees.
Any community developed for the purpose of bringing-in
members outside the company. Often, these communities
are developed to host the company’s consumer products.
Types of Online Communities: Internal vs. External
8. 8
Open Closed
These communities are open to anyone willing to
participate. There are options for inviting members, but
usually, members join due to their own volition and
desire.
Members are usually invited or recruited.
Better relationships are built and members are able to
connect with one another
More intimate
Opportunity to develop relationships
Remuneration is not mandatory
Incentives offered are often minimal
Types of External Online Communities: Open vs. Closed
9. 9
Types of External Online Communities: Open vs. Closed (cont’d)
Open community participants tend to be younger; closed community participants span a broader age
demographic based on relevance and purpose of the community.
Open communities are public domains; closed communities are private domains and offer a dedicated
community.
Small is “In” (300-500 member communities): Status and self-esteem; Affiliation; Sense of community;
Assistance and opportunity to help others.
10. 10
Benefits Drawbacks
Open to all users (potential higher participation)
Likely more diversity among participants
“Shot-gun effect” – the more people involved, the
more opportunity for a good idea to emerge
Great opportunity to build brand loyalty,
recognition, and public relations
Excellent opportunity for company and brand
exposure
Compensation is less likely to be expected from
participants
Higher ratio of “white-noise” (likely more irrelevance
than closed)
Much more unwieldy to manage
Potential to lose the sense of community, which may
have attracted members in the first place; such as
building relationships or being heard
Often less commonality than closed
External Open Communities
11. 11
Benefits Drawbacks
Great place to build true relationships between
participants (“members”)
More control over demographics (since the members
are recruited)
More interaction and rapport among members
which build relationships
Ideal for specific initiatives or areas of specific
interest with the company
Great opportunity to build communities, brand
loyalty, and public relations
Members have a better chance to feel a sense of
commonality
Smaller population
May find difficulty recruiting the right members
If community is not selected carefully, there is
potential for a possibly less diverse population
Members may expect some form of compensation for
their services (although still much cheaper than
traditional market research)
External Closed Communities
12. 12
Overcoming Barriers
Communities allow for freer communication and better input than focus groups.
Outside ideas can help foster internal discussions; e.g. – Improve design and functionality of next-
generation products, critiques of early stage applications, product extensions. (i.e. Stents - Drug Coated
Stents)
Companies who provide compensation, often do so in response to an IP issue. Many participants feel
rewarded just to be part of the system.
Regarding legal hurdles and intellectual property, companies need to be specific about ownership of ideas
submitted to communities.
13. 13
Perceived Value & ROI
In early stages, not enough quantifiable data is available to adequately assess ROI.
Hard to gauge and quantify.
One large consumer products company was required to justify return the first several years, but after
consistent ROI’s of ~400%, management was satisfied with the investment.
14. 14
History & Participants Purpose Infrastructure
Originally, market research
participants (all members
recruited)
Currently, two close groups
(both consisting of women) who
now share ideas among one
another called Idea Exchange
Participants are willing to sign
off IP rights, just so they can
have a voice in the company
Compensated with a small
package of goods
Mostly used for market research
purposes (feedback on certain
ideas from within the company)
Now there are innovative
initiatives integrated into the
research community
There is a lot more trust among
members of the online
community in comparison to
face to face focus groups
People feel free to share ideas
and feedback as a result
Constantly looking to improve
the technologies used
Initiatives can be as focused as
preferred gift wrap and broad
as connecting and caring
Most of the community work is
outsourced to Communispace
Hallmark’s Online Community
15. 15
Thomas Brailsford, Hallmark Manager of Advancing Capabilities
“There is a difference between a
community and a panel.”
“They all have visibility to each
other and they set up their own
surveys and their own bulletin
boards.”
“When you get into a
community environment, 200 –
400 people is about all you can
manage in a community. When
you get bigger then that you
really can’t wrap your brain
around the connections and
people start to break off into
smaller groups.”
Hallmark Insight
16. 16
Participants Purpose Infrastructure
Strictly limited to individuals
with a patented technology
Ranges from academics,
inventors, small research firms,
large research firm
Strictly created to provide a
portal for technology
submission
Since technologies are already
patented, they are promoted to
the respective division of
General Mills at a much higher
percentage than other sites
(about 40% promotion rate as
opposed to 5% or less in other
companies)
Produced Go-Gurt Fizzix
technology from site submission
Team is set up to perform
weekly analysis of submitted
ideas
General Mills to give feedback
within 30 days
All are members of an
innovation department within
General Mills, so there are other
responsibilities accompanying
their duties to the G-WIN
website
General Mill’s Online Community
17. 17
Participants Purpose Infrastructure
Open Community - submissions
can come from anyone
Kraft attempts to provided
feedback within 6 weeks of
participants submitting ideas
Provide a new avenue for
innovation within Kraft
One-way process (little
interaction between
participants and Kraft)
Looking to use a non-
confidential list of areas which
specifically need to be addressed
or improved
Every idea submitted is filtered
by a small group working in the
“Innovate with Kraft”
department, and if the idea
shows promise it is then
delegated to the respective
department within Kraft
Kraft’s Online Community
18. 18
Participants Purpose Infrastructure
Employees within Intuit as well
as users who have
recommendations for and are
proficient with Intuit’s software
Participants may be rewarded
with free products for their
involvement or even money if
used in pilot studies
Intuit takes it one step further
and will utilize community
members in research projects or
pilot runs
Brand building, market
research, innovation, building
communities
Features have been added to
TurboTax and QuickBooks as a
result
Excellent subject pool for
specific research initiatives
(members are familiar with the
process and software)
The site is run by employees of
Product Management and
Development
Intuit’s Online Community
19. 19
Intuit Executive responsible for Online User Feedback Program
“We feel that our program not
only rewards our customers
with product or gift certificates,
but we create an environment
which allows our customers feel
that their ideas are of great
value to us.”
“There are a number of features,
which have been added to
TurboTax and QuickBooks,
which were directly influenced
by our user feedback programs.”
“We make it easy for our
customers to get involved with
the creation of new ideas. One
of the things we will do is go out
into the field and experience our
client’s environment to see how
they interact with the
product. It is an immersive
experience, which lasts one hour
or more.”
Intuit Insight
20. 20
Participants Purpose Infrastructure
Open Community – but mostly
women who have comments &
questions regarding laundry
Brand building (wanted to put a
face to the Clorox product
Provided a platform for Clorox
to communicate and connect
with consumers
When people have questions
about products, the feedback is
taken back to scientists
Spread awareness of new
products
Established in 2005
Promote Dr. Laundry via
Clorox.com and through select
packaging
Two employees handle the blog
site
Dr. Laundry (leader of R&D
team) runs the site, and through
participants submissions is able
to explore research &
development
Currently very low-tech (just
Q&A) but looking to expand
Clorox’s Online Community
21. Observations Purpose Infrastructure
Feedback options - Easy to use
and broken down into numerous
categories – with the promise
that “we read everything, but
can’t always respond”
Apple evaluates ideas from
external resources and matches
them up with internal teams
Mostly centered around
features, bells and whistles; or in
some cases service additions to
existing products.
Team of employees who peruse
both the affiliated and non-
affiliated Apple blog sites to look
for ideas or feedback which are
community property
Great management support
Each Product Group is
responsible for maintain ideas
generate through OIN
communities.
Apple’s policy is that it does not
accept submissions unless the
ideas are provided with no
expectation for compensation
Apple’s Online Community
21
22. 22
Apple Executive responsible for Internal Innovation Strategy
“We evaluate ideas from
external resources
(communities) and match them
up with our internal teams,
which are segmented by product
category.”
“While most marketing and
innovative executives are quick
to extol the benefits of external
open innovation networks,
almost everyone agrees it’s a
me-too agenda. The practicality
of using the information just is
not there.”
“External innovation
communities are marketing and
public relations devices … hyped
by academic types and authors
as the next coming … in reality,
no one will be able to verify
there is a return on investment
in creating and monitoring
them…it’s like other ‘next wave’
concepts whipped up by people
who are the furthest removed
from the reality of business and
technology.”
Apple Insight
23. 23
Participants Purpose Infrastructure
J&J representatives, customers,
researchers, and academics
Rewards are usually in the form
of research grants or medals
provided by J&J
Build relationships, share
information, prevent
contamination of IP, & ensure
submitters timely feedback
Used for innovation purposes
and a forum for researchers,
academics, and J&J
representatives to share ideas
Drug coated stents and Splenda
are examples of products
created as a result of these
communities
Created a software program
which is used in conjunction
with IdeaPoint
Each division has their own
specific version of the software
and it is through this software
that ideas are exchanged
Johnson & Johnson’s Online Community
24. 24
Participants Purpose Infrastructure
Open Community including
internal support and mediation
from DELL
Dell provides a number of
interactive ways for customers
to share and learn with others.
They encourage open
conversations and believe
everyone has something to
contribute
User generated ideas
Best ideas (most promoted)
jump to top of list
Dell moderators address ideas
Actual production potential
Very user friendly
IdeaStorm, Blogs, Forums,
Videos, Web Feeds, Podcasts,
Information Portal, Dell in
Second Life, Wiki, Customer
Reviews, and Multinational
Reach
Dell’s Online Community
25. 25
Then Now
Initial ideas came from manufacturers
Companies were afraid to show early ideas or
prototypes to early adopters or lead users because
they were afraid it would set a bad expectation
Companies did not want to show users an imperfect
design
Companies are moving to open innovation – outside
innovation for ideas
Companies are recognizing best source for ideas &
insights may be from their own customer base
Companies should embrace customers who tinker
with technology themselves and there biggest pundits
Academia’s View of Communities: Seeding Innovation
Stefan Thomke
Harvard Business School
William Barclay Harding Professor of Business Administration
26. 26
Open Closed
Pros – Once companies elect to really open up their
innovation networks, they have to figure out what to do with
all the stuff that comes in over the transom. For example:
Pros – IBM celebrates its InnovationJam, involved ~ 60k
internal IBM participants in a 72 hour period. From that
input, IBM distilled 10 new innovation themes for the
company.
Cons – What they DON'T say is how the 60k inputs turned
into 10 themes.
Pros – More closed networks (or "gated communities")
overcome many problems communities have, such as IP issues.
Pros – There are deeper ties, so it is easy to solicit and get
relevant stuff, and less filtering is required as well.
Cons – They are unlikely to range as widely as more open
networks. So if a company is truly trying to develop a new
business area that is not adjacent to the current business, a
gated community may not include enough diversity to attract
sufficiently different ideas for the business to consider.
Academia’s View of Communities: Open vs. Closed
Henry Chesbrough
Haas School of Business University of California Berkeley
Adjunct Professor / Executive Director, Center for Open Innovation
27. 27
Technology
The general consensus of companies interviewed is that the one common thread among online community
participants is their proficiency with technology; specifically the internet.
Most companies believe that they are not taking full advantage of the technologies available, and do not seem to be
bothered by this fact.
Hallmark uses digital images of product ideas to receive critique from users before launching or even producing a
finished good, saving the company time and money in the process.
Each division of J&J has business unit software that is “division logo specific”, but uses the same software company
wide.
Some companies are using tracking software to determine which ideas are most popular via clicks, replies, etc. to
expedite their efforts in recognizing the best ideas.
“Companies today must create a coherent social strategy by focusing on relationships – not technologies...”
Charlene Li (Forrester Research)
29. 29
Studies are being performed by accomplished research firms within Virtual Worlds (“VW’s”)
such as Second Life and Active Worlds to assist residents and companies:
Build a strong presence
Gain insight about what they should offer in VW’s
How specific offerings will be received
Focus group studies are also being performed by companies to gain feedback about new offerings
There have also been large scale studies performed by research firms soliciting responses to questions
about real-world global shopping preferences.
Research being performed in Virtual Worlds
30. 30
Types of Virtual World Research
Primary & Secondary Market Research
Segmentation Analysis
Demographics & Psychographics
Behavioral Studies
Brand building Research
New Offering Testing
31. 31
Research Benefits
Companies can gain insight from early adopters and users.
Specific market segments and audiences are key to research initiatives and lead to healthy brand building in
VW’s.
Research further expands the understanding of demographic and psychographic characteristics, including
lifestyle behaviors and purchase preferences that drive buying decisions.
32. 32
Opportunities
Virtual Worlds are growing quickly. Venture capital, technology, and media firms have invested more than
$1 billion dollars in 40+ virtual worlds companies from October 2006 to October 2007.
Residents and users of VW’s are now able to buy goods and become exposed to over 100 existing and new
brands.
There are new opportunities emerging in VW’s for B2C and B2B businesses to work in a whole new arena.
Companies can use online virtual worlds to network and develop projects, sell services between each other,
and conduct commerce in an immersive 3D environment.
33. 33
Second Life is a 3-D virtual world created by its Residents. Since 2003, it has grown explosively and today is
inhabited by millions of Residents from around the globe.
“The World” - a vast digital continent, teeming with
people, entertainment, experiences, and opportunity.
Users are surrounded by the creations of your fellow
residents.
Because Residents retain the rights to their digital
creations, they can buy, sell, and trade with other
residents.
“The Marketplace” currently supports millions of US
dollars in monthly transactions and thrives with
business opportunities and ideas.
Second Life
User Hours (in Millions)
34. 34
Sun Microsystems American Apparel
On Oct. 10, Sun Microsystems held a press conference
with John Gage, chief scientist at Sun. The company
created an area called Sun Pavilion, where a video blog of
all of Sun's activities will be streamed. There were 60
avatars at the press conference -- in Second Life terms,
that's a full house.
American Apparel launched a virtual store in Second Life
in July, 2006. The hip T-shirt maker is debuting styles
before they are launched in the physical world and is
offering cross-promotions. Visitors to the virtual store
receive 15% off real-world purchases.
Companies utilizing Second Life:
35. 35
Toyota Reebok
Toyota's marketing plan for its hip, boxy Scion includes
an art gallery in Los Angeles (Scion Space) and sponsored
screenings of indie films (the Scion Independent Film
Series). Now the pop-culture-aware carmaker is also a
presence in Second Life, where it offers a virtual version
of the Scion xB.
Reebok is allowing avatars to customize the company's
RBK range of shoes in Second Life, the same way they can
do in real life on the Reebok Web site. People will be able
to wear the same designs in RL and SL.
Companies utilizing Second Life:
36. 36
Some of the most innovative companies have created online communities, however there
remains a question as to the usefulness of these communities.
Internal community networks are a rich and powerful
resource of innovation and idea creation. The amount of
data generated from virtual worlds and external
communities can be voluminous but, managing this data
can be difficult. External communities may serve a better
function as public relations, marketing, and/or market
research forum for users who seek to be involved and
“heard”, while giving the perception that the
organization values feedback.
When beginning a community, we have found that
companies that start small, then broaden their scope
have had the most success. Establishing the social
component, then introducing the innovation aspect once
the community is in place has proven to be a successful
model. Most users participate in external communities
regardless of tangible reward possibilities. They simply
enjoy the social interaction and intrinsic qualities these
communities are able to provide.
Summary
37. 37
Final Thoughts
Communities have a wealth of potential if used correctly. There are different community types for different
company purposes and it will be the strategy involved with determining the correct community for the client’s
purpose which creates the most differentiating benefit for creating these communities. Harrison Hayes works
with clients to educate and determine which customized community approach works best for our clients.
To learn more contact Harrison Hayes.
