Open innovation initiatives fail

One of EMAC 2011 participants (from the University of Amsterdam) presented yesterday some facts about platforms of open innovation like MyStarbucksidea and Dell’s Ideastorm. MyStarbucksIdea received some 74000+ suggestions out of which about 300 were actually converted. A mere 0.4%.

You can wonder therefore what the value of such platforms really is.

Well, I see some positive points:

• firms using such platforms actually do communicate in some way with customers
• firms can get suggestions and improve their product and service

However out of the discussions we had after the presentation there are a few drawbacks:

• finding lead-users among the crowd is illusory unless you have a scientific method to do so. The presenter worked on a semiotic methodology which enabled him to distinguish, in one particular setting, on one particular forum, 48 lead-users from the rest of the crowd. I can not believe that for-profit companies can go so far in their method to locate the lead-users. Rather I think that the promises they make are based on everything but a robust and scientific method.
• firms more and more realize that they can put customers at work but when it’s about rewarding them they stop playing the game. Eventually customers will stop playing the game if they don’t feel they can rip some benefits from it. In the end, would you keep working if you don’t get rewarded?
• all firms are by now “jumping in the train” of open innovation and launching platforms where customers can make suggestions and the like. What will happen is that this will slowly become a fade. Firms will realize that the use they make of such platforms doesn’t allow them to differentiate or, even worse, to become better
• One is clear (and it was conformed by another research on “living labs”): open innovation platforms are useful for incremental innovation but not for radical innovation. Knowing that growth comes essentially from radical (also called “breakthrough”) innovation, you can wonder whether it makes sense to go further in that direction

My take:

Open innovation platforms are good for keeping in touch with customers and bring marginal improvements to products or services, i.e. correct little dissatisfaction issues. But such platforms fail on delivering promises such as identifying lead-users, radical innovation. Even worse, if not well managed empirical research shows that not implemented ideas can lead to negative emotions for those who made those suggestions, which may eventually turn into negative word-of-mouth

By Pierre-Nicolas Schwab Dr. Pierre-Nicolas Schwab is the founder of IntoTheMinds. He specializes in e-commerce, retail and logistics. He is also a research fellow in the marketing department of the Free University of Brussels and acts as a coach for several startups and public organizations. He holds a PhD in Marketing, a MBA in Finance, and a MSc in Chemistry. He can be contacted by email, Linkedin or by phone (+32 486 42 79 42)