During the last class (Monday January 16th in the morning class) we discussed about the open innovation after the Lays ‘Maak je Smaak’ case. Open innovation has some pitfalls. In the article below you can read about these pitfalls.
I found this article on a Dutch website, so I translated into English. It is about crowdcasting: “Crowdcasting is a problem-solving and idea-generating tactic in which a corporation disseminates details of a specific problem or situation to a carefully chosen group of people for possible solutions. The process is often conducted as a contest. The results may be used to resolve difficult or complex development and marketing issues.”( http://searchcrm.techtarget.com/definition/crowdcasting)
(Translation of ‘De Valkuilen van Crowdcasting’, http://www.frankwatching.com)
Innovation is for many organisation the keyword of success. The definition is used a lot, but most of the times people do not understand it. Research showed that the biggest successes can be achieved when using open innovation with the help of consumers and other companies. Sometimes it does succeed, sometimes it does not. How is this possible? Below the three most common pitfalls of crowdcasting will be dealt with, crowdcasting is a very popular way of open innovation.
From closed toward open innovation
The companies who succeed the most are the most innovative organisations. Most of the companies do not succeed in integrating their originally innovation in their strategy as they wanted to do. This can happen due to a lack of ideas or capacity to explore the ideas. Traditionally innovations are organised within an organisation, most of the times at the R&D department. Nowadays the focus changed from internal (closed) innovation to open innovation. Organisations work together with consumers and partners to exchange their knowledge, creativity and experiences. In this way everybody can focus on their core activities. Organisations are aware of the possibility that innovations can arise any moment and everywhere.
The primary incentive for innovation is the changing demand of suppliers according to 58 % of organisations in a survey of the Global Innovation Survey. Only 52 % of the surveyed organisations involve the consumer in their innovation process. Companies like P&G, Vodafone and Unilever are very successful by involving consumers within their innovation process.
Pitfalls of Crowdcasting
Crowdsourcing is a way of open innovation what is very interesting and is becoming more popular. One specific way of crowdsourcing is crowdcasting, also known as challenge driven innovation. A company has a question and will ask this to the crowd, the crowd will be reward when they have solutions or ideas for this problem. Via this way of innovation an organisation is able to get access to an inexhaustible source of knowledge, creativity and experience. In practice a lot of companies use this way of innovation and think it is a success. It gives a possibility to give the innovation processes a continuation, but most of the firms do not succeed in implementing this process, they make common mistakes. Below the three most common mistakes will be elaborated on.
1. Clear goal
From the innovation strategy of the organisation the goal of the crowdcasting can be formulated. It is important to keep in mind that crowdsourcing is not the goal as such. Formulate when the organisation succeeds and when it fails, what are the targets in terms of time and money.
2. Formulate the right question to innovate
Formulating the right research/innovation question is a complicated process. The ‘crowd’ is most of the times a very dynamic and divers group. Every individual has his/her own background and preferences. If the question about the innovation is to ‘open’ it creates space for a wide interpretation and creativity on one hand, but uncertainty on the other hand. This can result in a enormous amount of ideas and solutions, some of the very valuable, and some of them worthless. A organisation can also choose to formulate the challenge very precise, this takes away the uncertainty but can put a hold on the creativity. So formulating the right research/innovation question is an important task.
3. Select the right crowd
Selecting the right crowd is seen as a hard task for organisations, because they do not know where all the ideas and solutions are available. The power of crowdcasting is: getting the idea or solution from an unexpected person or party. Diversity is important in the crowd, according to Wisdom of Crowd. Surowieki confirms this by emphasize that a crowd with diversity on ideas, levels of education and different thoughts acts better compared to a homogeneous group.
The question an organisations has to ask themselves is to ask their own (future) community or place it on a intermediary platform. Both possibilities do have pro- and contra arguments.
Crowdcasting is much more complicated as expected. The most common pitfalls are the goal, selecting the right question and the crowd. To avoid disappointments and increase the change of succeeding it is important to keep these pitfalls in mind. With keeping this in mind the inexhaustible source of knowledge, experience and creativity can successful be used.
Consumer Value Creation 
I do agree within these three pitfalls. Especially after the discussion we had with the Lays chips. As Dimitris said, this might be an easy way to innovate, but it can be that people do have negative experience with Lays and only want to create this negative feeling for other consumers as well.
And of course, when you have more difficult products to innovate it is very important what crowd you select. Do you only select experts? Or people who do not know anything of computers as well?
These are important things to think about when you use the public crowd to innovate.
Thank you Boudewijn!! Very nice Post!!
Indeed, all the strategies that involve consumer in a more active way, are interesting and effective as long as the criterion of joint profitability is met. However, it is not panacea!!
It’s very important to ask your customers, but also it is important to put a different importance weight to different groups of people. Or even equally listen to everyone and understand the more influential aspects.
Another point that George (Panagos) told me in class, was that Henry Ford also mentioned that “if I asked my customers, they would ask me for faster horses…”!!!