MADE.com; shifting the power of creativity to consumers

February 15, 2017 lottevuden Leave a comment

“The 3 Cs of modern creativity are Community, Crowdsourcing and Co-creation”- Jon Wilkins

MADE.com , what is it?
MADE.com, located in London and launched in 2010, is a brand that designs and retails furniture online and via several showrooms across Europe. MADE.com is known by its high frequency of two releases of new collections per week and not owing their own factories. Instead, they give factories instructed to meet orders. More importantly, the most fascinating thing about MADE.com is the way they actively involve customers. (MADE.com, 2017)

Business model – How it works
MADE.com shifts the power of creative innovation to stakeholders in two remarkable ways, so customers and designers create most of the value. First, customers decide which designs go into production by voting on them (key resource and process). The most popular designs make it to the production facility. By using crowdsourcing for physical design purposes, MADE.com applies a co-creator model (Chui et al., 2016). Second, MADE.com created a service called “Made Unboxed”. The idea behind MADE Unboxed is that customers upload photos of their interior designed by MADE.com, with the purpose to inspire other customers (key resource and process). Consumers can now look at items in a real environment, without going to a showroom. Moreover, the online community nominates some home designs to serve as a showroom. Everyone who is interested can visit designs at the “interior designers” homes. This adds the extra service of touching and feeling the items, instead of only viewing the items (Customer Value Proposition). This short video, which serves as an overview of the services offered by MADE Unboxed, shows that cities are covered with multiple mini MADE.com showrooms. (MADE.com, 2017; Myndset, 2015; Johnson et al.,2008)

Moreover, their crowdsource initiatives go even further. MADE.com also organizes an annual online contest that is similar to LEGO ideas (Mladenow et al., 2015). The Made Emerging Talent Award is a contest in which promising upcoming designers are able to submit their ideas (Customer Value Proposition). The ideas will be judged based on the number of votes given by other designers and customers. Obviously, the designs with the most votes wins the contest. After the contest, MADE.com takes the winning design ideas into production and adds them to their product line for the next 12 months (Profit formula).

Efficiency criteria; Win-win-win situation
With the current structure of the contest and MADE Unboxed, designers, customers as well as Made.com benefit from it in distinctive ways. The designers get exposure and maybe even a career boost if they win (see video for further explanation). Customers vote and can thereby give direction to which designs they would like to see for sale (i.e. efficiency benefit). Finally yet importantly, Made.com benefits from all the votes and uploaded ideas because it gives them certainty that they produce the most desired furniture. In addition, because of all the mini showrooms, MADE.com does not need to have many showrooms themselves, resulting in lower asset costs. It clear that this business model results in joint profitability for all parties.

MADE.com also satisfies the feasibility of required reallocations criteria. Het polity is not invloved and terms regarding what is allows and what not need to be accepted by stakeholders.

Sources:

Chui, C., Liang, T. & Turban, E. (2016) What can crowsourcing do for decision support?. Journal of Decision Support Systems, 65: 40-49

Johnson, M.W., Christensen, C.M. & Kagermann, H. (2008). Reinventing your business model. Harvard Business Review, 86(12): 50-59

MADE.com (2017) MADE.com. Available at: http://www.made.com/about-us. Accessed on 14/02/2017

Mladenow, A., Bauer, C., Straus, C. & Gregus, M. (2015) Collaboration and Loyalty in Crowdsourcing. International Conference on Intelligent Networking and Collaborative Systems.

Myndset (2015) Available at: http://myndset.com/2015/04/digitail-experience-made/. Accessed on 14/02/2017

Business Case

A lesson of Southwest Airlines

February 15, 2017 371466pv Leave a comment

It’s well known that the airline industry is a big business. From free soda, to airline services to baggage; the airline industry is an intensely competitive market. I assume that many of you have their own experiences with airlines and I totally agree if you have some bad experiences. Once I traveled to China and had a delay of more than 12 hours and guess what? No compensation. A lot of airlines are focused on euro’s and cents but fortunately some airlines do want to solve dissatisfaction by turning an ear to the voice of its customers. Southwest Airlines is an example of one of these airlines which has implemented customer experience programs to continually listen to its customers and show that they care.

Southwest Airlines is a big player in the US airline industry. This could be a result of its mission statement which is as follows: “Dedication to highest quality of customer service delivered with a sense of warmth, friendliness, individual pride and company spirit” (southwestairlinesinvestorrelations,2016). From napkins with ‘I’d happy to hold your drink’ to stocks which are named as “LUV”, everything is about the brand. But what’s in it for the customer?

Southwest airlines CEO Herb Kelleher has and still uses a couple of secrets which create an unforgettable experience for its customers. These key secrets lead to joint profitability as happy customers benefit the company. One of the key secrets and their long-term competitive advantage works as follows; an organization should be employee centric before it can be customer centric.

In this example, institutional arrangements are considered such as employees supporting each other internally so that they can take care of customers outside the company. Happy employees will try to make the right decision and are proud to work for your company. If you take care of your employees, they will take care of your customers and in turn, the customers will come back.

Another key secret is that Southwest airlines anticipates on customer needs. Let’s go back to the introduction of this blog and imagine that you have booked your ticket to China. Your flight departs early in the morning and the weather is stormy. You have checked the flight information a million times and as soon as you arrive at the airport the flight has been cancelled. In my experience, I had to wait for hours before the airline informed me about my options. Although legislation tries to protect flyers, the institutional environment had not been considered in my case… except for one free drink. Fortunately, the experience of many Southwest airline customers is much better. In the case of a cancelled flight due to stormy weather, a gate agent already booked tickets for the next flights before customers asked for it. In this case, a consideration of the legislation was not even necessary! Southwest airlines always try to anticipate on customers’ needs and be proactive in helping its customers.

The last key secret is to apologize sincerely. We are all just humans and we should accept that humans make mistakes and that we can’t control every situation. Sometimes, a sincere apology has more value than a monetary solution. This all started by Southwest airlines’ institutional arrangements as every employee knows that they should turn an ear to the voice of its customers. Southwest airlines then apologies. At this point, the institutional environment has been considered, as the company takes it responsibility so that both in the end the firm and customers are better off.

This all is almost too good to be true. I totally understand if you still don’t believe the things I’ve discussed above. Just relax, take a breath, and watch these little movies on Youtube to see and experience it yourself 😉

Used sources:
Hyken, S. (2014), Before you can be customer centric you must be employee centric [online] Available from:
https://hyken.com/internal-customers/before-you-can-be-customer-centric-you-must-be-employee-centric/ [Accessed 10 Feb. 2017]

Southwest Airlines Co. (2017) Company Overview [online] Available from:
http://www.southwestairlinesinvestorrelations.com/our-company/company-overview
[Accessed at 10 Feb. 2017]

Articles

The Ongoing Struggle of Ideator Bonding

February 15, 2017 yoerikok Leave a comment

The increasing bargaining power of the consumer enabled the concept of crowdsourcing communities to grow substantially in the past years. The power to the people has resulted not only in a lot of success for companies like Facebook, which is a crowdsourcing community in the form of an open source platform. Also, firms like Netflix and Starbucks seem to profit heavily by listening to the ideas of loyal customers. However, in the latter case this payoff only lasts for a short time due to the fact that ideators are doomed to repeat their success idea, which results in a decline of creativity.

Skeptics would wonder if these communities are a valid solution for the ongoing innovation problems companies are dealing with nowadays. Like Henry Ford said: “If I had asked people what they wanted, they would have said faster horses”. Isn’t the consumer an ignorant man that is just there to buy our products? The answer is no. Crowdsourcing, and in particular crowdsourcing communities, enables companies to stay in direct contact with their consumers, to gain better and cheaper information and consequently to become a great innovator (Bayus, 2013). The question here is not whether crowdsourcing is a good thing (because it is). The question is how to ensure that people will participate and more importantly, how to ensure that these people stay connected to the community over time.

Ideally, companies receive a continuous stream of quality ideas that will keep them competitive. Bayus (2013) acknowledged this issue by primarily focusing on the idea generator rather than the idea itself. By assessing the dynamics the Dell Ideastorm Community, a ‘typical’ idea submission platform, it appeared that the majority of the ideas came from one-time-only ideators, which is validated by Bockstedt et al. (2016). However, if the focus is on successful, actual implemented, ideas, it appeared that the serial ideators were in the vast majority.

The importance of the fact that these serial ideators should be interacting more with the company lies in the fact that their subsequent ideas tend to be less innovative and creative (Bayus, 2013). Given that a submission is popular and therefore implemented, ideators get the assumption that this is the right way to generate ideas and therefore it is unlikely that they will deviate from their path. This ‘cognitive fixation’ has a negative influence on the most talented idea generators, which is a shame for both parties.

Luckily Bayus (2013) provided us with a silver bullet by analyzing the community Dell has created. It appeared that this negative effect on the talented ideators practically disappeared when people got the opportunity to review and criticize ideas from others as well, which emphasizes the importance of communities. The higher the diversity of the ideas people are dealing with, the lower the effect of cognitive fixation is. It is acknowledgeable that this is the way to keep the most creative and promising ideators loyal, diverse and motivated, which consequently will lead to greater innovations!

I am not saying that ideators repeatedly should fire any idea whenever they want. I am saying that the firms should adopt successful ideators in a cooperative manner. This study showed that a diverse set of “out-of-the-box” ideas, if managed correctly (Alexy et al., 2012), is of great importance for companies that aspire to be our new pioneers of innovation. Now the only way to properly manage innovations is to bring them in-house and this is something that companies also should consider when it comes to their best ideators.

References:

Alexy, O., Criscuolo, P., & Salter, A. (2012). Managing unsolicited ideas for R&D. California Management Review, 54(3), 116-139.

Barry L. Bayus, (2013) Crowdsourcing New Product Ideas over Time: An Analysis of the Dell IdeaStorm Community. Management Science 59(1):226-244.

Bockstedt, J., Druehl, C. and Mishra, A. (2016). Heterogeneous Submission Behavior and its Implications for Success in Innovation Contests with Public Submissions. Production and Operations Management, 25(7), pp.1157-1176.