Tag Archives: innovation

Business Case

Digitising warrantees

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We’ve all experienced it – that dreaded moment when a new appliance suddenly stops working. And rather than giving you comfort, the idea that it is still under warranty gives your stomach muscles a twist. Where is the receipt – is it in the trusty old box labelled “receipts & other stuff” in the study; or in the pile of to-be-filed papers collecting on the dining-room table?  And if you are lucky enough to find it, will it be readable or has the ink melted away into the thermal paper.

In this post, I evaluate the concept and technology being developed by a team of South African entrepreneurs to digitise warrantees. By further unlocking the use of block-chain technology (Van Rooyen, 2017), key role players in the day-to-day transaction cycle will be connected to streamline the warranty and warranty-claims processes and eliminate the need for paper-based warrantees. 

What is a digital warranty?

The concept is for manufacturers to create product information, which include the warranty parameters, in an Ethereum  blockchain at the point of manufacture. Retailers will augment this information in the chain with the sales information when the item is sold to the consumer, thereby creating the warranty information. The consumer will then use an app to add their details to the chain which completes the digitised warranty.

How would it work?

Figure 1: Product and warranty information created by manufacturer

Figure 1 shows how a manufacturer would create its finished goods in the chain, including product information (for example, make, model, serial number, etc) and the warranty parameters (for example, term/period, type of warranty – repair only, replace only, repair or replace, service only). The manufacturer will also record when the item is sold to a retailer or distributor to allow for the tracking of items (weather it is in transit, on-floor or with the consumer).

An additional feature for manufacturers would be product placement in the app, once the consumer has completed the steps illustrated in Figure 2 below, using code from one of the readily available open-source recommendation agents. For example, a customer that registers a new 50″ TV can be sent a notification, or shown in the app, what other customers bought in addition to the TV – for example, a sound-bar. Also, on expiry of a client’s warranty, manufacturers can push replacement products to consumers or give the consumer the option of buying an extended warranty.

Figure 2: Digital warrantees from a retailer and consumer perspective

Figure 2 illustrates the process flow once the consumer has purchased the product which, in most cases, is when the warranty is activated. Participating retailers will add a QR code to the printed receipt which the consumer will scan with their smartphones, directing them to the digital warranty app. It is anticipated that large contracted-in retailers will require only a unique code from the customer – their warranty wallet number – to have the purchase sent to their digital warranty wallet, eliminating the need for a printed receipt altogether. Registering on the app can be done through an email & password combination or using an existing social media account. A broadly similar workflow, with different interfaces, will exist for consumers that want to register and manage their warrantees online instead of on the app. Once registered, they can add new warrantees, create an asset register or manage their warrantees – for example, take out extended warrantees – directly on the app or online. Opt-in notifications will send consumers an alert when an item’s warranty is about to expire and offer extended warrantees where these are available as well as advertisements from manufacturers.

Most importantly, because the information in the chain is immutable, consumers no longer need a physical receipt and any claim they make against the warranty will automatically be validated through the entry in the chain. By placing the customer at the centre, various add-on services can be created to manage the claim process on behalf of the manufacturer – for example, courier services to move items to and from the service centre or providing loan items for critical appliances.

Why would people use this?

For the consumer

  • Easy access: Purchase information is stored in one place, making it easy to reference and access when needed in a fast and efficient manner. 
  • Durability: Unlike paper receipts that are often printed on thermal paper, a record created in a blockchain is immutable and permanent. 
  • Acceptance: The decentralised nature of blockchain technology means that the warranty is automatically validated in the chain in the event the consumer needs to make a claim. 
  • Free storage: e-slips eliminates the needfor space-consuming and complex filing systems.   
  • Information security: Personal information is stored only once in the app rather than with multiple retailers, which reduces it’s susceptibility to malicious or accidental disclosure. 

For the wholesaler or manufacturer and the retailer

  • Customer loyalty:  Completing forms, collecting data and hard copy documents are a thing of the past which is likely to improve brand loyalty & increased repeat sales. 
  • Reduction in fraudulent claims: As the authenticity of the warranty is no longer paper-based and dependent on human error, it is expected that the cost of fraudulent claims will reduce. Claims for “fake” or counterfeit products will no longer be an issue as the manufacturer or retailer can track the chain of custody of each product.
  • Increased sales: Product placement and recommendations within the app or making extended warrantees available can generate revenue.
  • Cost reduction: Efficiency in the sales and warranty claims process. Printing and printer maintenance cost will reduce.
  • Reduced carbon footprint: Consumers respond positively and reward retailers with loyalty when the retailer demonstrates awareness of and a reduction in its carbon footprint.

What are the challenges and how will the entrepeneurs respond?

  • Monetising the service: The reality is that, whilst consumers may crave the simplicity of the service, not many will be willing to pay for it. Revenue streams would need to come from manufacturers and retailers who may not see the immediate benefit to them. Emphasis should, therefore, be on creating the ability to track inventory through the entire value chain, quick validation of warrantees when claims are made and increased sales from product placements. An additional consideration is to let consumers experience the service and then implement a pay-as-you-want pricing model for people to contribute toward the service.
  • Scale of the ecosystem: There are many role-players in the value chain which complicates negotiations and, due to the highly competitive nature of the consumer goods market, open discussions are tricky to navigate. Seeking out an advisory board for the initiative that is credible in the retail sector and can offer good connections is imperative, as is an experienced negotiator.
  • Lack of trust leading to low uptake: Whilst consumers, retailers and manufacturers would all appreciate the convenience, online trust is a subjective emotion that is hard to establish for new providers. This is especially the case where a recommendation agent recommend additional products, sponsored by the manufacturer, to consumers. All sponsorships will be disclosed in addition to comments as to why the specific product is being displayed. The choice of initial partners – retailers and manufacturers – is crucial to creating trust and credibility for the service. In addition, electronic word-of-mouth references from retail-industry influencers/stalwarts will increase adoption.
  • Funding: Like all start-ups, the team are looking at different funding options for their business. One of these options is crowdfunding to see if that attracts a suitable investment without having to give up too much of the company’s equity.

Conclusion

The portability of the information collected through this process to other organisations – like short-term insurers and financial institutions – and the actual service to other industries – like motor-vehicle warrantees – are wide-reaching. Whilst there are many and seemingly sizeable challenges to overcome, the benefits throughout the entire value chain and the rather simplistic technical solution to realise these benefits, makes this a no-brainer.

The team of entrepreneurs in South Africa are excited to deal with the challenges and are confident that the various role-players will come together, putting the consumer at the centre, to make this possible. Look out for your electronic warrantee coming soon.

References

Kulkarni, A. (2018). What else could blockchain be used for? Quora. Retrieved from https://www.quora.com/What-else-could-blockchain-technology-be-used-for/answer/Ajit-Kulkarni-4 on 22 February 2019.

Van Rooyen, J. (2017). Real-world applications of blockchain-enabled supply chains. Resolve SP. Retrieved from http://pressoffice.itweb.co.za/resolvesp/PressRelease.php?StoryID=275840 on 22 February 2019.

Business Case

GoMetro – Real Time Passenger Data for Public Transportation Systems

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Cape Town, South Africa.

Three million commuters use the metro rail on a daily basis in South Africa. The underdeveloped public transportation system has frequent delays, however there are no notifications of cancellations or changes in the schedule due to the fact that there are no sources of real time travel information. The South African startup, GoMetro, provides commuters with mobile services through the mobile web, apps, socials networks and sms-services and thereby they connect transit operators with commuters who are at the center of the platform. Commuters in their turn log on to the platform and share their real time location, stops, delays and any cancelations. In return GoMetro can provide and exchange real-time arrival and departure information, current locations of vehicles, early notifications of operational breakdowns and travel disruptions of the public transportation system. Hereby, GoMetro, transit operators and commuters co-create value through the sharing of real time data information creating a platform using a customer-centric approach.

Although GoMetro started in South African cities with underdeveloped transportation systems, the scope of the business model reaches much further. Personal mobile devices are being used and have changed information distribution paradigms, however they have not yet been used in the public transportation domain (Nunes, Galvao and Cunha, 2014). When consumers interact with service providers, in this case GoMetro, a win-win situations is created. This business model incorporates three different roles for the commuters in the co-creation of value; they need to use the information, provide real time information and validate given information (Nunes, Galvao and Cunha, 2014). This business model can be used in many different countries and cities, as the use of mobile devices has risen substantially over the recent years and will continue to do so (Emarketer.com, 2018).

The three parties involved in the platform of GoMetro are the commuters, the transit companies and GoMetro itself, each creating value with each other as to create joint profitability. The commuters create value through sharing the real time travel data and use the travel data of others, thereby creating value for the platform as a whole. The transit companies can provide incentives such as discounts on travel fares for the commuters, as to incentivize them to share their travel data. GoMetro contributes by the creation of the platform and bringing all users together so they can co-create value, in return they make money through advertisements on the platform. The creation and development is done in cooperation with Intel, who provide technical support and insights. All these elements are linked to the customer-centricity of the platform and the interaction between the parties creates joint profitability for all players involved.

The institutional environment GoMetro faces in South African cities has been positive ever since GoMetro started with the idea. With millions of people commuting each day in South Africa and many cannot afford a car themselves, efficient public transportation could be a lifesaver. GoMetro helps to improve the efficiency and commuters adopt the platform in large numbers, as already near to a million people are registered users. Looking at the support the company is getting from both governmental institutions as well as private companies the platform seems to be beneficial for all. Increasing the use of public transportation in the big South African cities helps to reduce the use of private cars, air pollution and frees up space in the cities, as less cars enter the urban areas. All these elements contribute to a more efficient infrastructure of large cities. Having no legal boundaries or complications, makes the institutional environment even more advantageous for the platform of GoMetro.

One drawback is the issue of privacy concerns. Sharing real time personal travel information reveals where you are at a given moment in time and this captures valuable information which can also be used for undesirable purposes. Consumers have to consider whether sharing their real time travel data is worth the costs of sharing private information with the platform. As long as the benefits outweigh the costs, the platform has a sustainable business model and a bright future (Karwatzki et al., 2017).

The extent to which the business model of co-creating value by customers sharing their real time travel information with a platform can reach is yet to be determined. The need for a more efficient public transportation system and the willingness of commuters to share their real time travel data are the least requirements for the business model to succeed. ‘As cities grow, they are in need of a flexible mobility platform to service their mobility needs’ (Justin Coutzee, Founder of GoMetro, 2016). Big cities in Africa, Asia and the Middle East are likely to adopt such business models as they want to improve the way people move within their urban areas.

 

 

 

 

References:

Nunes, A., Galvao, T. and Cunha, J. (2014). Urban Public Transport Service Co-creation: Leveraging Passenger’s Knowledge to Enhance Travel Experience. Procedia Social and Behavioral Sciences, 111, pp.577-585.

Emarketer.com. (2018). Mobile Phone, Smartphone Usage Varries Globally – eMarketer. [online] Available at: https://www.emarketer.com/Article/Mobile-Phone-Smartphone-Usage-Varies-Globally/1014738 [Accessed 13 Feb. 2018].

Karwatzki, S., Dytynko, O., Trenz, M. and Veit, D. (2017). Beyond the Personalization–Privacy Paradox: Privacy Valuation, Transparency Features, and Service Personalization. Journal of Management Information Systems, 34(2), pp.369-400.

Articles, News

Philips HealthSuite: Digital Revolution

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Healthcare Management Will Never Be The Same
Today people are more connected in more places than ever and we are becoming more active participants in our own health. At the same time healthcare providers are looking for deeper clinical insights and actionable information to make better decisions and improve patient outcomes. A digital revolution in healthcare might take place by the innovative launch of an online healthcare platform initiated by Philips. The Philips HealthSuite is an open platform of service capabilities and tools designed to inspire and enable the development of next generation connected health and wellness innovation. Imagine a mobile app paired with connected health devices that allows people managing diabetes to capture and monitor their diet, glucose, insulin and more, all from their smart phone. The same data can be shared with their healthcare providers so that they 1) get a better insight into the medical conditions 2) get reminders and alerts for medication and testing 3) have a program to support the persons individual treatment plan and 4) a curated social community of others managing diabetes. Unlike other cloud computing platforms, HealthSuite is purpose-build for healthcare. It’s health optimized infrastructure allows seemless integration with existing heath enterprise ecosystems (Philips.nl, 2018).

Philips HealthSuite Business Model
The highly innovative business model is based on connecting multiple stakeholders: pharmaceutical companies, patients and care professionals. Main goal is to establish and strengthen this medical network by digital connected devices from Philips.

  1. Where are the revenues coming from?
    Both pharmaceutical companies, patients and care professionals pay for using the online HealthSuite platform. Moreover, they have to buy the digital connected devices from Philips in order to be connected to the network. This is how Philips will mainly increase its revenue streams.
  2. What value is delivered to which markets?
    Philips’ main goal is to deliver customer value to people who need medical care, e.g. elderly or people with certain diseases. These customers will get more personalized care which they can monitor by themselves and which results in a more efficient treatment. After all, this treatment will be less stressful for patients since they are now able to stay in their own environment at home instead of going to the hospital. Patients thus get more personalized care which is the main value that Philips delivers to them.
    Secondly, Philip’s delivers value to the other side of the healthcare sector, i.e. the healthcare providers. By delivering an online platform and highly innovative infrastructure, it becomes less time-consuming for healthcare providers to monitor and treat their patients. Healthcare providers share their knowledge via the HeathSuite platform and can communicate with patients easier. Healthcare providers thus get more chance on sharing knowledge, provide efficient treatments and could thus increase their positive impact on patients via the digital platform.
  3. What costs are involved in delivering that value?
    Philips has to invest in research and development of digital connected devices and the online platform infrastructure. Another important cost item is the security of customer data which is very vulnerable in healthcare. Philips thus needs to invest in 1) improving the platform and innovating its products and 2) monitoring the data streams in order to protect data leakage.

CaptureFigure 1. HealthSuite Platform Stakeholders (Philips.com, 2018)

Theoretical Point-Of-View
Following Grönroos & Voima (2013), customer value creation depends on product and service interrelationships and product and service bundling. This resource integration-based view implies that customer satisfaction partly depends on its overall goodness of fit (Solomon and Buchanan, 1991). The Philips HealthSuite Platform does connect multiple stakeholders by providing a highly interactive platform where all stakeholders are connected and where both medical devices (products) and medical care (services) are bundled together. For example, a patient can monitor its own treatment at home while doctors can follow his or her results digitally. When needed, doctors can communicate with the patients and can provide them some extra treatments, such as medicines. Doctors will then switch to pharmacists via the platform to connect them with patients. In this case, Philips delivers customer value by interrelating products and services and bundling them together.
Following Karwatzki et al. (2017), individuals’ privacy valuation is a strong inhibitor of information provision in general. Following this line of reasoning, service providers need to align their service designs with consumers’ privacy preferences. Although Philips HealthSuite Business Model might be valuable in terms of revenues and costs, there is an important risk to consider. Medical data in healthcare industry is very sensitive and vulnerable. Patients may feel scared by sharing their personal data on such a highly intensive network. How will Philips elaborate on these dangers?

Capture 2Figure 2. Patient Relationship Management (Philips.com, 2018)

Call-to-action
A digital revolution in healthcare might take place by the innovative launch of an online healthcare platform initiated by Philips. Although this might be beneficial for many different stakeholders and delivers great customer value, we need to consider the ethical and legal dilemma’s of this revolution and protect customer privacy.

Are you curious?
In collaboration with Radbout University, Philips designed a digital application where patients can monitor their own diabetes and are able to share their results with professional doctors and other patients. The following video illustrates a prototype that could help patients with type-1 diabetes. Link to YouTube Video: HealthSuite Philips

Bibliography
Grönroos, C., & Voima, P. (2013). Critical service logic: making sense of value creation and co-creation. Journal of the academy of marketing science, 41(2), 133-150.

Karwatzki, S., Dytynko, O., Trenz, M., & Veit, D. (2017). Beyond the Personalization–Privacy Paradox: Privacy Valuation, Transparency Features, and Service Personalization. Journal Of Management Information Systems, 34(2), 369-400. doi:10.1080/07421222.2017.1334467.

Solomon, M. R., & Buchanan, B. (1991). A role-theoretic approach to product symbolism: mapping a consumption constellation. Journal of Business Research, 22(March), 95–109.

https://www.usa.philips.com/healthcare/innovation/about-health-suite

http://www.smarthealth.nl/trendition/2014/10/13/radboud-en-philips-werken-samen-aan-open-cloud-gebaseerd-zorgplatform/

Author
Daan Verpalen, Student MSc. Business Information Management, Erasmus University, Rotterdam School of Management, 2018 (studentnumber: 374199)

Articles, Business Case, Opinion

GE crowdsourcing platform – Let’s set the collective brain on fire!

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We live in a fast-paced digital world and it can be challenging for companies to keep up with the speed of today’s ever changing digital era. However, new information technologies have also empowered more technologically savvy businesses by giving them new means to operate, promote their products and services, and engage with customers. One company that is constantly taking advantage of these new tools is General Electric (GE), an enterprise who has succeeded in part because of its willingness to take risks and embrace innovative technologies. The most recent example of this mindset is Fuse, their new open innovation platform that launched in late 2016. It is basically an open crowdsourcing platform, which allows users from all around the world to collaborate with each other and work with GE engineers to solve meaningful technical challenges.

How does Fuse work?

The first step is for the Fuse team to translate GE customers’ needs and “pain points” into projects on the Fuse platform. Whereas most projects are straightforward and thus directly released in the form of challenges, some appear to be less clear and hence are uploaded on the “Brainstorming Section” of the Fuse platform as “potential challenges”. These potential challenges include a (rather extensive) description of the problem to be tackled as well as precise requirements for the solution, and contributors are asked (1) whether they would be interested in such a challenge, and (2) what additional questions the Fuse team should answer before launching the challenge. Based on the feedback received, the Fuse team might decide on further actions. When released, each individual challenge comes with a description of the problem, clear requirements for solution submissions, judging criteria, a timeline, a description of the prizes for the winners, and the official rules of the competition (including property right issues).

Capture d_écran 2018-02-08 à 17.41.40

Example of a Fuse challenge

In a second step, contributors from all around the world are invited to submit innovative contributions. Note that even though anyone can sign up and take part in challenges, the very technical nature of the challenges serves as a skills-based filtering mechanism as only people with a certain degree of knowledge in engineering would be able to understand the challenges. Once on the Fuse platform, anyone can have access to all the relevant information related to the challenges, however only registered users are allowed to submit entries. During the whole duration of the challenge, contributors can use the discussion board to brainstorm together or ask the competition holders questions. Not only does the Fuse team rapidly answer these questions and provide regular feedback/input, but they also organize “live Q&A sessions”, during which the participants can submit questions that are answered live in a video feed.

 The final step is for the Fuse team to evaluate the submissions, select the winners (generally the three best entries) and allocate the money prizes. The interesting entries are also forwarded to GE’s technical team, where they are further developed into implementable solutions.

Efficiency Criteria

In less than two years, GE succeeded in creating an innovative community and successful products from their contributions (Picklett, 2017). This was made possible for the following reasons: combination of extrinsic and intrinsic incentives, good management, and well-structured governance including the mechanisms recommended by Blohm et al. (2018).

From a contributor’s perspective, the Fuse platform and its challenges are interesting not only because of the cash prizes, but also because it is designed towards building long-term relationships with its contributors. For instance, competition winners actually have an opportunity to further work with GE engineers on implementing their designs (Kloberdanz, 2017). In addition, there is also an attractive physical part to Fuse projects, which consists in a micro-factory in Chicago designed for rapid prototyping, small-batch manufacturing, and modular experimentation (Davis, 2017). This faculty will be open to contributors and can constitute an incentive for them to become part of the Fuse community as it is a good opportunity to bring their ideas to life, work with GE professionals, and meet like-minded innovators. Finally, the Fuse challenges are also a good opportunity for contributors to collaborate with other brilliant mind, expand their business network, build their professional reputation, and gain recognition from their peers.

From GE’s perspective, the Fuse platform is a new source of innovative and ideas, which can speed up content creation, cut R&D costs for the company, and provide GE with an opportunity to spot talents who might be valuable additions to their team. But how is GE able to overcome the challenges inherent to crowdsourcing (e.g. huge quantity, low quality, free-riding behaviour, risks of sharing information)? First, due to the technical nature of the Fuse challenges, the clearly defined guidelines provided to the participants, and the rapid feedback/additional inputs provided during the competition, GE ensures that only a manageable number entries of a certain quality are submitted, thus facilitating the evaluation process. The platform is also clear about the transfer of PI rights, which avoids troubles along the way. Second, for most challenges, challenge, entries are private and only viewable by the creator, admins, and judging panel. As a result, GE is able to avoid free-riding behaviours. However, contributors are still able to communicate with (and help) each-other via the discussion board, and the Fuse team makes sure to encourage the discussion with feedback and additional information, hence allowing contributors to still learn from each other. Finally, even though opening up GE’s internal workings/information of some products in order to run these challenges can be risky, the company acknowledges that “there are certain risks you just have to roll with if you want to make progress and that willingness to take those risks is what makes this exciting.” (Davis, 2017). This quotes shows that GE understands the need to willingly take risks in order to continuously transform the company and, so far, Fuse seems to be worth it as GE reunited more than 8000 contributor successfully implemented several ideas generated by the platform in less than a year (Davis, 2017).

In summary, the joint profitability criterion is met as the Fuse platform creates value for both GE and its contributors. Furthermore, the costs linked to this innovative business model are relatively low as the Fuse team only consists of 4 employees based in Chicago (Pickett, 2017). However, as the platform matures, hosts more challenges, and attracts more contributors one can assume that the number of employees will have to increase. Still, the costs-benefits ratio should remain interesting compared to doing everything in-house. Finally, the legal concerns are taken care of thanks to inclusion of PI agreements in the official rules of the Fuse challenges, and the social norm dimension is met as GE is a well-known, reputable brand, hence building trust with contributors.

References

Blohm, I., Zogaj, S., Bretschneider, U., & Leimeister, J. M. (2018). How to Manage Crowdsourcing Platforms Effectively?. California Management Review, 60(2), 122-149.

Davis, B. (2017). How GE is using co-creation as part of its digital transformation. Retrieved from https://econsultancy.com/blog/68902-how-ge-is-using-co-creation-as-part-of-its-digital-transformation

Fuse. (2018). Fuse Platform. Retrieved from https://www.fuse.ge.com

Kloberdanz, K. (2017). Working The Crowd: This Fuse Will Set The Collective Brain On Fire. Retrieved from: https://www.ge.com/reports/working-crowd-fuse-will-set-collective-brain-fire/

Pickett, L. (2017). GE Fuse’s open innovation platform invites NDT professionals to co-create solutions. Retrieved from https://www.qualitymag.com/articles/94304-ge-fuses-open-innovation-platform-invites-ndt-professionals-to-co-create-solutions

Business Case

Introducing the future of fashion with Coded Couture

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“We’re about to change the fashion industry by bringing the customer’s personality into the design process through data technology”. – Aleksander Subosic, co-founder of Ivyrevel.

Finding unique clothing can be difficult; custom-made clothing is usually not affordable and designing your own piece requires design experience, which most people lack. Ivyrevel, part of the H&M Group and the world’s first digital fashion house, partnered up with Google to solve this issue by combining couture with data technology. Together, they created the Data Dress: “A personalized dress designed entirely based on a user’s context signals” (Brook, 2017).

235498-Kenza_Dress_1-8fd19f-large-1485948420

How does it work?

First, install the app and select an occasion e.g. party, gala or business, and a style for the dress. Then, simply carry your phone wherever you go (which you probably already do) and the app will use Snapshot API to learn from your daily activities, with your permission. During seven days, the app will capture context signals and ask you to confirm certain the data to ensure that it corresponds with your lifestyle. By doing all of the aforementioned, you become part of the value creation process. Finally, the data is passed through an algorithm that creates a virtual custom-made dress, ready for you to purchase.

Will customers buy the Data Dress?

According to a survey by Bain & Company, +/-30% of shoppers were interested in designing their own clothing. Furthermore, they found that unique products lead to lower return rates and create a deeper connection between shoppers and retailers (Wiggers, 2017). Thus, there is a potential market for the data dress.

235508-app-pr-visual-86d024-large-1485955461

Efficiency criterion

  • This video, shows that Kenza lives in Stockholm where it is -2°C and that she visited a fancy restaurant. Therefore, the app made her a black velvet dress with crystal details, reflecting her lifestyle. This shows that consumers will get a truly unique, on-trend, and custom-made dress. Additionally, consumers become part of revolutionizing the way we look at fashion. For fashionistas interested in technology this is the ideal combination, and it allows them to be early adopters within their community.
  • Ivyrevel aims to ‘merge fashion creativity with technological innovation.’ (Ivyrevel.com). Thus, by introducing the data dress, Ivyrevel will achieve this goal. Regarding costs, Ivyrevel is not dependent on designers and won’t need to invest much in production, since it already has a clothing line and production facilities. According to Adformatie.nl, the dress will cost €93.
  • I expect that Google will receive financial resources by allowing Ivyrevel to use its API technology. Additionally, Google enhances its positive reputation regarding technological innovation and receives positive WOM.

Feasibility of Required Reallocations

Currently, the app has launched in closed alpha stage and is being tested by selected global fashion influencers (Brook, 2016). Since not much information is available regarding the specific institutional arrangements and –environment, I will propose a few.

Ivyrevel must consider:

  • The protection of consumers’ privacy. Consumers are responsible for granting tracking permission and Ivyrevel will not share their information with other parties.
  • Safe payments within the app.
  • Production processes that are carried out under ethic conditions.

It is important that Ivyrevel makes clear arrangements for these kinds of issues to prevent problems from arising.

References

http://www.ivyrevel.com/se/codedcouture/codedCouture.html

Google blog: https://android-developers.googleblog.com/2017/02/fashion-gets-digital-upgrade-with.html

Brook, J. (2017, February 06). Fashion gets a digital upgrade with the Google Awareness API. Retrieved March 6ƒ, 2017, from https://android-developers.googleblog.com/2017/02/fashion-gets-digital-upgrade-with.html

Business Insider: Wiggers, K. (2017, February 07). Google partnered with H&M-backed fashion startup Ivyrevel to build customised ‘data dresses’ Retrieved March 6, 2017, from http://www.businessinsider.com/google-partners-with-hm-ivyrevel-for-coded-couture-project-2017-2?international=true&r=US&IR=T

Adformatie: H&M, Google en MediaMonks personaliseren jouw kleding. (2017, February 9). Retrieved March 6, 2017, from http://www.adformatie.nl/nieuws/hm-google-en-mediamonks-personaliseren-jouw-kleding

Articles

Customer-centric innovation model a big win for tire supplier Kal Tire

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The largest mining trucks in the mining industry can easily handle loads of over 500 tonnes, which means that these trucks need reliable tyres to drive on. The tyres have to be resistant to rocks and possible punctures, since repairs or changes to the tyres are very expensive and time-consuming. Mining Tire Group Kal Tire though they could do much more than simply supplying tyres and providing service for tyres. The company possesses decades of global expertise, that could be used to develop innovative solutions to improve performance and safety (Topf, 2017).

What is customer co-creation?

According to Prahalad and Ramaswamy (2004), co-creation is defined as ‘’the joint creation of value by the company and the customer; allowing the customer to co-construct the service experience to suit their context. In other words, it means that new ideas are produced by the company and the customers working together. Mostly, this increases the customer satisfaction because customers feel the company really listens to their feedback, and uses it to improve their products or services. If customers feel the company is delivering to their specific needs, customers want to be even more engaged with the company (Topf, 2017).

Customer co-creation at Kal Tire

Innovation and R&D manager Nilsson said Kal Tire is asking their customers for feedback as to how it can expand into other areas and become more innovative (customer value proposition) (Topf, 2017). As a result, the Innovation Centre was born in 2015. Kal Tire can develop new tools and processes to increase productivity and safety. Nilsson stated ‘’we are generating ideas from the operations on a regular basis which we then evaluate and see how we can start these ideas”. When looking at innovative servicing, Kal Tire made improvements to service contracts, which are generated from customer feedback or from within.

“Customers are looking for products or solutions that will solve their problems and make their life easier, so customers’ expectations will continue to drive innovation,” Nilsson said. As a result, all members of Kal Tire are encouraged to contribute ideas for projects for the Innovation Centre, in order to promote safety, performance and add value for customers (key resources and process). Finally, this innovation is going to give Kal Tire and their customers a competitive edge (Topf, 2017).

The success of customer co-creation for Kal Tire

Co-creating is very successful for Kal Tire. They use decades of knowledge in the mining/tire industry, to improve customer engagement, as well as customer satisfaction (joint profitability). This structure leads to an influx of new ideas while lowering R&D costs. Currently, the Innovation Centre is comprised of four truck bays with electrical and pneumatic outlets. The Innovation Centre is a way for Kal Tire to develop new tools and processes to enhance customer productivity and safety in the field. Examples include a ram mount tool and a remote-controlled service trolley.

kaltire2

They develop ideas in the Innovation Centre, engineer it, certify it, and perform a three-month field test. After this, the Innovation Centre will get videos, pictures and reports. If successful, Kal Tire will make the new product available to the entire Tire Group. Thus, the feasibility requirement is met since the co-creation concept is implemented and turned out to be successful. The institutional environment is not as relevant, because customers only interact with employees of the Innovation Centre to share ideas (Topf, 2017).

References:

Topf, A. (2017). Customer-centric innovation model a big win for tire supplier | MINING.com. [online] MINING.com. Available at: http://www.mining.com/customer-centric-innovation-model-a-big-win-for-mining-truck-supplier/ [Accessed 4 Mar. 2017].

Prahalad, C. K., & Ramaswamy, V. (2004). Co-creation experiences: The next practice in value creation. Journal of interactive marketing, 18(3), 5-14.

Articles, Business Case

Consider it sold

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Opendoor is a San Francisco based start-up that steps into the real estate business, trying to make this process as easy as possible for the sellers and buyers. They are basically an intermediary in the market that brings together buyers and sellers. They buy real estate for cash, fix it and sell it for a small premium.

Business Model and Value creation

Opendoor uses an algorithm to determine what price to offer to the people that want to sell their homes via Opedoor. This algorithm includes thousands of variables, including for example square footage, numbers of bedrooms etcetera. Furthermore, Opendoor uses questionnaires to determine the preferences of the buyers and sellers, incorporating this in their model. In this way, the customers are actually co-creating the houses that Opendoor fixes. In the future, Opendoor also wants to offer customer mortgages and home decorations. Overall, the value that Opendoor adds is providing a service that takes away the burden of the customer to buy or sell houses and using the preferences of the customers in this process.

Opendoor buys family homes built after 1960 in the price range of $125000-$500000. Opendoor makes the homeowner an offer and once he accepts, inspects the house and closes the deal in cash.  The company makes money by taking a service fee of 6%, similar to the standard real estate commission, plus an additional fee that varies with the riskiness of the transaction what brings the total charge to an average of 8%. It then makes fixes recommended by inspectors and tries to sell the homes for a small premium. Buyers can look at the property and they receive a 30-day guarantee that Opendoor will buy it back if they’re not satisfied. (Forbes Welcome, 2017) (Opendoor, 2017)

Efficiency criteria and risks

When we look at the efficiency of the value system of Opendoor, we can look at two criteria, the joint profitability and the feasibility of required reallocations. (Carson et al., 1999) Opendoor definitely offers joint profitability, because consumers can easily sell or buy their homes via the platform, and Opendoor can profit by making money from the fixed houses. The second criteria is more difficult because Opendoor solely depends on investors and loans and when they don’t make profits they cannot reallocate their assets to satisfy their investors. Next to that, trust issues are also important to take into account. Opendoor cannot see the homes before they make an offer an have to rely on trust. Finally, competitors will not be that happy with Opendoor and therefore legal aspects will be important to consider while expanding.

The business model depends on whether the algorithm is right or wrong. If it is right then Opendoor will earn money, however, if the price is lower, Opendoor will make a loss. Next to that Opendoor pays in cash and loans this money. It is dependent on investors and if they encounter a low in the market they have a problem. They did not face a crisis like the one in 2008. All in all, let’s keep a close watch at this company and see whether they will conquer the real estate market.

Bibliography

Carson, S. J., Devinney, T. M., Dowling, G. R., & John, G. (1999). Understanding institutional designs within marketing value systems. Journal of Marketing, 115-130.

Forbes Welcome. (2017). [online] Forbes.com. Available at: http://www.forbes.com/sites/amyfeldman/2016/11/30/home-shopping-networkers-opendoor-is-upending-the-way-americans-buy-and-sell-homes/ [Accessed 14 Feb. 2017].

Opendoor. (2017). [online] Opendoor.com. Available at: https://www.opendoor.com/about [Accessed 17 Feb. 2017].

Saarijärvi, H., Kannan, P. K., & Kuusela, H. (2013). Value co-creation: theoretical approaches and practical implications. European Business Review, 25(1), 6-19.

 

Articles, Opinion

Mapping the Impact of Social Media for Innovation

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Facebook, YouTube, Instagram, Wikis, Twitter – Social media (SM) are everywhere. Those websites and applications allow the creation and exchange of user-generated content in a community setting (Kaplan & Haenlein, 2010). The users are not only private people, but also companies are exploring SM as a tool for commercial success. Next to outbound marketing, SM are also applied to enhance business interactions as part of the innovation and product development process (Kenly & Poston, 2011). However, so far new product development (NPD) through social media channels can only be observed anecdotally. Specialized consultancies also jump on the train and offer their services to get a piece of the pie (Accenture Interactive, 2017). But how nourishing is this pie?

The impact of SM on innovation performance was investigated in a study by Roberts, Piller and Lüttgens (2016). The analysis of 186 companies contributed to a better understanding of the dynamics between SM activities and NPD performance. The idea to use SM for innovation and NPD purposes is not novel. However, their study reveals some surprising results:

  • Gathering information from SM channels can lead to higher performance, but only when embedded in complementary, formalized processes. A defined structure and sequence for the flow of activities provides control, helps to reduce uncertainty and mitigates risk.
  • The relationship between SM usage and innovation performance is not entirely positive. An extremely broad application of SM results in a negative performance effect for all kind of innovation projects.
  • The relationship between seeking market-related and technology-related information in the open innovation context is complementary. Leveraging this dependency has a significant positive effect on NPD performance.
  • SM is better suited for gathering need information than for accessing solution information. Depending on the information needed, the explicit SM channels (forums, social networks, blogs, wikis etc.) differ.

These findings imply the positivity of SM for a firm’s innovation performance. But I personally doubt its large-scale effectiveness. After having screened the literature for mentioned best-practice examples, there are enormous differences between companies in how they leverage and exploit benefits of SM usage for innovative efforts. The involvement of customers into new product creations for consumer goods rather resembles the characteristics of a marketing or market research tools. Haribo asked its fan base to vote on new flavors for a special edition during the 2014 soccer world cup. Home-appliances manufacturer Liebherr invited its customers to participate in a fridge-design competition. In contrast to that, I found technology-oriented companies, like NASA, or IBM in collaboration with Topcoder, to give their followers far more influential power by posting demanding challenges. This is surprising, because the study stated SM to be more suitable for gathering needs than (technical) solutions. So, is there a difference between industries concerning the successful integration of SM in NPD? Are technology companies simply more knowledgeable in utilizing SM? Or are their users simply identifying more with the product and thus engaging in NPD processes? The multitude of questions call for a further investigation of the results in relation to different industries and specific firm capabilities in dealing with SM. Hence, up to now how nourishing and likely this cake for businesses and consultancies is, might still be questionable and has to be answered for individual initiatives specifically.

 

References

Accenture Interactive (2017). Social Media: Optimization to Harness Innovation. Retrieved February 15, 2017, from https://www.accenture.com/us-en/insight-social-media-optimization-harness-innovation-summary

Kaplan, A. M., & Haenlein, M. (2010). Users of the world, unite! The challenges and opportunities of Social Media. Business horizons, 53(1), 59-68.

Kenly, A., & Poston, B. (2011). Social Media and Product Innovation: Early Adopters Reaping Benefits amidst Challenge and Uncertainty. In A Kalypso White Paper. Kalypso.

Roberts, D. L., Piller, F. T., & Lüttgens, D. (2016). Mapping the Impact of Social Media for Innovation: The Role of Social Media in Explaining Innovation Performance in the PDMA Comparative Performance Assessment Study. Journal of Product Innovation Management, 33(S1), 117-135.

Articles, Business Case, Opinion

“Buy a present for my wife” said Jan to the phone

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This year St. Valentine’s Day caught millions of men by surprise, again, leaving them wondering what present to buy for their partners. What if somebody or something could perform this burdensome task in a timely manner? There might be a solution…

Viv

Viv is an intelligent personal assistant introduced to the market on May 9, 216 and acquired by Samsung in October 2016. Similar products such as Siri, Google Now, Microsoft’s Cortana and Amazon’s Alexa can perform some basic tasks but nothing beyond the tasks they’ve been programmed to do. Due to artificial intelligence, Viv can generate code by itself and learn about the world as it gets exposed to more user requests and new information.

This makes it by no means a universal product. Viv is expected to learn and store information about every user, and learn with time how to serve him or her personally. For example, if the owner asks: “I need to buy a present for my life for St. Valentine’s Day”, Viv should be able to predict what a suitable present would be or perhaps book a table for two at a fancy restaurant downtown.

Continue reading “Buy a present for my wife” said Jan to the phone →

Articles

Crowd contesting for innovation in transportation

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There are number of ways how to induce innovation in the different fields. One of the interesting methods for generating new innovative ideas and approaches is crow contesting. Crowd contesting is an open contest that allows anyone to participate with his/her idea. To guarantee the outcome quality, a strict contest requirements and schedules has to be followed by every participating individual or team. To motivate participants for joining and actively devoting their effort, different types of incentives are used, such as monetary rewards, public recognition, and sponsorship funding offers. Furthermore, often times a passion in the particular field of contest is the main driver for participants. Crow contest is an efficient way of leveraging a power of competition to generate new ideas and approaches based on the theme of the contest.

Continue reading Crowd contesting for innovation in transportation →

Business Case

What the consumer wants, the consumer gets.

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When a company’s vision is to offer “Earth’s biggest selection and to be Earth’s most customer-centric company”, they’ve got some big shoes to fill. Due to the popularity of the term “customer-centric”, everybody’s been claiming they’re dedicated on the customer, however, are their real-time activities supporting this claim?

Amazon’s Vice President of External Payments, Patrick Gauthier is not in agreement with the statement that everybody is truly focused on the customer, as too many are obsessed by the industry lingo, too fixated on generating the next big cash cow, and repeatedly overlooking who’s voice it is that they are representing, namely that of the consumer and the merchant. Payments and commerce leaders should analyze the situation with a customer-first mentality in this industry in order to enter into true innovation.

“Start with the customer and work backwards.”

Most companies claim they begin their processes with the consumer in mind, however in amidst of the translation, the lingo which is used in the industry – that of the insiders, in essence keeps innovation away from the vision, as the true message appearing in the lingo of the consumer is lost in translation. Gauthier perspective, also shared by payments, commerce and retail experts at Innovation Project 2015, proposes a backward motion of customer-first mentality in seeking what a business model needs to solve. For example, every Amazon product manager is known to write and internal press release, which focuses on the problem of the customer and the current solution they are offering and how this offering fails. Following this, the managers write down every single benefit that the new product will provide to this problem, and will not stop until the benefits will be of interest for the customer. They stay that the money will follow once the company focuses on what the customer truly want. In this new era, having the perspective of a customer-focused company is surpassing having a financial perspective. Starting with the consumer in the back of your mind and going backwards, thus focusing on what a company believes the business model is intended to solve, as this will deliver diverse methods of serving those customer needs. Innovation can occur quickly, but more importantly, instead of focusing on the speeds, it is more significant that innovation happens right as well as for the right target audience.

How to approach this according to Gauthier:

  1. Being part of more dialogues with outsiders
  2. Connecting to the merchant and consumer
  3. Having more conversations that are focused on actual consumer needs
  4. Conversing less regarding payments
  5. Conversing more about the commerce experience

Drop the industry jargon

When the industry jargon is dropped, a focus can be given to consumer identity and true innovation, and in turn enables a full customer experience. Companies can only provide this by forming an open setting of transparency, enabled through conversations. Listen and acknowledge who the consumer is, and it will answers how the consumer prefers to pay will come to the surface. This in turn has the potential to open gateways to a richer commerce experience for the company as well as the customer.

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Botch the customer and the merchants in essence want be part of a commerce experience, in contrast to a payment experience. Gauthier states that companies need to focus less on payments and more on the individuals that are making the transactions. He discusses identity and economics in the same sentence, as he believes it is pivotal.

“Who I am [as a consumer] is pretty key to what I’m going to do. Today, the economics is very centered around how I pay. And maybe at some point the economics should be centered, or certainly migrated, not with just so much just how I pay, but who I am. The who I am, and the willingness to share who I am — what I choose to share — should potentially change the economics of a transaction.”

– Patrick Gauthier, Amazon’s VP of External Payments

how-to-survive-and-thrive-in-the-customer-revolution-exacttarget-infographic

Both identity and payment experience are part of the commerce experience. Yet, from the merchants’ side, the occurring conversations focus on the payments side. The downside of this occurrence is that it diminishes the key role of the retail and commerce experience during the transaction stage, loosing out on the important achieving merchant-centric experience.

The industry is battling with conflicts due to having opposing viewpoints, on how payments and commerce ought to be engaged into the consumer experience. This tension of sort is a result of commerce innovation is completely being overtaken by payments innovation, similar to the example of a current successful business model Uber.

“The [retail] industry needs to embrace customer-centricity in order to really get to what it can be in the next 10 years.”

– Patrick Gauthier, Amazon’s VP of External Payments

Many views, and opinions from payments-, retail- and commerce sectors as well as managers with innovative perspectives are opening up discussion points. What is essentially needed though is a dialogue regarding what and who these individuals are actually chatting about.

References:

Pymts (2015) “Amazon’s customer-centric Focus.” pymnts.com. 24 Mar. 2015. Web. <http://www.pymnts.com/in-depth/2015/whos-talking-about-innovation/#.VT0yIxOUee4&gt;.

McAllister, Ian. (2012) “What Is Amazon’s Approach to Product Development and Product Management?” Quora.com, 18 May 2012. Web. <http://www.quora.com/What-is-Amazons-approach-to-product-development-and-product-management&gt;.

Bulygo, Z. “Becoming a Customer Centric Company” 9 June 2014. Web. <https://blog.kissmetrics.com/customer-centric-company&gt;

Header image: http://pretiumsolutions.com/wp-content/uploads/2012/02/Customer-Experience-Management-Customer-Centric-Organization-copy.jpg

Infographics: Web. <https://blog.kissmetrics.com/wp-content/uploads/2014/06/how-to-survive-and-thrive-in-the-customer-revolution-exacttarget-infographic.png&gt;

Articles, Business Case, News

Crowdsourcing in co-innovation: a SAP HANA example

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Let me start by saying something we all already know: in the current digital world, innovation is critical. Disruption from new agile competitors becomes a continuous threat for many businesses.

As we all expect, innovation needs fresh thinking, open minds, experiments and new approaches. In the last years many new technologies were launched. However, in many cases it is hard to unlock the full innovation potential of these technologies – such as data analytics, mobile and digital. To unlock this potential, I claim that within big firms innovation leaders need to lead this innovation and use dynamic new approaches to co-creation and collaboration.

A great example of such a dynamic new approach is crowdsourcing. Crowdsourcing is a dynamic approach to the generation of ideas, without being bounded to traditional (firm) boundaries. Crowdsourcing gives the possibility to include input from the entire business ecosystem, which includes the input from employees, partners, suppliers and customers.

An excellent illustration of such corporate crowdsourcing is the SAP HANA Innovation Challenge. HANA is SAP’s in-memory database technology. Yearly, also this year, they organize a crowdsourcing contest. The SAP HANA Innovation Awards were designed to showcase and honor customers innovating with SAP HANA. Because current year’s contest is still active, I will illustrate this example based on the 2014 contest.

social+media+2
The contest was organized the following. Customers using SAP HANA in production were invidted to enter their innovation story in a certain category. 22 finalists were selected by public voting. The social buzz for the conteste hashtag #HANAStory generated over 6 million impressions on Twitter, 6.7 thousand votes and 76.1 thousand website visits. SAP User groups were invited to nominate judges and 11 judges reviewed and scored each of the 22 finalists using a score card to select the final winners. This lead to a massive attention to SAP HANA innovation and mulitiple ideas were executed and implemented on a larger scale.

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The crowdsourcing contest at SAP is every year a great success, as illustrated with the 2014 example. For the innovation leaders willing to lead the innovation in this collaborative way, there are some important considerations:

1. Open up innovation processes to third parties
CIOs can open up their innovation process by partnering with third parties who share their aims and are prepared to collaborate. To identify potential allies, innovation leaders must study their partners’ portfolios to find common areas of interest.

2. Accede collective brainpower
If a small group starts to define innovation opportunities, it can result in a very narrow approach being taken. Opening up for a wider group can give you a greater diversity of input. It also can give you insight in the end-user experience.

3. Decide how to evaluate ideas
The end goal of idea crowdsourcing is to implement innovative ideas. To reach this goal, it is important to have a clear appraoch towards prioritizing and selecting the best ideas. In most cases such an approach consists of two stages: structuring and selecting.

What can innovation leaders learn from this blog?
Very straightforward, that the people at their organization,  and the people around their organization, are full of innovative ideas. It is key to find new ways to unlock the potential innovative value of these ideas and exploit it.
Innovation leaders should start experimenting now: where can crowdsourcing be used to move product/service/technology from a deployment to a genuine innovation?

Sources:
http://www.sap.com/corporate-en/about/our-company/our-boards/members/profiles/ingrid-helen-arnold.html
http://scn.sap.com/docs/DOC-59874
http://www.news-sap.com/partner-quote-sheet-sap-unveils-next-generation-enterprise-software-new-business-suite-sap-s4hana/
http://www.pristineworldwide.com/?p=1087

Click to access 1310_Success_Stories_and_Lessons_Learned_Implementing_SAP_HANA_Solutions.pdf

https://blogs.saphana.com/2014/10/01/innovation-and-liberation-with-sap-hana-you-get-both-part-one-of-a-two-part-blog/
http://scn.sap.com/community/hana-in-memory/blog/2014/07/08/first-sap-hana-innovation-award-an-exciting-inauguration

News

What’s New from Amazon?

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“Selling services on Amazon : reach customers in your neighbourhood and grow your business”

Amazon Dash Button : “everything’s at the touch of a button”

What at first was an online bookstore now becomes one of the biggest online retailers worldwide. Amazon sells pretty much everything, from home appliances to clothing and even groceries. Its business model enables users to be actively involved by allowing them to act as buyers as well as sellers. Buyers are also encouraged to review sellers and share their experiences to build trust among each others. These involvements lead to users as co-creators of value. According to Saarijärvi et al (2013), value co-creation offers opportunities in identifying new ways to support either the customer’s or the firm’s value-creating processes. This business concept allows Amazon to capture greater value than it could have independently.

Being an e-commerce site leader doesn’t stop Amazon to grow its business. Based on The Economist (2015), on March 30th it announced Amazon Home Services which sells services. This service has a trial version called Amazon Local Services, which has been testing in some American cities since late 2014. So how does it work? Customers in several cities in the United States can search for the services they need and purchase it or submit a custom request on Amazon.com. There would be builders, plumbers, mechanics, and even music teachers offering their services to customers in their neighbourhood. To simplify the transaction, standard services have set prices up front while custom services can be requested (Amazon, 2015).

This service is a smart move from Amazon (if it succeeds), it offers convenience for customers as they will be able to locate nearby builders, plumbers, or any other services available in the website. Customers can purchase a service while shopping for products related to it, therefore Amazon encourages people to buy products (i.e. home appliances) from them as customers can simply have it installed too through the service. Not only that, the services providers also gain benefits from this, as Amazon takes care of the payment process while also exposed them to potential customers through the website and also provides them with easy-to-use tools.

Youtube : “Introducing Amazon Home Services”

As if the Amazon Home Services announcement is not enough, the firm has another news this week. It introduced Amazon’s “Dash” buttons, wireless-connected buttons for members of its Prime scheme branded (The Economist, 2015). The idea is consumers have these buttons in their homes and they can simply press it whenever they need certain household items. By pressing the button, an order of those certain items will be placed on Amazon.com then delivered to the customer’s home. People always keep trying to find new ways to make their life easier and this button is certainly attempting to do so. Though it seems easier to simply push a button rather than actually order an item online, which might required more than a couple of minutes, I have my doubts in this “smart” buttons. People obviously have lots of household items, not just a thing or two, and though it’s still not very clear about the technical of these buttons, I think people wouldn’t want to have lots of buttons in their homes for each of their items. And also, since it is a button, it would be small and people could easily forget where they put it and lose it. It would be even trickier for people who have kids at home. That being said, I don’t think these buttons would be practical to use.amazon dash buttons

(The Economist, 2015)

References

Saarijärvi, H., Kannan, P., and Kuusela, H. (2013). ‘Value co-creation : theoretical approaches and practical implications‘, European Business Review, 25(1), pp.6-19.

http://www.economist.com/news/business-and-finance/21647715-connected-devices-home-are-becoming-more-widespread-sensors-and-sensibility

http://www.economist.com/news/business-and-finance/21647529-americas-biggest-online-retailer-attempts-take-another-slice-demand-economy-books

http://services.amazon.com/selling-services/benefits.htm?ld=NSGoogleAS

Articles

Justin got fired, kept his job and earned more. WHAT? (Incl. Video)

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The story in this blog is pure fiction. The fundamentals of this blog is inspired by the following academic article: Schreier, Martin, Christoph Fuchs, and Darren W. Dahl. “The innovation effect of user design: Exploring consumers’ innovation perceptions of firms selling products designed by users.” Journal of Marketing 76.5 (2012): 18-32.

A couple of days ago I experienced the most impressive thing in my life. A way to earn money for free, for doing nothing. No, I am not talking about the scams advertised in web-popups or the unique offers from ambiguous men on the corner of the street. This time was different. This time I faced the real-thing and the good part of it is that you, as a business owner, can earn money for free too! Let me share this have-to-know story with you…

It was the first Monday morning after my 3-week during holiday. I jumped into my car and head to work, kicking off my working-week at Threadless ltd. Arrived at work, I noticed something was different, my colleagues where not there. Literally, no cars on the parking lot, no bikes, no nothing. The entrance of my office was still open, but the receptionist wasn’t there either. The entire “freaking” office was empty, non of my fellow product developers where present. At first I thought, is this a dream? But then, a couple of minutes later, I saw the Porsche of my boss driving towards the office. He jumped out and spoke the following words to me: “Hi Justin! You can go home, our customers have taken your job, for free!” My natural reply was: “Our customers?” , leaving alone my thoughts “I am fired!?”.

Let me explain, Schreierer et al. (2012) found that common design by users (products developed by customers) enhances the perceived innovation ability of a firm, leading to greater purchase intentions. In other words, by empowering a firm’s customers to build their own products, a company saves money while increasing their future sales. In the extremes, a firm, such as where (I) Justin worked, entirely outsource their product development and fires their employees of the design, innovation or product development department. Examples are LEGO (customers partly develop new LEGO models), Threadless (fashion items designed by users) and Linux (entirely open-sources co-created operating software). The authors describe that products that best-fit for outsourcing product design to users is with products with low-complexity and in markets where users are familiar with user innovation. A large downside is found in the field of luxury products (Fuchs, Christoph, et al. 2013). For each individual firm it is therefore (according to literature) a trade-off between perceived innovativeness and luxury.

Coming back at the case of Justin and Threadless ltd, the business owner and boss determined to fire the entire product development department. Instead of letting employees design their shirts, they outsourced design tasks towards the customer themselves. Interesting to experience is the way the business owner could cut costs and increase their sales. Less costs, more sales: free money, for nothing.

As most fair tales have a happy ending, this was the case for Justin too. He was one of the best product developers of his company Threadless. He determined to continue working on new designs, but now from as a customer / co-creator. In the end his experience and feeling for fashion let to the result of being the best-performing artists on Threadless, earning even more than his former salary [CHECK THE VIDEO OF JUSTIN].

References:
1. Fuchs, Christoph, et al. “All that is users might not be gold: How labeling products as user designed backfires in the context of luxury fashion brands.”Journal of Marketing 77.5 (2013): 75-91.
2. Schreier, Martin, Christoph Fuchs, and Darren W. Dahl. “The innovation effect of user design: Exploring consumers’ innovation perceptions of firms selling products designed by users.” Journal of Marketing 76.5 (2012): 18-32.

Written by: Matthijs van de Grift (416083mg)

Articles

The Dark Side of Customer Co-Creation

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In this blogpost I will talk about the article “The dark side of customer co-creation: exploring the consequences of failed co-created services” by Heidenreich, Wittkowski, Handrich and Falk (2014).

Co-Creation
Co-creation becomes more and more common. Co-creation can take place in product development and service development. The authors focus in this article on co-creation in services, whereas in services “innovation always starts with customers’ unmet needs” (Ostrom et al. 2010, p. 16). Co-creation is beneficially for both firms – which are able to adapt changes better to customer needs – and customers – who will be more satisfied because of more empowerment. However, more involvement asks for more contact points between the firm and the customer, which in turn leads to higher complexity of the process and service. And as we all know, higher complexity increases the risk of failure.

Whereas current literature emphasizes the positive effects of co-creation, this article highlights potential negative influences of co-created services. The authors conducted four studies to investigate this dark side of customer co-creation. In this blog post I will highlight the outcomes and implications of these four studies, without mentioning all methodological and statistical characteristics.

Capture4

Study 1 + Study 2
The authors show that in case of service success, highly involved customers are more satisfied than customers who barely participated in co-creation. However, in case of failure, co-creation triggers a greater imbalance between customers’ expectations of delivery and the actual outcome. As a result, negative disconfirmation is enahnced, leading to a decline in satisfaction.

Service Recovery
After failure of service delivery, a firm must make up for its mistakes. The process of fixing failures is referred to as service recovery. Current literature even shows that sometimes customer satisfaction, customer loyaly, and customer repurchase intentions are higher after successful service recovery than if the service delivery was successful in the first time. The authors now include the degree of customer co-creation.

Capture.2PNG

Study 3 + Study 4
The outcomes of studies 3 and 4 indicate that consumers who experience a mistake in the service delivery of a highly co-created servicetend t oblame themselves for the flawed outcome and thus feel a sense of guilt. In such cases it is best to have no recovery process at all to restore customer satisfaction.

The outcomes of this study lead to some interesting implications for managers. First it highlights the importance of awareness of the potential negative consequences of offering highly co-created services. However, because of the high potential positive influences, firms might want to offer highly co-created services. Therefor, firms should implement measuring indicators to minimize the change of co-created service failure caused by human mistakes. Because not all failure is inevitable, managers must focus on higher customer satisfaction along with the overall service. This can mitigate negative effects in case of  failures. The importance of a proper recovery system is highlighted in this research.

Finally, even though there exists a dark side in customer co-creation, managers must try to overcome these difficulties and create light in the darkness…

References
Heidenricih, S., Wittkowski, K., Handrick, M. & Falk, T. (2014). ‘The dark side of customer co-creation: exploring the consequences of failed co-created services’. Journal of the Academic Marketing Science.
Ostrom, A. L., Bitner, M. J., Brown, S. W., Burkhard, K. A., Goul, M., Smith-Daniels, V., et al. (2010). ‘Moving forward and making a difference: research priorities for the science of service’. Journal of Service Research, 13 (1), pp. 4 – 36.

Articles, Business Case, News, Opinion

Recommendation Agent 2.0

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Just like Don Corleone in the epic Godfather movie, the folks at Washington-based e-commerce giant Amazon are about to make offers to their business partners, the company hopes they can’t refuse. That the firm, like Corleone, relies on ‘capos’ to enforce these offers, can be doubted, but they have a treasure the Mafia never possessed. Amazon’s immense knowledge about their business partners, generated from all sorts of data, takes the firm to a stage where it plans to rely a huge part of its channel domain on its recommendation system. But let me explain.

After establishing overnight delivery years ago and the introduction of the ‘drone delivery service’ last summer, the firm filed a patent in January with the bulky name ‘anticipatory shipping’. The idea behind it could revolutionize the e-commerce environment. According to techcrunch.com the system is the next ‘step towards cutting out human agency entirely from the e-commerce roundabout’ (1). When set up properly the automated collaborative filtering algorithm will learn from the behavior of registered consumers and anticipate what they could possibly be interested in, before the consumers themselves think about it. When matched with a specific product, Amazon plans to wrap the item and send it towards the potential customers before an order has been placed. This means slashing down shipping time by relying on clients’ historical buying patterns, preferences expressed via surveys, demographic data, but also browsing habits, wish-lists and even mouse movements (1). Essentially, the system entirely outsources the consumers’ shopping experience and direct communication with Amazon on basis of an online recommendation agent.

Continue reading Recommendation Agent 2.0 →

Articles, Business Case, Opinion

Collective Hyperintelligence or Hypercollective intelligence?

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What does it take to create the smallest pieces you can find on this earth? Either you can jump in your self-made time machine and travel to the birth of our universe or, for the pocket money of 6.4 billion Euro, you can purchase 27 kilometers of tunnel underneath the Jura mountains in Switzerland and France, buy 9593 magnets, 1232 dipoles and 392 quadropels (1). Now you only have to find a smart brain and you will get yourself a private science lab, similar to the CERN in Geneve, right?

Wrong! It was not the billions of tax money or the finesse of one Harvard student, which makes the ‘world’s most ambitious scientific experiment’ a successful story (2). It is the fact that more than ten thousand qualified researchers from all over the world have collaborated in the experiments conducted at that giant laboratory (3), most of them physicist and engineers. Solely the largest experiment, ALICE, involves a scientific community, which, in my opinion, could refer to itself as the world’s smartest melting pot. 1200 researchers from 131 different institutes out of 36 countries make it possible to crash two tiny little substances with immense speed into each other, just to make them break apart further and to tell the physicists something about the history and future of the world (4).

Scientists working on-site at the ALICE detector
Scientists working on-site at the ALICE detector

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Articles, Business Case, Opinion

Students-to-Students: Making Free Study Spots Visible

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As any consumer that switches from one company to the other, I’m prone to compare the one to the other. With universities, this is no different. When I switched from Utrecht University (UU) to Erasmus University Rotterdam (EUR), I saw a lot of points that both universities did differently and where they could learn from each other. But the one thing that the EUR needs most, I know exactly what that is.

As any good student, I regularly spend a lot of time on the university, working on projects, reading articles, doing research for my thesis, you name it. In between classes, before or after, I spend this time behind university computers (as I didn’t own a laptop) in the library, in computer rooms, etcetera. However, space is scarce in Utrecht’s university library. Whole generations of students have already been complaining that there are never enough study spots. Discussed measures have gone from a time limit on any computer use to banning HBO students from the library, but these were all rendered impossible to implement for the university. Of course there already existed a rule (and the on-screen timer that goes with it) that you are not allowed to spend more than 30 minutes away from your computer, or you’ll  be logged out and lose your current files, but this solves little as students usually don’t take other peoples stuff away if they want to sit somewhere.

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Enhancing Customer Experience : Touchscreen T-Shirt by Under Armour

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Hi guys!

Do you know something about “wearable technology”? Imagine: clothing and accessories incorporating some advanced technology capabilities. These kind of innovations are the real example of how technology is nowadays part of our everyday life.

In this post I would like to talk about one of the latest wearable technology that will be released on the 20th of March by Under Armour: Armour39. It is an athletic performance monitoring system that measures how hard an athlete pushes him or herself during a Continue reading Enhancing Customer Experience : Touchscreen T-Shirt by Under Armour →