All posts by pierre

Co-founder and CTO for idexlab.com
I am a R&D rooted person with 20Y in
research, SW dev et product management.

Crowdsourcing and Open Innovation

Crowdsourcing, a concept born in mid 2000s in the USA, is one of the tools available to companies willing to embrace open innovation.

As a definition of Open Innovation, one could say that for a company, it represents the extension of the sphere of innovation actors. The crowdsourcing fully represents that logic.

Crowdsourcing consists of leveraging the collective intelligence of the crowd. Crowdsourcing = ‘sourcing’ from the crowd

In order to have a good understanding of how crowdsourcing works, one should answer the following questions:

➔ Sourcing what? What does the company wish to supply itself with? What is the company searching for?

➔ Sourcing from whom? Who are the people or the participants in that crowd that the company appeals to?

These questions have multiple answers but constants that exist, the ones that allow talking about crowdsourcing, are the following:

➔ Crowdsourcing involves innovation, in every sense. Therefore, the answer to the question “sourcing on what?” is: ideas, projects, concepts, or even simple advice.

➔ The question “sourcing from whom?” should be answered more generally: from a great number of people. Without that, one cannot talk about crowdsourcing!

We’ll quote several practical cases to have a better understanding of what it means in concrete terms.

Practical example number 1: a company wishes to launch a new product but they are not sure that it will meet the demand and they would like to make enquiries to the public about the improvements that could be brought. Through a crowdsourcing platform, this company asks thousands of participants to give their opinion about the product and to potential improvements to it.

Practical example number 2: a company wishes to launch a new advertising campaign that highlights the advantages of their products. However, they couldn’t find the powerful message that would turn the operation into a success. To get there, they decide to ask net surfers on their Facebook page to imagine the most efficient and most original message. They will offer a reward to the best proposals with a voucher, free products etc.

Practical example number 3: a company reflects upon a new manner of communicating. They wish to adapt their communication strategy to new channels but they don’t have the necessary expertise. Therefore, they decide leverage a  crowdsourcing platform in order to have the highest number of contributions possible.  The participant who will have the most innovative idea will receive 1,000 Euros.

Practical example number 4: a company wishes to improve its brand image. To do so, they decide to launch a call for projects called “building a better world” on their website. The participants could suggest projects aimed at eradicating world hunger, preventing wars, limiting epidemics, reducing unemployment, any of that within a limited, previously established budget. A voting system will be put in place to elect the winner: to get a higher number of votes, the authors are invited to share their projects on Facebook, therefore multiplying the reach of the contest.

As one can see, crowdsourcing can have very varied applications. For the company, it can be used either to conceive or to optimize a new product, to create an advertising campaign or to simply improve its image before the public. The crowdsourcing operations can be made on dedicated platforms (nowadays, there are hundreds of them), on the company’s website or directly on social networks.

There are multiple advantages to crowdsourcing:

  • Crowdsourcing is an economical solution. To boost participation prize systems can  be put in place but costs are fully controlled.
  • Crowdsourcing allows the participation of a great number of people. Certain crowdsourcing campaigns can involve a million participants. With so many brains connected together, this can only produce very promising results!
  • Crowdsourcing allows the development of closer connections between the company and the public, as well as the adaptation of brand communication.

picture credits https://www.flickr.com/photos/mrlins/

Frugal Innovation, definition and practical examples

India invented the “Jugaad” or “frugal innovation”

Meet Sam Pitroda

Jugaad was popularized by Sam Pitroda, founder of C-DOT, who has developed and popularized telecommunications in India. Frugal innovation can be defined as “the commercialization, in the context of limited resources, of quality products and services that are affordable to the masses.” This has been the principle applied by Sam Pitroda when developing the famous network of tens of millions of token-phones in the country. Nowadays, as leader of the National Innovation Council, he dedicates himself to making India the country of innovation by 2030. Get to know him with this interview from Euronews.

Visionary? Maybe, but in any case his concept of frugal innovation had a great echo in developing countries as well as in developed countries facing a financial crisis.

Indian ambition and worldwide opportunity

Sam Pitroda’s vision of frugal innovation is societal and it aims at reducing poverty, producing accessible innovations for the most impoverished and allowing the improvement their condition. He resumes it by  saying that “the great brains work too much on solving the problems of the rich” and at the same time on designing new products that feed the overconsumption of rich countries. He preaches the development of innovative frugal projects with social impact.

The opportunity perceived in developed countries is a little bit different. It’s generally accepted that the ever increasing investments that are necessary to innovate are no longer sustainable. This happens particularly in a period of economical stagnation. To sum up, three complaints are made regarding the structure of the Western innovation:

 too expensive: innovative companies spend colossal amounts (600 billions in 2011) in their R&D and innovation process, and those amounts increase mechanically as the processes become more complex and as the technologies are miniaturizing. And yet, the results are not always there, particularly when the need is badly understood or it’s overrun by an innovation cycle that takes too long.

– too “precluding”, innovation rests upon a limited population (engineers, researchers) and aims at a reduced audience (limited high range markets). Whereas innovation could be inspired by a much larger population: employees, clients, suppliers and it could also aim at the “non-clients” beyond the original target.

– too slow because it relies on complex and restrictive processes.

Therefore, the innovation process has to develop in three directions:

– the agility through interaction between users and designers. The practice is well-developed in the software industry (Agile) but it’s much less developed for the manufactured products.

– the ”inclusiveness” or the opening towards the greatest sources of ideas, external competences and the largest target audiences.

– the conception or the frugal innovation, or how to make more with little, which also requires to value ingenuity rather than only heavy engineering.

When setting up projects and teams that rely on these principles there is indeed a great challenge not to compromise with product’s quality. But the benefits can be considerable: do more, cheaper and for the largest markets is a promise that no company can neglect !

So what’s the role of open innovationin all of this? It brings the necessary opening towards external contributions, ideas, as well as technological solutions. This is a core component in frugal innovation as it offers means of being attentive, reactive and innovative with smaller budgets.

Examples of frugality

The Indian Mangalyaan spacecraft for Mars was developed 3 times faster and it involved spending that was 10 times lower than for the one designed by NASA, through the reuse of existing components. It reached the Martian orbit in September 2014!

Schneider Electric with its BiBop program aims to offer solutions for affordable  energy and for a new business model, like the low-cost LED lighting solution In-Diya.

Renault and Dacia: Frugal engineering is the term used by Carlos Ghosn rather than frugal innovation to resume the company’s orientation towards low-cost cars, allowing other markets to be reached. The success of Dacia cars in Europe is also demonstrative!

Tata Motors takes it even further with Nano, a $2,000 car developed by the Indian company.

Essilor and its 2.5 New Vision Generation pursue a strategy of economic inclusion with the main goal of offering access to visual correction for 2.5 billion people that are excluded at the moment.

In 2005, the MIT already suggested the conception of a 100 USD computer for developing countries through the project “One Laptop per Child” which would have been deployed in almost 1.5M units.

Twitter Accounts to follow on this subject:
@NaviRadjou
@sampitroda

picture credits TaxCredits.net and https://www.flickr.com/photos/quinnanya/

 

Open Innovation Examples

This article proposes a few examples of companies that have chosen the path of open innovation.

Innovation is more than ever in the core of the corporate strategy, no matter what the size of the company is. The intensification of competition in a global economy requires new innovation forms and capacities. Nowadays, a company that doesn’t innovate is jeopardizing its existence.

The men and women that lead the big companies are aware of that. But if we say innovation we also say investment. And companies, especially in a time of economic downturn, don’t have the means to allocate colossal amounts to research and innovation.

This is when open innovation makes sense and becomes important.

In this article, we would like to list a certain number of examples of companies that have chosen the path of open innovation.

PSA Peugeot Citroën

In 2011, the French car manufacturer has launched a collaborative project to design the cars of the future and aimed at multiplying the company’s partnerships with scientific laboratories all around the world.

This project materialized into the creation of a network of OpenLabs. These structures are designed to allow the encounter between the group’s research centers and the external partners. They have a goal of thinking about the future of the automotive industry, particularly according to scientific advances. For example, a partnership has been established between PSA and the Institute of Movement Sciences of Marseille.

Other Open Innovation exmaples follow.

Coca-Cola

It’s well-known that Coca-Cola keeps the recipe of its famous drink secret. That is probably why the American company didn’t choose open innovation for developing its products. However, their program “Shaping a Better Future” allows internet visitors to suggest solutions to real society problems (for example unemployment or the environment). Afterwards, Coca-Cola selects the best project and offers its author $50,000 to put the project into practice. The winner is selected according to the intrinsic value of the project but also according to the number of votes it had received. To obtain the greatest number of votes possible, Coca-Cola encourages the authors of the projects to share them on social networks, especially on Facebook. This program obviously aims at improving the image of Coca-Cola. An open innovation project can also do that!

Briefly, more open innovation examples:

➔ The Audi car manufacturer has launched the Audi Production Award. It is a contest that invites the participants to think about the car of the future. The winner receives a trophy as well as 5,000 Euros.

Procter & Gamble  has published the list of technical problems that their team wasn’t able to solve or hasn’t solved on time on its website. They make a call to all the web surfers who may have the magic solution. Every idea is welcome!

➔ GE have launched their program Ecomagination Challenge. Its goal? To collect ideas from entrepreneurs, students and any other innovative people, regarding problems connected to energy.

➔ The HP (Hewlett Packard) IT company has created open innovation laboratories for allowing worldwide researchers to work together and for initiating partnerships between the HP teams and external scientists.

➔ The Danish Lego Company has gone the longest way on the path of open innovation. And this is already happening for many years (MindStorms, Lego Ambassador, Lego Factory and lastly the Lego Cuuso…). It’s no surprise then that Lego is often nominated in open innovation studies. In every one of their operations/programs, Lego makes a point of honor by having their fans participate in the evolution of their product lines. Nothing could be more efficient in bonding the Lego community, made out of young and less young people.

➔ Local Motors is a start-up created in 2007 by a former marine, Jay Rogers. The design of a new car requires years of work and generally costs millions of Euros. To save time and money, Local Motors has decided to use crowdsourcing. Its original approach has allowed this small company to conquer important market shares. The fortunate winners of the industrial design contests could also receive royalties from the car sales.

As we can see from these examples (there are still many others to mention…) open innovation has multiple advantages and surely has a bright future ahead of it. It offers advantages in terms of efficiency and in terms of savings and as we’ve seen in the Coca-Cola example, also in terms of brand image.

Open Innovation ROI

Innovation is a crucial investment for any company.. However, it is often difficult to evaluate the return on investment (ROI)

of the expenses dedicated to innovation. In any case, we can observe the results obtained by companies after having created open innovation programs and we can notice great performances in terms of ROI. Here are some examples that were chosen to illustrate the financial peformance of an open innovation approach.

Innovate to …

… Renew the offer and boost the revenue

Procter & Gamble, one of the pioneers of open innovation, has begun a process of open innovation in 2003 and has since seen its revenue go from 43 to 83 billions in 5 years and 50% of their products were developed through collaboration with external partners.

Concretely, open innovation has allowed them to develop new products by relying on the expectations and need of the customers and on the expertise of new partners.

By following the same method, in India, the Bharat Petroleum gas station network has launched a call for ideas among their collaborators in order to develop their line of products and services. The first responses have soon led them to understand that one of the common points of their clients, heavy truck drivers, were health issues, especially diabetes, as well as their need to monitor their health. The company has therefore developed a system dedicated to clients inside the gas stations, which facilitated medical monitoring and analysis. This initiative has been rewarded by a 30% increase in their revenue.

… Solve problems faster

In 2009, Forrester Consulting performed a large survey among users of an Open Innovation platform, it revealed that companies organizing innovation challenges received a 74% return on investment for the submitted projects.

The open innovation platforms therefore represent an important opportunity for ROI but also for time saving. In fact, after publishing an issue it had for more than 15 years on one of these platforms, Groupe Roche received at 113 suggestions, allowing them to solve the problem in less than 2 months.

… Generate economies of scale

Companies can also count on their collaborators to ensure innovation actions. Within an open innovation strategy, the collaborators often prove a true engagement and propose smart ideas.

In 2013, within a challenge called « Costbusters », which aimed at reducing costs, the PSA group involved 3500 collaborators who suggested 3500 ideas, all of which aimed at improving the group’s productivity and ROI.

The cost reduction obtained were revealed by the SNCF who declared having saved 82 million Euros in 2009, after having received 25,000 ideas and after having retained 50% of those suggestions.

(picture credits https://www.flickr.com/photos/financeblue/)

Innovation communication: an issue of corporate communication

In 2013, the index of company values indicated that 34% of companies consider innovation as the main value they claim to have, before quality, integrity and client satisfaction. Innovation represents the element of distinction in institutional speech as well as in developing the corporate image.

First of all, innovation communication allows mobilizing internal publics, by explaining the added value of innovation projects and by allowing them to understand the usefulness of actions that may sometimes seem apart from the core activity of the company.

An Inergie and InnovActeurs study from 2007 indicates that 71% of collaborators feel that innovation is a priority in their company, and it’s well-connected to the internal communication supports. For all that, they still require more innovation communication: presentation meetings, informative meetings, advertising meetings…

In a group such as Total, they take advantage of every opportunity to pass on messages about innovation and to communicate about the group’s engagement to innovation: organizing internal conferences about innovation, spreading messages about a wide variety of innovations, highlighting innovation on the group’s corporate site and on the internal platform dedicated to participative innovation, setting up innovation space inside the premises etc…

… But also to the outside

Innovation communication to the outside public represents a major issue for a company, as it also concerns its image, its reputation and even its position on the market.

Highlighting innovation in advertising is a sure way of conquering consumers: an Ipsos study from 2006 reveals that in France, innovation is the main engine of advertising efficiency in terms of CEI (+35), before differentiation, pertinence, and credibility. The brands have taken advantage of this and have highlighted their innovation track record, and are tracing the history of the company’s innovations over the years, just like that Honda commercial does.

The other Ispos study from March 2014 reveals that consumers judge brand influence according to their innovation capacity. Therefore, their innovation strategy allows companies to build a positive reputation.

But examples also show that a company that tends to only follow customer advice rather than suggesting split innovations will face a decline in its market.

That was the case in the 90s, when Apple designed a Newton, a “message pad”, under the impulse from its new CEO, John Sculley, who relied on market and consumer studies. The product was stopped after a short time. This shows that brands need to demonstrate split innovation capabilities.

Internally as well as externally, the diffusion of messages that highlight the innovation strategy proves to be crucial in bonding and mobilizing teams as well as in seducing the consumers and imposing the brand as a strong and influential one.