By Anna Caraveli
Unless you have spent the last few years on a different planet, you must have been bombarded by the word “innovation” from just about every possible source of information. Yet “innovation” is often treated as a little island unto itself with little relationship to results. I automatically conjure up images of little people sent to a room to “innovate,” the way I would occasionally give my kids paper and bright paint and allow them to “innovate” on my kitchen table without worrying about getting their clothes or kitchen dirty. Why innovate and how?
A recent article in the Sloan Review, “The Age of the Consumer-Innovator,” gives us a dose of reality. This must be innovation for adults because it does not evoke little people bending over a table, behind closed doors. First, it places innovation in a business context—in relationship to product and business development cycles and market outcomes. Secondly, it re-defines the innovation paradigm to reflect a growing, new trend: consumer-based innovation. This is what is new about it. In the traditional, supply-based innovation paradigm, organizations come up with new product ideas internally, and then market to consumers who are treated as “passive” recipients. New research indicates that, in fact, “consumers themselves are a major source of product innovations” today.
We are not talking about building innovative sand castles here but about facts. Three national surveys of consumer innovation in the U.S, the U.K. and Japan show that millions of citizens innovate each year ‘to create and modify consumer products to better fit their needs.” We are talking about “total estimated annual expenditures by consumer-innovators [that are] in the billions of dollars in each country.”
Is this something to worry about? The article considers it to be a wake-up call for businesses. Consumers today don’t wait passively for products and solutions that meet their needs. Instead, they take initiative in closing gaps and meeting their own demand. Associations, like businesses, must take stock of the dramatic implications of this trend for the way they develop new products and services, view and relate to customers. The new path to effective innovation today evolves from the outside in rather than inside out. Instead of viewing member innovations as threats or unworthy of attention, associations must identify those that can serve as potential prototypes for new products and learn how to leverage them to achieve their growth objectives.
Some of the recommendations in the article can be adapted by associations and used as guidelines for leveraging member-based innovation to develop profitable products and services.
- Re-think how your association develops new products, business lines or delivery mechanisms: Instead of merely relying on staff and volunteers for new product ideas, restructure all your R&D processes to identify and take advantage of member innovations as central engines for growth.
- Re-think your definition of “threat” and “competition:” Stop fighting member-based innovations, such as member companies generating products that compete with yours; or new online communities and uses of technology. View them, instead, as clues to what members want; and use them as “prototypes” for new products/services, saving you R&D expenses and lowering the risks involved in launching and generating sales for a new product. Why take on all the risks yourself? Example: “Microsoft first deplored the hacking of its Kinect product by users seeking to use it in new ways. Then, within days, it reversed course and applauded those same users — recognizing the potential for mutual gains.”
Maddie Grant and Jamie Notter in their recent book, Humanize, similarly propose a entire new model of customer and market-driven innovation for associations. Instead of considering social media as threats to the associations’ survival, they extract from them the underlying principles of growth and innovation and “apply them to the way we lead and manage our organizations.”
- Learn how to recognize nascent concepts for potential new products, services or modes of delivery in members’ innovations: Consider, for example, what can be learned from the way members use ASAE LitServes and various online community groups. Components that contribute to the success of such platforms include: targeted problem-solving; new ideas; quick, in time answers to questions; the caliber of community members and, hence, conversation; mix of expertise and viewpoints represented; and 24/7 access. Yet most associations do not develop these attributes into the way the package benefits and frame value. The Veterinary Information Network (VIN), on the other hand, based its entire membership and business model on member online innovations and behavior to create virtually the largest veterinary practice in the world. Its success and rate of growth have been phenomenal.
- Support user innovation: The article advises to “create documented, open interfaces to support modifications to your products; create “developers’ toolkits” to assist further; and create websites so that users with common interests can more easily share information and innovate together.”
- Launch targeted online, learning and development member communities to create invaluable and continuous research and development laboratories. An example is the Delta Exchange, a spin-off of AAFP.
- Approach member innovators as strategic business partners: when innovations have already resulted in a new product or practice, the authors advise: “determine what users want in exchange for your benefiting from their innovations. For example, your users may want support for their user communities, free parts or special access to your in-house developers. To create a positive long-term relationship with your innovating users, strive to create a win-win. When you decide to produce a commercial version of a user-developed product, give the innovators credit.”
Associations can no longer survive as solitary islands. Instead of relying on their own resources and guess work to develop and launch new products, they can tap members, users and others who benefit directly or indirectly from their resources as partners in innovation and R&D; market testers, prototype developers; champions and advocates.