Monday, 27 October 2008

Open Innovation according to Frank Piller

How to achieve a 30% profit margin with no risk, no Ph.d., no capital investment, no R&D and (almost) no employees?

This was the kick off question of a masterclass I attended last Thursday. The man raising this question was Frank Piller. To be honest I had never heard of this man before, until I was invited to his masterclass. I quickly discovered that Frank Piller is regarded as one of the leading experts in the fields of mass customization, co-creation & open innovation, frequently being quoted by the NYT, Financial Times, etc. Quite an impressive man so to speak. There I was, one of the 25 people sitting in his class and I knew the company he had presented in his first question.

The company fitting the profile was Threadless. An online T-shirt company with a business structure not conveying to the traditional rules of economics and therefore a succes. In the traditional markets, products fail because companies are only looking for a way to identify consumer needs. But people most of the time don't know what they want, let alone have the ability to communicate their needs to a company. Market research isn't the answer to the problem, since companies will always tend to look for the obvious solutions in the obvious markets. This is when open innovation kicks in. Using lead users/experts, broadcasting or developing communities, means you are doing the right things as well as doing things right. An important comment here is that using lead users is not a market research method. Lead users are the people that have a certain need today that the market has tomorrow. Lead users are not the current customers of the company. So people who want to fit an open innovation method into their traditional model will be disappointed.

Conclusion...open innovation isn't for everyone. You can always try to weigh the pros and cons and develop models to proof which approach is more profitable. But you just have to go for it, or not...but please choose.

1 comment:

Armaan Ali said...

There are probably always something around the home projects you have contemplated tackling. Work on the most visually obvious things in your home improvements.
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