This blog post is part of a series on successfully managing open innovation programs. In this series, I talk with experienced innovation managers to understand how they've built an open innovation capability in their organizations and how they strive to make this capability increasingly stronger.
Here, having an open innovation capability refers to having the ability to successfully combine internal knowledge and resources with external ones to create something new. According to the foundational work of professors Joe Tidd and John Bessant, this "newness" can refer to different things.
First, innovation can be the product, service, or process itself. For example, how a product/service is created and delivered. Second, innovation can lie in the positioning – i.e., changes in how a product or service is introduced. Third, a new paradigm can also constitute innovation. Any new ways of framing what a company does falls under this category.
Given its complexity – i.e., there are multiple stakeholders involved – managing an open innovation program is different from managing an internal innovation program in at least four ways, including:
- Bringing awareness to an internal program is vastly easier than advertising an external program to the outside world.
- The figurehead or sponsor of the program might need additional support. For example, in the case of supply chain open innovation, supply chain analysts can contribute by maintaining constant communications with key suppliers as the program unfolds.
- Trust might take longer to develop if participants are not familiar with the company's vision and mission.
- Ensuring the sustainability of the external program is even more difficult and requires constant showcasing of results.
All in all, constructing an effective open innovation program requires careful planning and orchestration. In this series, we will explore just how this orchestration takes place and the key lessons learned in the process.
The flavors of open innovation
There are many flavors of open innovation and three broad ways of getting it done. From our vantage point at HYPE, and considering the main external stakeholder that can be engaged, the big picture looks like:
Customer open innovation
Today, we dive into customer open innovation and explore why the consumer community can be an excellent open innovation partner – provided the right guidance and infrastructure are in place. To better understand this, I talked to Bernhard Vierbauch, Innovation Manager at Liebherr Appliances, and his colleague, Christina Terenkoff, International Market Research Manager, about how Liebherr engages its customer community with crowdsourcing.
The case for innovating with customers
Innovating with customers – also known as B2C open innovation or consumer open innovation – is increasingly common. In the toy industry, Mattel created MyMattelIdeas – a portal where anyone with a new toy idea can share their insights and contribute to new product development. In the car industry, India's Tata Motors uses crowdsourcing to let the public vote on future mobility solutions. In the hotel business, Marriott is pursuing "Meeting Innovation" through continuous engagement with customers and their needs.
Generally, companies might engage in customer open innovation to gain additional consumer insights, improve a customer's experience, create brand loyalty, or even engage in new product development. For customers, open innovation initiatives offer the possibility to come closer to the organization, understand its way of working, and share an enthusiasm for a topic. Customer open innovation becomes a way to maintain an ongoing dialogue with customers and also become truly customer-centric.
Further reading: We've covered customer-centricity before here on the blog. Learn more about companies' shift from products to customers here.
Liebherr's approach to customer innovation
The Liebherr Group is one of the world's largest manufacturers of construction machinery. With 16 companies throughout Germany, more than 46,000 employees help shape technological advances in many other industries. The Liebherr Group was founded in 1949 by Hans Liebherr and is still family-owned today, a fact that has always influenced the corporate culture and continues to provide a firm foundation for success. Liebherr stands for continuous innovation and successful idea management on a large scale, as illustrated by the following statement: "We work systematically to keep one step ahead."
The Domestic Appliances division is one of 11 divisions at the Liebherr Group. It is noted for its innovative ideas, modern design, and well-thought-out solutions for the best user convenience in cooling technologies. The Domestic Appliances division manufactures more than 3,000 products, including refrigerators and freezers, as well as wine cooling and wine-temperature control cabinets.
As the Domestic Appliances Division is naturally close to customers, the idea of starting a "Wine Experience" project emerged somewhat naturally. Energized by the possibility of using lessons from internal innovation campaigns to work with people outside of the company, the "Wine Experience" project focused on bringing the customer deep into the innovation conversation.
Creating a community and benefiting from interactions
The "Wine Experience" customer crowdsourcing project unfolded in four main steps.
1. Market research online community:
The first step was to create and engage an online market research community. Liebherr built this community around existing and potential customers. "We invited people who had bought a wine cabinet not only from Liebherr but also from other brands," said Christina Terenkoff. Over two months, Liebherr identified significant customer pain points associated with wine consumption and wine storage while using cabinets.
This groundwork focused on how customers related to Liebherr products as well as those from other brands. It was important for Liebherr to understand where potential improvements could be and how customers were using workarounds.
"We asked people to describe the problem," added Terenkoff. "We also asked, 'Does everyone have this problem or just a select few?' and 'How do you prevent the problem from reoccurring?'"
2. Internal idea campaigns:
During Step 2, the open innovation campaign team (the "innovation team") further refined the insights from Step 1 with the internal organization's help. Using a mix of qualitative (daily diary entries, discussions) and quantitative research methods (surveys), the market research team learned a great deal. They gained insights on their customers' habits, relationship to wine and wine cabinets, and the major problems faced with wine storage and cooling products.
Additionally, the team acquired better insights into the real pain points customers were facing. "We had insights from product management about our wine customers," said Terenkoff. "These assumptions were basically verified or falsified in the first phase." Ultimately, the team created a shortlist of pain points, identifying and prioritizing the most significant ones.
3. Crowdsourcing (external idea management):
The third step required the team to focus once again on adequately marketing the project to the outside world. For example, they needed to provide a dedicated landing page, easy mobile access to the campaigns, and a guest view so that potential participants could preview the content.
Community discussions with customers.
This step also required the involvement of more people and hence, tighter coordination among the different roles, including:
- The open innovation campaign team oversaw the interactions on the platform and made sure to involve the right people at the right times.
- Product managers provided background knowledge, comments on customer input, and were involved in the evaluation. "Product management commented on ideas and asked questions to narrow down some specific areas," said Vierbauch.
- Developers helped do rapid triage. "The developers gave feedback on ideas because we wanted to quickly understand if something was feasible or not," he continued. "We had ideas that sounded good but had physical limits. I think it was good that technicians then gave some in-depth feedback."
- Campaign sponsors ensured that the winning ideas could have a clear path to execution. "We had two sponsors," Vierbauch noted. "One was the product manager responsible for wine cabinets, and the second was from our e-business department focusing on digital business models accompanying our hardware."
4. Evaluation of results:
The evaluators were a mix of technicians that had previously worked/were still working on wine projects, and the evaluation itself took place in multiple rounds. In this way, Liebherr made sure no idea was lost or overlooked in the process.
First, evaluators looked at whether the company had already tried any of the collected ideas. Next, they looked at how technically feasible each idea was, involving product managers to understand the potential. The final criterion was the fit with Liebherr's other product lines in domestic appliances.
In terms of recruiting the evaluators, these were personally contacted based on their unique expertise. For example, Liebherr has a team specializing in water and ice solutions, so they are the experts in water properties.
A sample idea from Liebherr's campaign.
After eight weeks of ideation, the "Wine Experience" project had nearly 10,000 page-views, which resulted in 2,300 user sessions. Out of the 174 participants successfully interacting on the platform, 123 were entirely new to the organization. The project generated an astounding 139 product and digital service ideas, as well as 639 comments. The team used a technique called community graduation to promote the best ideas to "hot" status, and eventually shortlist the ideas.
Although customer open innovation was a new format, the results energized top management. Investing in a new way of working paid off!
Challenges and lessons learned
1. Finding the right participants is critical to success
Perhaps the most important lesson from the "Wine Experience Project" was that selecting the right participants is essential to high-quality idea generation. In Phase 1, the market research online community phase, the team recruited participants through a special registration form (a screener). A dedicated landing page containing all relevant project information. There was also constant communication with the crowd, ensuring that the right people contributed to the right conversations.
In Phase 2, the team used targeted advertising to expose the project to relevant participants. "Initially, we had trouble recruiting people," Vierbauch said. "It was not such a smooth process." One month into the project, the team offered guest access to give potential contributors a preview of what to expect. As the metrics showed, this proved a winning strategy.
2. Motivating the community can be tricky
Motivating stakeholders from outside the company's boundaries to participate in an open innovation initiative can be a challenge at first. Whereas employees have a vested interest in a company's success (they will typically identify with the company culture and want to contribute to collective growth), external stakeholders usually do not.
For the "Wine Experience Project," Liebherr made sure the community was always engaged by interacting with them in a playful manner (Phase 1) and making sure the crowd received feedback (Phases 2-4). For example, the innovation team asked the community to describe their relationship to wine coolers as though they were a person. This unusual approach has helped identify the key pain points.
Additionally, the open innovation team ensured that participants could have high-quality discussions with Liebherr product managers and developers on the platform. "There was just no place to talk about wine at such a [high-expertise] level," said Terenkoff, echoing the community member’s feedback. "They really enjoyed having this closed space of people who are qualified."
This way of working gave participating customers a unique glimpse of how new ideas are generated and transformed into new products and digital services. Finally, the best ideas (those receiving the most innovation points) also received prizes, including the chance to take ideas to implementation.
The role of a digital platform in open innovation is a particularly important one. A platform can help scale the ideation process and store the results safely. Additionally, it can help bridge the geographical divide and create transparency around the new product development process.
"You should not be scared to use technology to get in touch with your customers," said Vierbauch. "In the end, there is always this phase of setting up something (whether online or off). While using an unknown system can be daunting, ultimately, it's a really good solution to get (and stay) in touch. After using it for a while, I think it's not as difficult as some might expect it."
In Liebherr's experience, innovating with customers can bring a wealth of know-how (both ideas and best practices) into the organization. If engineered right, initiatives such as the "Wine Experience" customer crowdsourcing project can help companies achieve customer-centricity goals and effectively accelerate new product and service development.
For customers, engaging in open innovation can mean high-quality discussions on themes in which they are passionate. It also means understanding the intricacies of new product development (from a company's perspective), becoming part of a community of creative problem solvers, and even receiving prizes and recognition for their work.
Ready to run an open innovation campaign? Get started today!