Quiz  What does Eric Morris mean by “shoehorning”?  How does Ford use Big Data for marketing?  Name 3 things we can learn from Wikinomics according to Tapscott.  Von Hippel states that “Full-function communities in which users actually produce their innovations” can only exist under one condition. Which condition is that?

Mass Collaboration and Crowd-sourcing: How does the Internet help Innovate?

User Innovation Community  user-community in which information, assistance, and innovations are freely shared. Open source communities (Apache, Linux, Apple) Apple Innovation communities: InnoCentive, Kitesurfing Kitesurfing Open source hacker communities (Apple)Apple Brand communities (Coca Cola, Harley Davidson, LEGO, or Barbie)

Instant Messaging is a User Innovation  By 1987 MIT Lab for Computer Science had thousands of workstations online and difficulties diffusing system admin info rapidly. Developed “Zephyr” instant message system. MIT students begin to use for general instant messaging  By 1990, other universities adopted Zephyr-like programs First Commercial Product 9 years later  1996 Israeli firm Mirabilis put out product ICQ  1998 Mirabilis acquired by AOL

Ongoing evolution of Wi-Fi  User Activities starting around 2002 Users discover possibilities and begin free sharing of wireless networks Users Modify Wi-Fi antennas to greatly increase range Widespread implementation occurs – travelers find “hot spots” as they travel, can get Internet access, send from the highway etc. Traditional Supplier Responses? No one will want it no network security We think this might be service stealing… should stop.

Examples of Important Consumer Product Innovations

User and Manufacturer Innovations Differ  Users tend to develop Functionally Novel innovations: The first sports-nutrition bar The first scientific instrument of a new type  Manufacturers tend to develop Dimension of Merit Improvements: A better-tasting sports-nutrition bar Improvements to an existing type of scientific instrument

Consumer Innovation Communities (Prosumers)  Displacing manufacturers as product developers? What are marketers to do?  Motivation? What are marketers to do?  Taking Control over experience. What are marketers to do?

Effect of Democratized Innovation "When I say that innovation is being democratized, I mean that users of products and services—both firms and individual consumers—are increasingly able to innovate for themselves.” (von Hippel, 2005)

Effect of Democratized Innovation  User-centered innovation processes offer great advantages over the manufacturer- centric innovation.  Users that innovate can develop exactly what they want (no middle agent).  Individual users do not have to develop everything they need on their own.  The trend toward democratization of innovation applies to information products such as software and also to physical products.

Effect of Democratized Innovation  The multiple – the social  Superiority in design and functionality  Leverages the playful element of consumers  Changes attribution of product/service outcome “3M products based on lead users, are 8 times higher in sales than market research driven innovations.” (von Hippel, 2005)

Customers involvement in the product development process:  especially in idea generation, product conceptualization, prototyping  We know that online user communities allow a firm to leverage the creativity of its customers in all stages of the product development process.

But what kind of online user community should you have?  There are different types: Virtual customer community user content collaboration innovation community User development community user product collaboration innovation community.

Virtual customer community  Consumers as consultants  Composed of customers who have experience using your product.  Customers chat online and exchange personal experiences, disseminate news through bulletin boards, and comment on products, services, and even marketing activities (investment communities).  reputation management  product and service support  users’ hidden behaviors (understanding wants and needs).

User content collaboration innovation community  Customer as collaborator  a model of a volunteer community of collective creation through networks.  Members don’t have to be tech-savvy  Ex.: Wikis

User development community  Customer as collaborator  Allow users to customize your product/service  Allows for the development of supplementary products by others  Ex.: iPhone’s software community).

User product collaboration innovation community  Not much known about these groups yet.  Difficult to say how this community format may affect company.  Mozilla, Linux, Kitesurfing

What community is possible and useful for  Paper manufacturer  Home improvement retailer  Mid-Range Hotel chain  One of your own choosing

Fournier on brand community  Business strategy  Exists to serve the people in it  Strong community = strong brand  Embrace conflict  Mass participation (not opinion leaders)  Online networks just one tool, not a community strategy  If done well, it can’t be controlled