By Rodney Lim
(Published in ‘Campus & Beyond’, a weekly column written by Swinburne academics in the Borneo Post newspaper)
Customer communities have spread like wildfire across the Internet. People are congregating on forums, blogs and social networks of all sorts to share their thoughts, give feedback, post photos and other content. They talk about their hobbies and activities, review products they consume, and organize themselves into customer or user communities that revolve around things that matter deeply to them.
Many companies have experimented with creative ways to integrate user communities into their businesses. They are finding new opportunities in these communities, and reaping great benefits, especially in terms of enhanced innovative capabilities and generating more loyal customers.
In her book, ‘Outside Innovation’, Patricia Seybold calls for companies to embrace these customer communities. She gives a compelling argument for the opening up of an organization’s innovative processes, and shows how companies can collaborate with passionate customers to co-design their products and services.
A successful collaboration venture should begin with a company making genuine efforts to appreciate what customers care about deeply, their problems and the results they want to accomplish. They need to identify customer communities that are relevant to them, and to embed themselves amongst these communities to gain profound insights about their customers.
For many companies, participating in such communities has yielded valuable customer-level perspectives that have allowed them to make changes to the way they run their businesses, and to re-engineer their productive processes to be come more customer-centric.
One way to develop an outside-in innovation is to invite lead customers or lead users- enthusiastic, smart and visionary people who are influential in their own circles- to help create products and services that accomplish the customers’ desired outcomes.
One great example of a well-known company that has successfully leveraged lead users and online communities to co-create products is Lego, the popular toy building brick company. Lego paid close attention to its huge online fan following. It identified prominent lead users and incorporated them into its business, including Tufts University educators who sought to infuse Lego bricks with robotics software for educational use. This collaboration has enabled Lego to find new markets and revolutionized usage of its products beyond the kiddy toy crowd. Lego has also established its own community called LUGNET and is listening to and working closely with its most ardent fans to discover product ideas. For many companies like this, lead customers hold the key to their ability to continually innovate.
Companies also need to realize that most customer communities are really fan sites. Too often companies tend to be either hesitant about them or even shun them altogether for various reasons. Sure, they may write about a nasty product or service experience in detail for the entire Web to see, or they may hack your codes or steal your logo and paste it on their own blogs, but really, they must care enough to do it. In fact, in many user communities, people are helping each other by providing advice, trouble-shooting and essentially performing many of the vital customer service functions that companies are supposed to fulfil. They modify, customize and extend products not because they are malicious, but because standard off-the-shelf offerings do not match their requirements. Thus, rather than opposing them, it makes more sense to work with them to reach their goals.
This sort of user community activism is the basis of the open source movement, which has proven a powerful strategy for many players in the post-dotcom era. Netscape, left for dead after the browser war, has been reincarnated as an open source software in Mozilla to become a formidable opponent to the almighty Microsoft. The popular Wikipedia website, with its 12 million articles in over 220 languages is a community-created, consensus-based encyclopaedia that has revolutionized the way information is aggregated.
Another collaboration technique with customer communities is to provide design tools to empower customers to create their own solutions. Here, the company farms out the product design process to customers by equipping them with the necessary tools to configure their own designs.
Companies like Dell and Nike, have built mass customization models via the digital tools they employ online to enable customers configure their own products. At some Mattell stores, kids can custom-design their own Hot Wheels toy cars in in-store computer kiosks and collect the assembled product at a counter. The Lego Factory feature on its website allows Lego lovers to download software kits that can be used to create customized Lego designs which can be ordered with all the necessary pieces to build them.
Similarly, a growing number of Web-based companies like Threadless (http://www.threadless.com/) and CafePress (http://www.cafepress.com/cp/customize/) are taking advantage of online tools to let customers design their own t-shirts. Unique business models are emerging amongst companies like these which build online customer communities around their brands so that these can be leveraged to develop products for their own consumption.
Empowering customer co-design products has many benefits. It shifts a very tough part of the product development process to the very people who know exactly what is needed, so design failures are minimized.
It reduces costs and improves relationships with high value customers (carmakers like BMW and Volvo which have advanced built-to-order manufacturing systems, have reported that customers have shown a willingness to spend more, not less, when given options to configure their own products on the Internet).
Collaboration with online customer communities is fast becoming a necessary proposition because customers are no longer just shoppers and surfers. They want more say in the products and services they consume. They are essentially knowledgeable and capable, and are more willing than ever to pursue opportunities and activities to satisfy their desired outcomes.
The time has indeed come for companies to acknowledge that the customer is really in charge.
Rodney Lim is a lecturer with the School of Business and Enterprise at Swinburne University of Technology Sarawak Campus. He can be contacted at firstname.lastname@example.org.