Open innovation has found its way into companies’ innovation processes and is a widely used approach to spur collaborative innovation with consumers. A multitude of methods and tools have come into being, creating confusion about how to make the most out of users’ knowledge and creativity. This article provides innovation managers with insights into four popular open innovation practices at four German blue chips and contrasts the various approaches.
What innovation managers can learn from the “Dogtown Boys”
If you do not have any plans for this weekend, we would like to recommend a movie to you. “Dogtown Boys” – a movie featuring a perfect example of user innovation. It may help today’s innovation managers to understand this phenomenon and unleash the creative potential of users. The movie reflects the time at the end of the 1970s, when a bunch of skateboarders started a new style of skateboarding adopting techniques and moves from surfing and transferring them to the streets and empty concrete swimming pools in private residences. Interestingly, the movie represents a common development from user innovation to commercially exploited innovation. What these boys had started in a small repair shop developing skateboards for their personal use soon developed into a small business by selling to friends and acquaintances. With increasing publicity due to their success in skateboarding contests, companies became aware of the trend and started to mass-produce skateboards. In the meantime, skateboarding, a purely user-driven “business”, has become a $4.8 billion industry.
When user innovation turns corporate
In its original sense, the term user innovation describes the phenomenon where empowered users show innovative behavior to come up with solutions that meet their own needs. Prof. Eric von Hippel found that user innovation is a widespread phenomenon in many industries. For instance, 6.1% of consumers in the UK have already engaged in product innovation – often without any interference of a brand. Users not only innovate but also tend to freely reveal their ideas and solutions, for example, in online user communities. Suddenly, an idea is facing a potential, albeit limited, market. Based on the community members’ feedback, individuals sometimes realize the commercial potential of an idea and start their own small businesses becoming user entrepreneurs. This has especially been the case in the outdoor/sports industry such as kayaking or surfing equipment. As soon as the need reaches mainstream, commercial firms jump on the bandwagon. They try to efficiently mass-produce users’ product solutions relying on their powerful production capabilities which individual users apparently lack.
Co-creation tools unleash the potential of user innovation
The idea of users as a source of innovation has fascinated companies ever since the active, “prosuming” role of the user was detected. Instead of just watching out for user innovation, companies soon started to proactively address and engage users in innovation processes. A new form of creating products capitalizing the creative potential of users has emerged since then. The tools and methods applied by companies to empower users are known under the concepts of Open Innovation or Co-creation. Various co-creation methodologies have been introduced helping companies to capitalize on this promising source of innovation. The lead user method was one of the very early attempts to capitalize on the commercial potential of user innovation in an offline environment. With the rise of online-based tools, however, the methods have been adapted to the new medium as well. Today, so called co-creation enablers or intermediaries are living proof of the relevance of user innovation to corporate innovation efforts. They support companies in their attempt to jointly create new products with consumers. Thus, intermediaries bridge the gap between the phenomenon of user innovation and the commercial exploitation by firms via co-creation.
Framework for co-creation tools
A vast number of different co-creation methods and tools have been developed throughout the last decade to capitalize on user innovation. In the following, we intend to provide an overview of the most popular web-based co-creation tools to show how companies can make use of the creative capacity of users with different methods depending on their intended goals. We draw on cases from four different German blue chips exceeding 6 billion Euro in revenue (2010/2011): Beiersdorf (Nivea) as an example in the cosmetic industry, Evonik representing the chemical industry, Audi as a company from the automotive industry and Henkel as a typical FMCG firm.
For companies, two fundamental factors when collaborating with consumers are (1) the type of information they want to receive from users (outcome dimension) and (2) the type of integration they apply for co-creation (method dimension). Thus, we structure our overview of co-creation tools according to these two dimensions in order to provide guidelines for the right use of co-creation:
(1) Type of information: Need vs. solution information
When companies innovate, they need to tackle two major challenges. The first challenge is to find out what consumers want, i.e. gain need information. Second, companies have to find out how to realize a solution which answers that need, i.e. acquire solution information (Piller/Ihl 2009). In order to gain need and solution information, companies may also tap resources outside the company walls by involving users.
(2) Type of user integration: Passive vs. active integration of users
The methodologies used by companies to tap users as a source of innovation can be divided into passive and active. Active user integration methods directly address users and invite them to participate in the innovation task. Passive user integration approaches refrain from direct interaction with users. These methodologies rely on observing and listening to consumers in “natural” online discussions. Thus, passive methodologies may also be described as co-creation “light”.
The two dimensions can be arranged into a 2 by 2 table (see table 1) comprising the intended outcome (need vs. solution information) and the type of user integration (passive vs. active) applied. We have selected one case for each of the four categorizations showing how different co-creation methods can be used to achieve different outcomes.
Table 1: Outcome and method dimensions of co-creation tools
Type of Information (outcome dimension)
Type of Integration (method dimension)
Passive Integration of Users
|Tool: NetnographyMethod: Qualitative, passive analysis of consumer conversations in natural online environments
User type and activity:Highly-involved online community members expressing needs in conversations with fellow users
Outcome: Rich consumer insights and initial product solutions which build on the insights
Example case: Nivea (Cosmetics)
|Tool: Social Media Solution ScoutingMethod: Search for potential solutions by leading-edge users in the target market as well as analogue fields
User type and activity: Lead or expert users revealing their ideas or self-made solutions to a problem in online communities
Outcome: User solutions which may be adopted, enhanced and commercialized
Example case: Evonik (Chemicals)
Active Integration of Users
|Tool: Configuration ToolsMethod: Toolkits with “gamified” mechanisms enabling configuration of preferred products within a given solution space
User type and activity: Target group users applying a configuration tool to define their ideal product variables
Outcome: Data and insights for the definition of a new product
Example case: Audi (Automotive)
|Tool: Innovation ContestsMethod: Crowdsourcing platform staging a competition for the best ideas/solutions
User type and activity: Innovative users submitting their ideas and solutions, discussing and evaluating them
Outcome: User-generated, often visualized ideas and solutions
Example case: Henkel (FMCG)
Method 1: Netnography
“Consumer tribes” in a networked world
The advent of the internet offered users the possibility to not only exchange their opinions about various products with their family and friends but with numerous other people that they have no direct relationship with in the real world. No matter whether you are an espresso aficionado bringing coffee art to perfection, an IT geek in a Wii-controlled household, an aquarium enthusiast or a pet owner worried about the daily excursions of your cat, you can be sure there are at least a few hundred people around the world with the exact same interests. These “consumer tribes” gather in online communities, blogs and social media sites. Their discussions and evaluations make up a rich source of information about problems users face with products. Besides, these dialogues also allow a deep dive into the world of users, their usage habits, daily routines, and positive and negative emotions. The “father” of Netnography, Prof. Kozinets, described this accumulation of people with common interests in the internet as a culture of its own that has proved worthwhile to study and learn more about.
Unobtrusive consumer research in social media
The term “Netnography” was coined as a combination of the words “internet” and “ethnography”. Depending on the research goal, these communities can be analyzed by interacting with them – or the research can remain passive with the researcher only listening in on the conversation without actually influencing it. Thus, the methodology allows for unbiased and unaltered information. As community members are not aware that they are being observed, discussions are not influenced by the researcher in their content. Additionally they are not limited in their breadth or depth by the researcher’s questions. Additionally, anonymity on the internet creates an environment where users freely reveal their opinions about sensitive topics – information that might be difficult to obtain with traditional market research methods. The challenge for the researcher lies in handling this enormous amount of information and in identifying the underlying consumer insights, but the reward is a deep understanding for the consumers’ needs and wishes.
Case 1: Nivea Sunless Tanning
Online communities as sources of innovation
Nivea, a brand of Beiersdorf, wanted to explore business opportunities in the field of self-tanning using Netnography research. The identification of 437 relevant online communities in five different languages already revealed that sunless tanning is a big topic amongst users. However, different user types choose very different platforms for their discussions on self-tanning. Average users, for instance, exchange their experiences and opinions in regard to self-tanning in general communities such as beauty and lifestyle communities. Consumers highly-involved in self-tanning find like-minded enthusiasts in communities of interest exclusively set up for this topic. Communities such as www.tantalk.com or www.tantoday.com revealed deep insights into the lives of heavy users (see figure 1).
Community conversations about tanning disasters and “raccoon eyes”
One interesting topic intensively discussed was the different usage of tanning products depending on the season. In the winter season, for instance, users tend to experiment with new self-tanning products without having to worry about the outcome. In doing so, ‘tanning disasters’ can be more easily covered up and the products with the best results can be identified and then used during the summer. Besides users’ habits, the Netnography helped to gain insights into users’ language and specific terminologies. The phrase ‘racoon eyes’, for example, refers to the challenge of tanning the sensitive area around the eyes. Users frequently reported that self-tanning leaves white areas around the eyes which make them look like a raccoon. The term has become a commonly used expression in these communities.
What Nivea learned from bodybuilders
More surprisingly, however, self-tanning was also found to be an important topic in special interest communities. In particular, bodybuilders show extreme needs regarding a smooth application of self-tanning products as they need to achieve an immaculate tan for their competitions. Their demand for precise and smooth application could not be met by commercial products. So they started to improvise with products from analogue markets such as airbrush pistols used for painting cars. Based on the analysis, a landscape of needs, wishes and concerns was conceived to frame potential fields of innovation and initiate the innovation process.
Figure 1: Avatars of members of the IamTan online community
Method 2: Social Media Solution Scouting
The Internet – an incubator for innovation
Social media can be a valuable source for companies to learn about how consumers deal with weaknesses in products and develop solutions of their own. The advantage of the internet lies in its ability to connect like-minded people around the world. Thus, even highly scattered ‘consumer tribes’ revolving around a very specific interest may reach a considerable size when they connect globally. The internet is a stage and incubator for user innovation. With a potentially large audience, it is appealing to users to excel in problem solving or a certain discipline in order to get the positive resonance and recognition by hundreds and thousands of users. To consumers, it serves both as a way to increase their knowledge about the topic, and also as a way to proudly demonstrate one’s own solutions and ideas for improvement. This constellation induces an upward spiral of improvement leading to “crowd accelerated innovation”¹. In addition, the crowd may even get involved in the process of continuous trial-and-error improvements. The detailed conversations among expert users, heavy users and lead users in blogs and specialized communities bear enormous know-how which can be utilized by companies.
“Ready-made” solutions by users
In contrast to the netnographic analysis of consumer communities, these users have even greater product and experience knowledge. Therefore, they do not only communicate the needs and problems unanswered by existent products but start developing initial solutions by themselves. In communities, users often reveal their ideas and solution information in order to facilitate the collaborative process. Generally, two types of solution information can be found online. First, users ‘hack’ products available on the market and modify them according to their needs. Analyzing user modifications can help companies become aware of their ‘functional fixedness’ in how they address problems. Second, they also come up with sophisticated solutions from scratch and further improve them with fellow community members. The high level of product-related know-how is often due to the sheer number of manifold educational and professional backgrounds users have. Relevant solution information can also be retrieved from analogous fields which often provide radically different approaches to problem solving.
Case 2: Evonik Hydrogen Peroxide
User-generated applications for hydrogen peroxide
One of the largest producers of hydrogen peroxide, Evonik wanted to explore new markets and growth potentials. In order to facilitate thinking outside the box, solution scouting in social media was applied to unlock possible fields of applications for hydrogen peroxide. In contrast to the Netnography method focusing consumers’ needs and wants, social media solution scouting extends the research field also to the professional domain and technical solution information. Starting out with a broad search, the online research eventually uncovered 47 fields of application for hydrogen peroxide. These could be divided into four major topic clusters: bleaches, disinfection, fuel and energy as well as oxygen and free radicals.
Hydrogen peroxide for do-it-yourself helicopters and gold recovery
Despite the focus on more technical solution information by experts, social media turned out to be a rich source. Applications of hydrogen peroxide mentioned in social media range from power fuel for do-it-yourself helicopters and cleaning agents for fresh water supply systems in RVs to a formula for gold recovery. For instance, numerous online tutorials by users describe how valuable metals (e.g. gold, platinum or silver) can be effectively extracted from electronic waste using a compound of hydrochloric acid and three-percent hydrogen peroxides. Another field of application was uncovered in the domain of remodeling and redecoration. Users describe utilizing hydrogen peroxide as an agent to remove mildew stains on walls. It bears the advantage of being less aggressive and thus applicable to porous materials such as rugs and textile surfaces. Once coated on the wall, the hydrogen peroxide’s bleaching effect is activated by the ultraviolet radiation of the sunlight. Hence, the whiteness of the wall remains fresh and intense for a longer period of time. After the application fields had been identified, further research was conducted to substantiate the market potential of the application fields and identify possible partners and solution providers. Currently, three fields of application are further processed by internal project teams at Evonik.
Figure 2: Hydrogen peroxide as a cleaning agent for RVs
By Volker Bilgram & Constance Casper
About the authors
Volker Bilgram is Associated Researcher at the TIM Group of the RWTH Aachen University and Team Lead Innovation Research at HYVE, a Co-Creation and Open Innovation enabler based in Munich. He graduated in International Business Law at the University of Erlangen-Nuremberg with a focus on New Product Development and Open Innovation. He is currently doing research on the use of Co-Creation as an empowerment and branding tool for companies.
Constance Casper is Senior Project Manager at the HYVE Innovation Research GmbH. Her focus lies on Netnography and how this method can be used to gain deeper consumer understanding to facilitate innovation processes. She graduated in Consumer Science at the TU Munich with a specialization in open innovation and lead user research.
 Anderson, C. (2010): Crowd accelerated innovation, http://www.wired.com/magazine/2010/12/ff_tedvideos/.