In past recessions, the tried and proven strategy has been for organisations to shed all non-core businesses and hunker down to the job of making the core business more secure. Often in the process, entrepreneurial activities are starved and new product development is pruned back. The problem is, consumers have grown to expect continual improvements in nearly all markets. When a company stops developing new products, consumers begin to wonder and the brand begins to feel a little tired. That’s bad news for the long term.
How do we innovate faster and more cost effectively than in the past? One way is to use the internet to dramatically improve the efficiency and speed of the innovation process. The reality is, today innovation is managed by bureaucratic control freaks. It has taken about 50 years to build a “system” that fundamentally saps energy and slows innovation, reducing it to a series of “you can take the next step” management directives. It has failed to tap into a massive pool of innovation energy that exists in the consumer/user community.
The new feedback loop
The recent development of online “communities” has changed all that. Companies are now investing heavily in this area. Information presented by McKinsey late last year shows that the most advanced FMCG marketers in the US are investing in “communities” at a far faster rate than their laggard counterparts.
Given the benefits it is hardly surprising. The old model was one of “build the factory then tear it down” time and time again. Not surprisingly, it is slow and expensive. It was based on laying one golden egg every six months or so. The new communities’ model is more like a modern day production line; it produces many smaller innovation outputs continually. Once built, this innovation factory stays in place to be progressively refined and refocused based on incremental learning and the needs of the business. The cost per idea, per new product, per new advertising campaign and the speed of development is dramatically reduced.
The principle is to enrol interested consumers into an online “community” of like-minded people and facilitate their communal creativity to generate, guide and assess new ideas, products and advertising for a particular brand. Companies now have an opportunity to be closer with consumers more frequently than ever before.
The one-way conversations of the past have been turned on their heads and now two-way discussions lead the real collaboration between brands and their community members, resulting in co-creation. Companies and organisations now have access to the non-stop conversations about their products and brands. Have they been accessed before? Yes, but never continuously. The internet and social networking software means they are now accessible 24/7. In “communities” in the US, 37 percent of members contribute daily and 89 percent contribute monthly.
Opportunity and community
Communities generally number about 400 people, selected because they have a relationship with the company or brand and they have demonstrated an interest to contribute. The motive can be to make contribution to the brand, the status of being selected to guide future decision-making, access to a special relationship with management of the brand and getting early information about where the brand is going.
Companies such as American Express, Mercedes Benz, BMW, Dove, Coca Cola, and Virgin have all developed “communities” in different parts of the world and are intent on expanding their use.
They generally outsource the development, administration, facilitation and reporting, but brand executives are regularly online and in communication with the members.
If good management heading into a recession is seeking out and eliminating waste, then companies who do not have their own community might want to look at the efficiency of their new product development processes. They may well find they don’t have to mortgage their future by cutting out new product development but instead, re-engineer how they work in this space.
John Shanahan is the CEO of Colmar Brunton, Australia’s largest independent ad-hoc market research agency. www.cbr.com.au