COMMUNITY 2.0-Community-Based Innovation

Topic: Take a look at how companies successfully leverage internal and external communities to improve all their innovation processes.

This is a panel discussion with the following players:

• Gwen Ishmail, Decision Analyst
• Sean Belka, SVP, Fidelity Investments (one of my "Visionaries")
• Richard Gotham, Boston Celtics
• Jake McKee, Lead Samurai

(I'm not sure why I wasn't invited to this panel--I was assigned to moderate the customer self-service panel tomorrow.. )

Gwen Ishmael, Decision Analyst--have been working with communities

Sean Belka--We try to help people achieve their big life goals. We decided to build a purpose-built community. We do consumer research, customer listening, develop prototypes, conceptual and functional. We can engage hundreds of people that way. About 1 year and a half ago, we created Fidelity Labs to invite customers to give us feedback, what we could do better and take suggestions and see what was missing. By the time it got where we put things into production, they had been thru 5 stages before they go into production. In retirement planning.. There's only a certain set of folks who really want to engage with us. We've run customer sessions in Boston and we have a lead user panel, but   this makes it easier for us to find the folks who really care passionately about retirement planning.

Jake McKee, was responsible for LEGO group--the adult fan community. It was difficult in the beginning to convince the employees in the company to do this.. They didn't think that the 5% of consumers--adult fans were worth investing in. Having adult fans--like 5 guys who put together a model railroad layout and take it to the mall--and show it to 20,000 customers. One of my favorite projects was LEGO Mindstorms, four adult fans sitting side by side with the product developers. My role was to figure out that both side of the equation don't kill each other. How do we make sure that fans stay enthused. They had no idea that they'd be profiled in Wired magazine. Those 4 people were submitting wiring diagrams, product code, developing marketing efforts. We had 100 slots and 6,000 applicants for  the Mindstorms.

Rich- Boston Celtics. Before I joined the Celtics, I was with an Internet search engine--Lycos. It built market cap for Lycos, but I got into a sports world where community has a whole new world. We have a global community of fans who give us more feedback than we could manage. Most teams don't talk about ticket sales as product development, but we did. Allows us to create products and experiences that meet their needs. I've worked in businesses where the biggest challenge is to get people to tell you what they want.  When we send out a survey, we get a 50% open rate. People want to tell us what they think about the team, finding a parking spot, a trade or a draft pick we made. We've spent the last 4 years building out an infrastructure that allows us with analytics that let us tailor promotions to their needs (go out on Friday night for dinner and a game, business entertainer, family with kids--we'll book restaurant reservations, sit you courtside, etc.).. We've created an analytical infrastructure that lets us put it to work. No one talks about it, but community is what it's all about.

How do you decide what to listen to and what it means for you?

Rich: Custoemrs offer it up.. fans and media. Most of our media are major fans of the team. We get feedback from everywhere and we're a very public business. You can see our win/loss record and you can see our games every night. We have to be careful not to let public opinion run our business. We get an 18-game losing streak. Injury streak. We're getting a lot of pressure to trade some of our young talented players. We made a decision to grow our team organically. Draft good guys and grow the team organically. That was this year's instance. There's something every year, every month, every day. We keep our business goals in mind. It's emotional. People who buy sports teams are bought for the passion, not the money (although it's a good tax break). I'm going to take the heat and absorb the pain. But we need to be a good listening organization. Arrogance doesn't work.

Sean: Customer listening. Info can come from a range of places. Employees can report customer feedback, informal anecdotal, since our focus is on what's right for the customer and help them be successful. We welcome their input, but we know what our mission is.

Jake: It's not easy to listen. It's not easy to react. When you're building community, you're building relationships. But that's still hard. At LEGO, I wanted to be sure that I was listening. I got tons of email from customers. There was enough communications coming at me, it was easy to sort them out. There were a few strong vocal voices, but they didn't necessarily represent the majority.

What do you do to measure whether you're being successful.

Richard: ultimately it's ticket sales and television. If we're doing a good job, we see it. We have biz metrics in addition to the wins and losses. The real trick for us is creating a recession proof business. When the team wins are down, we need to keep our tix sales and TV revenues up.

Sean: most people come to us because they want to get something done. They want to educate their kids, they want to retire. How good are we at helping our customers reach their goals. Inevitably we'll be successful if customers can send their kids to college and can retire with peace of mind. How do we think about a 20/30 year horizon of helping them over that period of time. In our case, the goal is 10/20/30 years out.. so it's setting them up for that future.

Jake: LEGO has a strong system of beliefs. Since 1932 has wrapped itself around the core values. It was a lot easier for us to look at the overall situation. We didn't use metrics. We used stories. Everytime I talked to anyone, I got their stories. We'd collect them. We'd seed topics every week, and see what they were saying. It was really easy for people to read comments that were representative of a quarter--stories. The difficulty of measuring were the active and the sleepers. We had story after story after story, people who grew up with LEGO who were coming back.. every 6 months we'd ask people how much people were spending each month. If it was 1500 percent more than the average kid, then we knew..

Sean: we have active traders who love to invest. It's part of their life. There are other people who  want to be lead users, we want to work with them. But we also focus on simplification.. Simple Start IRA.. when do you want to retire, we'll tell you what to do.. you don't even have to pick a fund. We've learned that the road to success is not always about more features and functions. Simplification--how do I make it easy or less work.

How do you reward your community members for participating?
Sean: I think some people just want to participate. We have lead user panels where we incentivize them, and other things where people want to get some insights into how we work. Active traders want to be recognized.

Jake: It really comes down to ego--they like that you value their opinion. After a while with free dinners, after a while they may feel they're working for you. My mantra: everyone goes home happy.

One Innovation that your community has come forward with.. what are good, what are not.

Jake: We came up with a 3000-piece starter set for $300 based on customer input. The employees thought this would never fly. There was so much discussion with the leadership of the community and other people you don't hear from often. It was designed to really make it easy for them to build the Star Wars.. we built 10,000--saw how they went, made more.

Rich: we don't have an R&D lab. We survey 150 fans after each game night. You learn more and more ab out what they care about. The result of the game was not a primary driver for whether or not they want to come back. If you can give them a fun night out, it's the best thing you can do. We invested $15 Million in arena renovations.. hi def scoreboard. The good experience they had makes them want to come back again. Game entertainment and presentation is really important to people. That wasn't anything we had paid attention to. In the last 3 years, we've focused on overall game experience. We've sold out twice as many games as we did last year with an 18-game winning streak. Our attendance up.

Sean: Innovation--Define innovation as anything that helps customers. Google Mash ups..to find the investor center. I have the address but I can't find the building. For customers who just want a solution, we've developed lifecycle fund strategies.. make them successful at that stage without requiring them to do anything.

Rich--the online community hasn't been around very long. Bill Simmons is a columnist and a sports fan. We have an open dialogue with Bill. That's seeding the community. That builds talk and chatter and blogs.

Jake--when I started at LEGO in 2000, the largest forum/fan group was 200 people. Do we want to put in place our own efforts or support them in doing their own thing. We supported them. We made sure that we could do everything we could do acknowledge them. This was their hobby. We tried to invest in things that mattered to them. CEO show up at a fan meeting. 3 people in a basement, 10 people in a restaurant, 50 people in a club. Buy them a beer. Simplicity of building human relationships.

Sean--our company is over 60 years old. Online for us gave us an opportunity to scale it. I look at onlin as a way to make it easier for customers to give us feedback.