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  • What is Outside Innovation?
    It’s when customers lead the design of your business processes, products, services, and business models. It’s when customers roll up their sleeves to co-design their products and your business. It’s when customers attract other customers to build a vital customer-centric ecosystem around your products and services. The good news is that customer-led innovation is one of the most predictably successful innovation processes. The bad news is that many managers and executives don’t yet believe in it. Today, that’s their loss. Ultimately, it may be their downfall.

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      Observations

      • LEAD USERS
        Eric von Hippel coined the term "lead users" to describe a group of both customers and non-customers who are passionate about getting certain things accomplished. They may not know or care about the products or services you offer. But they do care about their project or need. Lead users have already explored innovative ways to get things done. They're usually willing to share their approaches with others.
      • LEAD CUSTOMERS
        I use the term "lead customers" to describe the small percentage of your current customers who are truly innovative. These may not be your most vocal customers, your most profitable customers, or your largest customers. But they are the customers who care deeply about the way in which your products or services could help them achieve something they care about.
      • LEAD CUSTOMERS AND LEAD USERS
        We’ve spent the last 25 years identifying, interviewing, selecting, and grouping customers together to participate in our Customer Scenario® Mapping sessions. Over the years, we’ve learned how to identify the people who will contribute the most to a customer co-design session. These are the same kinds of people you should be recruiting when you set out to harness customer-led innovation.
      • HOW DO YOU WIN IN INNOVATION?
        You no longer win by having the smartest engineers and scientists; you win by having the smartest customers!
      • CUSTOMER CO-DESIGN
        In more than 25 years of business strategy consulting, we’ve found that customer co-design is a woefully under-used capability.
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      « WHAT’S BEYOND WEB 2.0 AND ENTERPRISE 2.0? BIZ 3.0! | Main | Customer Co-Design In Action »

      April 19, 2007

      THE WEB 2.0 WAVE--WHY IT’S NOT A FAD

      This week, I attended the Web 2.0 Expo in San Francisco. It was a great conference--meaty sessions, thousands of smart people, great logistics--all the things that matter were well-orchestrated and unobtrusive. I continue to be impressed by the O’Reilly organization and its many partners (in this case, CMP). “Spreading the Knowledge of Innovators” is the O’Reilly motto. If you want to know where lead customers are taking us--this is the place to be.

      The Web 2.0 Culture: Loosely-Coupled Innovation

      The Web 2.0 Culture isn’t a youth culture. There weren’t a lot of kids at this conference (although admission to the keynotes and exhibits was free or $100). In fact, most of the Web 2.0 Expo attendees have kids. The 10,000 participants ranged in age from mid-20s through 60-somethings, definitely skewed towards 30-somethings. There were seriously optimistic business/technology strategists (like me), corporate IT renegades, seasoned architects, professional developers, marketing and design professionals, lots of entrepreneurs--some on their second and third ventures--and venture capitalists, as well as plenty of professional bloggers and reporters.

      The mood was optimistic. There are no evil empires that can stop innovation. Anything is possible. It’s a culture of DIY, roll your own, solve your own problems, invent a new toolset, secure in the knowledge that:

      • Whatever you invent will plug into and interoperate with everyone else’s innovations
      • The simplest approaches are the most elegant and valuable
      • It doesn’t really matter if someone else has done something similar before
      • Esthetics count--clean, crisp graphical UIs are in

      It’s a give-back culture. Interestingly enough, most of the givers are over 40. Most of the smart doers are in their 20s and 30s. What I witnessed was a massive transfusion of knowledge from older geeks (business and technology geeks) to a savvy and receptive younger crowd. Arrogance was amazingly absent.

      So, one reason why Web 2.0 is not a fad that will go away or that you can ignore like just another technology buzzword is that it IS a cultural phenomenon. You either get it or you don’t. If you don’t, you’re toast. Ignoring the Web 2.0 wave would be like ignoring the Internet. You can pretend it doesn’t matter, but you’re going to get wet.

      Web 2.0 Technologies: Distributed Computing and SOA that are Accessible and Sexy

      What I find exciting about this Web 2.0 wave of accessible technologies (rich Internet applications, XML, RSS, SOAP, REST, open source, etc.) is that the patterns that have worked so well for 20 years in good systems and application architecture--in distributed object computing and service-oriented architecture--are now showing up as a set of lightweight, accessible, and graphically-appealing tools that geeks and non-geeks can use to create loosely-coupled modular intelligent objects.

      Widgets, gadgets, and badges are the simplest examples of this phenomenon. You simply wrap up a set of application functionality (a map, a calendar, a news feed) in a graphical wrapper, give it some behaviors--e.g., email this to a friend, tag this, copy and paste--and set it loose in cyberspace. Other people and applications can consume it as it is (read the news feed, look at the map) or they can interact with it (enter coordinates, click on an article), or they can connect it to any other object that has data, methods, or properties in common (by creating mash ups).

      Your gadget doesn’t “live” anywhere, although it’s probably tethered to a back-end database or application code on a server somewhere. Gadgets and widgets live anywhere and everywhere--all at once. They clone themselves, they propagate. They can migrate onto mobile phones, blogs, and dashboards. They’re good embodiments of user-centric distributed computing. Not, “if we build it, they will come”; but, “If we build it, they’ll use it and take it with them, and combine it with whatever else they’re doing.”

      In a lightweight, but legitimate way, much of the action in Web 2.0 is the culmination and instantiation of so much that we older geeks have held dear for so long:

      • Our world is comprised of objects, events, and rules
      • Each object is intelligent, self-contained, and well-behaved
      • You can request services from objects and get consistent results
      • You can assemble new applications by combining and recombining objects and services
      • You can do this assembly on the fly, in memory, on the Net, in the ether--there is no “there” there
      • You can wrap any combination of information and functionality into an intelligent object
      • Anyone’s objects can interact with anyone else’s objects
      • Anyone’s service can call anyone else’s service
      • Events can trigger service requests
      • Rules can govern workflows and behaviors
      • There is no MASTER PLAN, there is only good, simple, adaptive architecture

      Web 2.0/Enterprise 2.0 Mission: Empower Customers and Employees

      The third dimension of Web 2.0 that is probably the best understood is the fact that end-user empowerment is the end goal. In Web 2.0, we’re empowering consumers/customers/stakeholders who use the public Web. In Enterprise 2.0, we’re empowering employees by giving them the same tools and facilities they enjoy in the public Web, but asking them to contribute, share, and create behind our firewall for the good of our shared company mission.

      In Web 1.0, putting a user interface--a Web browser--on the Internet transformed a set of network computers and file stores into a rich and growing bazaar with all the world’s goods and services at your fingertips. In Web 2.0, giving end users the tools to create and publish information, to create and deploy applications, and to mix and match information and applications to create new inventions has provided a platform for innovation. People are inventing new businesses, new business models, new games, new tools, and forming new communities. These new communities don’t just discuss topics of interest; they build things. They solve problems. They invent together.

      Empower Customers--Then Align around Their Outcomes

      Web 2.0 is here to stay. There will probably be a Web 3.0. It may already be here. I think we can safely sow the seeds of many of our dreams in the Web 2.0 culture and use its technologies to grow and harvest them. But there’s a lot more to our world and to our businesses than the Web/Internet reality. We can harness the Internet to make it easier for us to design, sell, ship, and service our products, but we still have people to lead and inspire, jobs to do, results to achieve, work that we all need to get done in order to contribute value.

      Getting our organizations aligned to deliver a fantastic customer experience and to help customers achieve their outcomes is the hard work that’s still ahead for many of us. So, this week, I took the first stab at thinking about how to extend what we’re doing in the Web 2.0 world to move beyond a customer-empowered Web strategy (Web 2.0) to a customer-outcome-driven business strategy (Biz 3.0). I’d love to get your reactions and thoughts!

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