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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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    • 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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    « New York's Metropolitan Museum's Customer Contributions | Main | Business Exchange: Good Example of Crowd Sourcing and Social Networking »

    April 27, 2009

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    Comments

    Patty Seybold

    Wow! Great post, Scott! (Scott is also one of my "pioneers"...I love the Apple analogy and wouldn't have gotten it, if you hadn't pointed it out.. I wonder if any of the "mainstream media" will figure this out??

    Scott Jordan

    An angle missing from most commentary on Oracle's Sun acquisition is to note the many fresh parallels of the combined company to the business-model of a certain other well-known enterprise. See if you can figure out who I'm talking about.

    Consider: In a commodity market, this company has distinguished itself through vertical integration that includes both proprietary in-house and open-source software, some superb applications, innovation in the field of cloud resources, a pan-format OS architecture, extensive and risk-taking hardware engineering and manufacturing--even chip design with last year's still-mysterious acquisition of PA Semi--and arguably the finest design smarts in each niche it has chosen to address.

    It's Apple, of course. The corresponding elements in the Sun/Oracle combination are obvious when you think about it. The main element that doesn't quite match up is on the sales front, where Apple has both third-party and online dealers and its own retail network (itself a differentiating reason-to-buy for its customers, as I've found recently when I needed help with my son's 4 1/2-year-old PowerBook and my own Macbook Pro. How refreshing to be able to talk face-to-face with someone possessing a clue). Meanwhile Oracle has its global network of sales professionals and consultants, including the Siebel organization.

    The result in Apple's case is an artful melange where the whole is greater than the sum of the parts. In particular, in a field awash with commodity products and with its competitors' support costs ballooned by the obligation to support all that diversity, Apple's strategy has been to differentiate by squeezing-out the best possible performance and user experience while containing support costs (what I call "The Great Unfunded Liability") through control over a limited number of components and configurations. Intriguingly, for the broad class of commodity peripherals like printers, Apple seems to rely on the open-source community for drivers and other resources.

    (There's one other business-model element that doesn't match up: Oracle now owns a leading virtualization player. What to do with that, Larry? ...How about making your next acquisition a BIOS company? Owning the preboot space would be a marvelous place to be for your newly re-vectored software/hardware company and would monetize what is currently a free/open-source endeavor.)

    It is worth noting that Larry Ellison is a very close friend of Steve Jobs, and they've spent some quality time together in recent weeks during Jobs' recuperation. Perhaps Jobs gave encouragement for Ellison's grab of Sun. The resulting corporate combination certainly looks like something Jobs himself might have crafted.

    One could point to IBM as another place to look for similar parallels, or HP, but there's a certain flashiness to this combination that separates it from those worthies. Frankly, the world of big-iron IT hardware and software could use a little flash and sizzle... and Apple-class innovation. Lack of software development tools' support for multicore architectures, for example, is a frequent lament among IT pros, despite nearly a quarter-century's example of how to do it provided by the personal-computer world in the form of LabVIEW. Which was, let's remember, first developed on and for the Mac.

    Unlike some of my colleagues and friends, I'm bullish on the new Oracle.

    Patty Seybold

    From Peter Horne in Sydney--One of Patty's Pioneers:

    I was quite surprised at the negative response to the Oracle takeover of Sun. I thought it was business as usual to some degree - the strong taking over the weak.
    However the take-over does raise some far reaching questions for the commercial/open source debate. Has Oracle through this acquisition, debunked the notion that commercial Co's could be both commercial and altruistic in terms of their support of open source? What Oracle has done is snatch a fully integrated stack, much of it open source, back in to the aggressive take no prisoners commercial sphere. Those that were relying on these tools to stay in friendly commercial hands have had a wake up call and are now worried about a risk that was always there.

    I think that "true", hard nosed commercialism, and open source are both winners. A strong commercial Co, has proven its strength over a weaker one, and open source may be re-invigorated with a new raison detre. The true open source advocates, actually the FSF, never trusted the commercial side anyway and will feel vindicated. Those who were kidding themselves in the middle - either that open source was commercial, or commercial Cos could be big in open source, are vulnerable in the middle ground. That includes IBM.
    Perhaps this deal demonstrates the boundaries. Open source develops components, the commercial world integrates. The reason for this is that open source can't integrate as you need a business problem to define the integration problem, commercial software Cos can't compete as single problem specialists because once there is enough interest then a dominant open source alternative emerges. Sun tried to be a component specialist, some open source, and it didn't work. It will be interesting to see if Oracle can make the fully integrated model work.

    Regardless, I think the deal is a defining moment and gives the IT world some intrigue and makes it interesting again.

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