Outside Innovation: Great Paper by Frank Piller and Susumu Ogawa on Threadless

Description

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.

December 22, 2005

Great Paper by Frank Piller and Susumu Ogawa on Threadless

Frank Piller, MIT Sloan School Visiting Professor from TUM Business School in Munich, sent me an enthusiastic welcome and a link to a recent paper that I recommend highly. You can find it at http://userinnovation.mit.edu/papers.php . Scroll down to his paper Collective Customer Commitment: Turning market research expenditures into sales, published in October, 2005. The two authors describe the customer involvement and business models at Threadless and Muji. Here's the final version published in the Sloan Review in February, 2006. MIT Sloan Review: Reducing the Risks of New Product Development .

I had heard of Threadless.com from a colleague who frequents their site all the time. It's a great example of customers as creators. Customers design T-Shirts. Other customers vote on their favorites and pre-commit to purchase them. When enough votes have been received, the shirt is manufactured and sold. The designer gets a $1,000 prize.

Here are some examples of winning T-Shirt designs at Threadless :

The first one is called:
King's Cobra,
and is designed by Ron Lewis.

The second one is called:
The Family Portrait had to be Rescheduled
and is designed by Kevin Ryan

Kind of whets the appetite, doesn't it?

Muji is a specialty retailer in Japan. Muji's customers also submit product designs and vote on new products. They also pre-order. The results have been some blockbuster products--"The most successful of these products is a kind of beanbag sofa chair which generated sales of 1,344 million Yen in 2004 (compared to 24 million of average sales in this category.)" [Ogawa and Piller, Collective Customer Commitment: Turning market research expenditure into Sales--an MIT Sloan School Working Paper, October 2005]

Frank also referenced the vibrant work of Eric von Hippel and his colleagues at MIT. I was familiar with Eric's work. His book, Democratizing Innovation,
was one of the first I read as I plunged into my own research on Customer-Led Innovation. Eric's research on User Innovation is the seminal work in the field. The User Innovation Lab at MIT is a hotbed of activity in this field.

Here's my review of Eric's book, Patricia Seybold's Review

Posted by Patty Seybold on December 22, 2005 in Customer Innovation, Customer Roles in Innovation | Permalink

Comments

Exelent info

Thanks for posting!

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