HBS Managing Innovation Winter 2012 Course

2Mar/1219

IN THE LAND OF OPEN (CROWD) SOURCE INNOVATION, THE ONE-EYED MAN IS KING

It’s fair to say that in a technologically hyper-connected world, access to information has never been so “democratic”. That in of itself is great news or at least seems to be, only until firms realize that more information in more hands can be just more competition. Yup, in a services economy, information is gold. Not surprisingly, currently it’s services oriented firms that seem to be looking for a little “extra edge” that differentiates them from others that… you guessed it! have essentially the same information. But don’t let this disappoint you… it isn’t as if we’re back to the good old business school question on “how do firms differentiate” (or are we?).

There’s no denying that tapping the broader public presents firms with unlimited possibilities to solve different questions. But not only the talent source is virtually unlimited, this new model comes with fantastic advantages such as multidisciplinary, information sharing, alternative frames to work with, constant debate and diversity of thought, amongst others. But as if all of these weren’t enough, open source innovation is a dream come true for costs structures. It’s almost too good to be true, right? Well, not so fast.

 In words of Sandy Speicher from IDEO “the idea is the easy part of innovation. The actual implementation… takes years… The speed at which we can ideate is definitely not the speed at which we can manifest”. I thought this was a very revealing quote taken from the OpenIDEO case that also resonated well with the problems MRF faced as it went to the big pharmaceutical companies to develop the targets they had identified. It is my opinion that at this point of the open source revolution, execution poses the greater challenge if we are to believe that this new paradigm will allow the market to capture more value. Debatable, I know, but bare with me.

Control of the community was a theme that though present throughout the course we didn’t spend much time discussing class. However, it is control of the community what really drives the model. We saw this with InnoCentive as it is them who frame the problem, set the deadlines and provide the forum. We saw it in Threadless as it is them who eventually make the final decision on which designs to print. And in my view, we saw OpenIDEO exercise this prerogative the most, as the interaction with the community was the highest throughout their 8-step process. So far so good. But if we go back to competition in a services economy, doesn’t control mean an opportunity to profit? I believe it does and BTW, I believe that’s the genius of this business model. By introducing open source innovation, firms are actually “learning” to manipulate (read: control) a new process that differentiates them from competition while simultaneously tapping talent (in vast numbers) at very little cost. A home run!

Going forward, I have very little doubt that the open source revolution will extend to the execution side of the equation at which point society at large will capture more value from this fascinating model. Most likely however, by the time this happens, firms would have ideated yet another new business model, and that’s the real power of innovation. No wonder it pays to be the one-eyed king in the “perpetual beta” land.

 

Posted by JeronimoSilva

Comments (19) Trackbacks (0)
  1. Very interesting your article, this topic is fascinating Thanks

    • I absolutely agree with you. Crowd sourcing is a very interesting topic and it will be talked about a lot in the coming years. We all should be active part of the debate. Thanks for reading!

  2. Is there a reason that you focus only on services? What differentiates services and products that would make these topics more relevant for a services business? Since you discuss implementation as a large challenge, are there open innovation examples you know that focus on implementation? Are some of the Innocentive, or other innovation challenges, execution focused?

    • Hi Liz, thanks for reading and for your questions. The reason I focused in services is because I see the model to be more profitable in that segment. It is easy to imagine a consulting firm or any other services firm tapping a large audience in search of ideas to solve a problem and from there formulate a solution or strategy. This however, has not taken care of the implementation side. In that sense, there are great economic benefits from tapping a large audience with diverse skill sets at a very low cost to formulate only ideas, not full solutions. This is not to say that there are no successful examples at the implementation side but I’d say there are fewer.
      Innocentive can be regarded as execution focus. However, once the winner idea is sent back to the company, the internal structure of that company could stop the idea from being implemented. If that’s the case, Innocentive would have provided the service of suggesting an solution to a problem but cannot do much to see the idea implemented.
      Perhaps, in order for the model to be execution based it would require for the company directly reaching out to the public instead of going through a third party.
      I would love to hear your comments on this regard. Again, thanks for reading!

  3. I’ve been reading up more on crowd sourcing lately and it does seem that it has many advantages. I think we will be seeing it more and more.

  4. Thanks for reading and for the enthusiasm!

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  8. Hey, you used to write fantastic, but the last several posts have been kinda boring… I miss your great writings. Past several posts are just a little out of track! come on!”The smaller the understanding of the situation, the more pretentious the form of expression.” by John Romano.

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  11. Open source is really the true future. I hope more educational systems start exploring such ventures. I’d be happy to take such a class if I were still in school! Good luck!

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  13. good one silva. Very good article about crowd sourcing. I am really impressed. thanks..

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