Beware of customers as the main source of innovation

By Christian Kelley

I was catching up with my social production feeds in Google Reader last night and ran across a report from Grant Thornton International from September (via Mass Customization and Open Innovation). I usually see these things pretty quickly after they come out, so not sure how this one slipped passed me for so long.

I dove right in (its a quick read and worth the time) and was surprised by the magnitude if not necessarily the direction of some of the responses in the survey the report was based on. Specifically the fact that most companies believe that the overall number one source of the best innovative ideas is customers, followed by heads of business units and general employees. In AP, nearly 50% of companies surveyed felt that customers topped the list. Open innovation is certainly not a new concept, but most discussions center on getting ideas from an extended supply chain or partners, not from end user customers them selves. When companies started to look beyond their four walls for ideas to their partner networks it was a somewhat natural evolution of what they had already been doing. The move to engaging customers in the open innovation process is potentially revolutionary.

The most obvious revolutionary aspect is the number of connections and relationships that will have to be maintained. When practicing open innovation with the supply chain, intellectual property and collaboration have to be maintained with a handful of entities that likely already have tools and established connections with the lead firm. When practicing it with customers, the number of connections increases exponentially and its more than likely that they won’t have tools more advanced than a word processor and web browser to capture and express those ideas.

Perhaps a less obvious revolutionary aspect is the change in the balance of power between customer and company that this move will cause. Customers already have a tremendous amount of power in most vendor relationships since their is so much competition in most markets. However, once companies actually begin to depend on their customers as the prime source of their innovative ideas, then the final stage of dependency may bee reached since at that point customers will control the inputs (innovative ideas) and the results (the cash companies get for selling those innovative ideas bundled into products and services). The role of a company will have to fundamentally change when (if?) this model takes hold. It will have to view itself as a facilitator rather than a producer. The firm that has the best way for customers to flesh out and communicate their ideas, the shortest time from receiving a new idea to producing a product or service that incorporates that idea and the best reputation for respecting customer provided intellectual property will be the winner.

It’s clear from this study that business leaders see where things are going and are looking for the customer to step up and provide more of their innovative ideas. The question is do they know where that path will lead them?

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This article first appeared on the Siemens Digital Industries Software blog at