Its so cool to be a Reverse Innovator

I have been recently seeing more and more reviews and stories on the topic of Reverse Innovation.   Could it be maybe Vijay Govindarajan’s recently released his new book entitled Reverse Innovation or maybe Im getting more aware of examples that fit this type of innovation, nevertheless I thought I write something brief.

 

When I think of Reverse Innovation two concepts come to mind.  The use of applied Design Thinking and Lean Start Up methodologies. More I read about Reverse Innovation the more I think about these two methodologies being used to develop products and services under new constraints.

 

Reverse innovation is the process where a product (or/and service) is essentially created, sold and used within a developing market but (and this is where the magic happens)  it is ultimately transposed into a developed market but with significant competitive advantage or changed business model.

 

Why I say it’s a combination of applied Design Thinking and Lean Start Up is because it combines the empathy aspect of Design thinking by looking at a countries environmental characteristics and constraints (i.e. low income, low standards of living, high rates of population growth & dependency burdens, general poor infrastructure and market distribution) and applies an iterative product development approach by wokring on minimal viable product (MVP) to test assumptions, validate learnings and either pivot or progress.

 

There are a lot of examples but the one I came across that I liked was the GE Healthcare and how they went out and asked the question:

 

How might we provide affordable and simple to use high tech-technology health in developing regions?”

 

According a GE report  in India; about 75 percent of medical professionals work in urban centers, leaving 3/4 of the India’s 1.2 population to be served by just 25% and these are most in very rural areas.

 

Backed by GE Healthcare’s strengths including: global infrastructure, strong brand reputation, partner relationships and scientific knowledge; the team successfully developed a low-cost electrocardiogram machine for the India market.  The machine came to a cost $800 compared to hospital-class units that range from $2,000 to $10,000. Either way; that is a cost-savings of 60% to 92%.

 

Now let me ask you this; if you had a product that was 92% cheaper and just as superior on the market do you think you have a competitive advantage?

 

GE Healthcare’s low-cost electrocardiogram has subsequently been marketed and sold in China and in the US with great success – and without losing substantial revenue on their existing products in this category.

 

Key thing for me is that constraints breeds creativity and innovation, and Reverse Innovation is really a way by which a company can leverage its own existing strengths by applying it in a new context that  leadings to new growth streams.

 

Check out the video below:


 

 Further reading

 

 

 

 

 

Here are a few crowdsourcing models out there.  I was reading a blog post by Hutch Carpenter  (a great thought leader on the topic crowdsourcing) and Im going to campare AMP crowdsourcing platform (which I run) and say Quirky.com – amazing company that crowdsources product development.

 

Let me summary this for you.  Firstly, generally speaking there are 4 elements but these can be shuffled around depending on the nature and culture of any organisation or even sub culture of business unit within an organisation.

 

 

These elements all are about gathering, filtering and selecting submission be it “ideas” or product concept like Quirky community.

 

 

The four elements are as explained by Hutch Carpenter  are:

 

 

  Crowdsourcing starts with the contributions of people from around the globe. These submissions are aggregated into a common site. Submissions are provided in the format matching the contest objectives
  People provide their feedback on the submissions of others. This feedback can be up-down votes, star ratings, comments and buying into ideas with virtual currency. This process can be collaborative, helping refine submissions
  Organizations establish panels of experts who review the crowdsourced submissions, and select those best meeting their requirements. Experts possess distinct domain knowledge to make the final decision in the contest.
  The winners of the contest are determined by people’s votes and other measures. This selection process is a mix of overall crowd sentiment, weighted for higher reputed members, and the power of individuals to leverage word-of-mouth marketing.These components can be integrated in different ways to provide four different models for running crowd sourced contests.

 

Quirky uses:

 

 

VS

 

AMP uses:

+

 

If you break down this way, you can see we use crowdsourcing can be more complicated than then it should be.

 

The good news we are starting to refine our thinking on this model and I’m working on a new model to make our process simpler and clear.  Its all about learning and testing what works

 

The process of turning guesses into fact –  the hammer, nail and wood story

 

So you have an idea that its been crowd sourced and people love it!   You have a business sponsor willing to take your idea but now your asking yourself – how on earth am I going to  implement it?  Would it work really?

 

I am a big believer of using Start up thinking in a corporate environment to move an idea into reality. At my work I often use frameworks advocated by Eric Ries in Lean Start up  –  which I often call the “nail”Steve Blank on customer discovery  –  which I like to call the “wood” and incorporate a little Alberto Savoia‘s pretotyping – which I call the “hammer“.  I know its stretched out analogy – but play along with me!  Does the “nail” (ie MVP) pass through the wool easily (ie be accepted by customers) when you are using the hammer (ie the process of conducting the test)? If so, keep progress, else pivot your approach and just another nail!

 

A minimal viable product (MVP) can be used against an agree set of hypotheses to validate whether an idea will work.  Now there are few ways to do this and depends on where you are at in your hypotheses.

 

Pretotyping is about testing whether an idea will actually solve a customer problem (ie will it be used) while Prototyping  tests whether one can actually can build the solution in viable way.

 

Screen_shot_2012-10-16_at_10

 

By testing I mean turning these those assumptions or “guesses” (i.e. your hypotheses) into real solid fact.

 

I like to talk about  three methods of test  – and this was posted on http://blog.leanstartupmachine.com/ which provides a good practical summary:

 

1. Exploration Method

 

Based on ethnographic research techniques, this method is basically exploring the solution through conversation.  You need to first  ensure that the person you are interviewing fits your customer target  –  ideally early adopters of your solution who will help you validate  your assumptions.  Here are few statements to start with:

 

  • “Tell me about the last time you…”
  • “How are you currently solving [insert problem]?”
  • “How/where did you search for a solution?”
  • “If you could wave a magic wand and have anything you wanted, what would it look like?”

2. Pitch Method

 

This method is basically used to engage with your target customer  and try to see if they are willing “invest” in your solution by getting them to exchange some form of “currency” (eg an email, a tweet, an verbal agreement or even money).  Its also known as smoke testing.

 

Forms of Pitch
  • Landing Page –  I’ve used this and actually set up one using http://launchrock.com/
  • Cold Email
  • Cold Call
  • Gimmick Sign
  • Fake Ad (ie gumtree, ebay)
  • Walking into a store and pitching the owner
  • Kickstarter
All of these forms can be considered “pretotyping” and you can use the following types of currency
  • Cash $$$
  • Letter of Intent
  • Email Addresses
  • Pay With a Tweet
  • Taking a Meeting
  • Time

3. Concierge Method

 

I love this method and I have personally used it to test some of my “start up” ideas. It is often referred as Wizard of Oz ie. faking the product with as little technology as possible.

Screen_shot_2012-10-16_at_10

If you go to Alberto Savoia’s around 16.42 minutes you see a classic example of this in action.
The goal of concierge is have your target customers engage with your product (ie use it) and see if would they buy it right now.
In the video example with IBM, initially people thought “speech-to-text” was a great idea, but after the people had the chance to actually “use it” , people didn’t like. Some said, their throat became sore or the office became be very noisy, others said it would be very difficult to dictate confidential memos.   Killing the idea completely but savings millions of dollars in the process!
Summary:  when you have an idea, you really have assumptions.  You need to turn those assumptions about your idea (ie features, target segment, price etc)  into fact.  These method help with this process.  Always ask yourself what is the most simplest possible way you can test your idea and turn any assumptions into fact and determine how and if your would actually idea work.  Use the Learn startup method, create a MVP, apply pretotyping methods and get out of the office!

Firstly, both crowdsourcing and co-creation involve an ingredient of collaboration, however while crowdsourcing is seeking information and ideas from a group of people, co-creation seeks information and ideas from with a groups of people.

 

Further, co-creation is different in that the group works together on one concept.

 

Co-creation typically has smaller more specialized groups that capture ideas from many and work them through different stages to develop it.

 

So while crowdsourcing is focused on “quantity” of ideas or thoughts, co-creation is more focused on the “quality” of ideas that has being generated or discussed.

 

Here is a great article that summaries the same: http://dailycrowdsource.com/crowdsourcing/articles/opinions-discussion/559-cr…

 

How can companies engage employees and truly generate collaborative innovation though the effective use of crowdsourcing?

 

I was brainstorming with Eric Folger (a brillant Design Thinker) and we started to talk about crowdsourcing and whether it provides  truly generate collaborative innovation.

 

We know crowdsourcing among employees works well when a few things are addressedFirstly, leadership is active and continually drives collaborative participation among its employees. Secondly there is regular communication around the outcomes of ideas submitted and finally there is a reward system to motivate employees.

 

However, the most important element around crowdsourcing that sometimes is often missed:  establishing a clear focus or having a framed business problem to curate and engage employees with.

 

There are two board types of business problems:

 

  • One that is mechanical or linear problem that require a logical response

OR

  • One that is more wicked in nature and has no one clear solution.

Logical problems are often straightforward and typically require an “answer” to the problem. For example, discovering solutions to an internal business process issue such as lowering average handling times in a call center.  These challenges really say if I do “A”, than the next obvious step is “B” which leads to an obvious “C” and so on. Which may pair of into B.1 or C.2 etc. but essentially it is a linear process.

Screen_shot_2012-10-01_at_1
Wicked problems on the other are more complicated and really don’t have one solution. They tend to be difficult to solve.  An example would be something like how can we get 75% of the Australian population who currently do not seek financial advice to seek advice?

 

 

Most crowdsourcing platforms such as Spigit plalform  – which are used by some companies addresses the first type of problems.  It is very much a linear process.    When posed with a question, staff will typically post the most logical answer/idea that is known to them.  We also know that “linear” type problems generate more “linear” type ideas, which are by nature, less “innovative”. So for Linear type problems; crowdsourcing works fine.

The issue is that a lot of business problems are not “linear” there are more “wicked” in nature. There are more ambiguous and are impacted by so many things and require all sorts of specified knowledge to answer.

 

 

The question therefore is: how could use crowdsourcing framework to tackle more “wicked” problems and generate truly innovative ideas?  How can you get people to have an informed opinion on a real ambiguous problem and collaborate on it?

 

 

Before we explore this question, lets consider the universe of wicked or ambiguous problems is made up of:

Screen_shot_2012-10-01_at_1
  1. Culture – how the way things are done
  2. Industries  – how other markets or communities do things
  3. Social construct  – how we interact with things, which are constructed by society.   Something is a certain way because people agree to treat it or act that way.   For example, in call centres, one construct is – you can contact me only by phoning me and when you do, you will get a random person each time and that person will not necessarily know what you said to the last person.  Another construct is you are guaranteed the same person every time we meet in a private room and have an agreed time to talk and discuss things.
  4. Dialogue – which all about talk about the problem, exploring the dimensions of it.

 

For example, back to the 75% of the Australian population are unadvised problem.  If you had this as challenge to crowdsource, people are going to use their own logic and post their ideal solution rather than talk about that really matters or driving the problem:

 

Screen_shot_2012-10-01_at_1

 

Most corporates have built a framework where you either post 100% idea up or are shot down. That is, if you just put 20% of an idea – hoping to get crowd to build onto it, the crowd would not understand it and will not get supported and it does not progress.

 

Questions:

 

How might we build effective dialogue within a crowdsourcing framework that can generate truly innovative ideas that matter to customers?  What do crowds need to foster effective dialogue?

 

Truly innovative ideas address “what matters” to customers require:

  1. Effective dialogue
  2. Iteration of dialogue
  3. Same time and space
Screen_shot_2012-10-01_at_1

If we know in an offline world, people tend to generate truly innovative ideas through effective dialogue and iteration process. Where no single person has the complete idea but rather smaller golden nuggets of half baked ideas that merge and formed to get to bigger more complete idea.

 

For instance, can we use something as simple as live chat where up to 4 people at a pre-determined time work on a problem space for 20 minutes.  We give them a prompt (i.e. question) and let the group form ideas, build on each other and merge them into 100% or 80% of the idea before submitting it to a wider crowd?

 

An online chat/dialogue removes “influences” or “strongest personality” issues (often seen within workshop environment).  With online chat no one owns the conversation but anyone can throw in his or her opinion at the same time equally. If no one is online, people are asked to ‘rate’ other ideas left before while they wait for someone else to join.

 

Summary

 

Current framwork for crowdsourcing ideas from staff typically see 100% of the idea being posted with not much building from the crowd happening. If you post 10% of an idea is posted (hoping the crowd build onto it), the crowd deems it as a “thought” (rather an idea) and are not generally supported.

 

Truly innovative ideas need to be nurtured amongst smaller crowds to really understand and explore what “could matter” to the customer.  This is done by effective dialogue between people (up to 4 else it becomes unmanageable).  Each building on others raw idea. Once the idea reachs 80% or 90%, this is the time to post it for the wider crowdsouce community.

 

If we want to generate truly innovative ideas that are of cognitive (i.e. complex) or “what could be” in nature, we need few things to happen:

  1. Need to frame it right
  2. Need to have a dialogue
  3. Iteration of dialogue
  4. Same time and space for dialogue

Innovative ideas will merge and these innovative ideas can be posted to a wider crowdsource community to be validated getting truly collaborative innovation through crowdsourcing.

 

This Jeffery Philips crowd sourcing typology. This based on two (2) focus:

  1. Whether challenge or campaign is framed (Directed or Suggestive)
  2. Whether the participates are open or closed (Participative or Invitational

Other considetations with deciding whether Directed/Suggestive or Participative/Invitational

  1. Are you interested incremental or disruptive ideas?
  2. Have a public/open participation or closed “confidential” ?
  3. Do you have resources to manage community on-going?

 

Suggestive Participative

Dells http://www.ideastorm.com/ is Suggestive Participative model, open to anyone to post anything regard Dell ideas but over the years due to number of idea, Dell frame challenges within the site called “Storm Session” to address a specific concern or business topic

 

Summary:

  1. Idea volumes with be vast
  2. Review and selection process must be clear and time consuming
  3. It’s more “social media” as idea owner ask others to participate (ie vote, comment). People expect others to comment and vote
  4. Likely to be incremental innovation – large groups will reject idea if they are too radical @
  5. It tends to be an continuous engaging platform – keep running challenges and engagging people to participate
  6. Community communication – need to interact and take time to engage community. Need to response and provide feedback else community will not come back

 

Suggestive Invitational

 

Here is innovation sponsor invites people. Like AMP’s IdeaLab. IBM IdeaJam where it’s a board topics like environmental issues.  People are selected more carefully because of their belief, insight or expertise. 
Summary
  1. May generate few idea but more aligned to challenge
  2. It can lead to “groupthink” if crowd is not diversified enough
  3. Selection and evaluation tends to be simpler
  4. Less liable to “social media”
  5. Ideasa more likely to discruptive (rather increment) and more align to strategic intend.
  6. Event driven, short period of time

Directed Invitational

Pre-defined and Pre-screen participates (eg P&G Connect and Develop with selected customers, partners and prospects) another is Innocentive. Typically have expertises.

Summary:

  1. May generate few idea but more aligned to challenge
  2. May be less innovative idea – participates tend to know too much and don’t stench their thinking
  3. Ideas that are submitted are govern by sponsors frame rather open and wisdom of the crowd or taking a “customer back” or the voice of the customer

Directed Participative

The sponsor directs participates to address a specific problem or opportunity. Anyone who cares about this topic can participate. For example, AMP Bank IdeaLab on home and mortgage. Ask any who cares about their home loan or gone through the process to participate or Dell’s IdeaStorm sessions

 

Summary:

 

  1. Idea posted are limited to the sponsors framed challenge. 
  2. You are tapping to people’s passion and interest – who want to voice their opinion.
  3. Selection and evaluation is simpler as challenge is framed
  4. Can typically attract a lot of passionate participates depending on the predefined topic
  5. It’s more “social media” as idea owner ask others to participate (ie vote, comment). People expect others to comment and vote. You may need to monitor and mentor participates within the community.
  6. Can be less innovative as sponsor directs, frame and selects ideas
  7. Campaign driven and can exist for a longer time to get participation.
Image
After debunking some of the misconceptions and myths around innovation practices, Jeffey Phillips  discusses the real obstacles to innovation: business-as-usual and middle management.

Phillips does not blame middle management specifically for killing innovation, but rather the organizational system that emphasizes the need for consistency, cost cutting, and efficiency.

Many attempts at embedding innovation within organizations have fallen flat for several reasons, including:

  1. poorly communicated strategy,
  2. lack of resources
  3. fear of uncertainty and/or risk, and 
  4. the demands for quarterly results.  

Innovation “tools” such as Six Sigma and Lean have perpetuated the business-as-usual cycle, rather than opening up firms to embracing innovation as a capability.

 Middle managers must be tasked with executing innovation as usual,but they cannot do so until there is a firm wide adoption of clearly articulated innovation strategy.

 After investigating why many firms fail to successfully innovate, Phillips explores how to create an “innovation-as-usual” approach. The goal, he argues, is to create an operating model that embraces innovation through a combination of culture, attitude, frameworks, and processes. Exploring cases from relentless innovators, he identifies:

  • eight factors that allowed those firms to create an innovation business-as-usual framework:
    • Innovation metrics tied to specific strategic goals
    • Compensation
    • Enabling functions
    • “Who” is managed, as opposed to “what”
    • Communication
    • Defined innovation processes
    • Reactive versus proactive philosophy
    • Human resources (specifically recruitment, retraining, and rewards)

http://www.innovationmanagement.se/2011/12/14/book-review-relentless-innovation/

 

 

This is great example of how constraint can really breed innovation.

Have a look at this video and see what Gray Chang did to his small 344-square-foot studio apartment.  With a series of sliding doors, hidden handles and movable walls, he is able to transform is apartment into 24 different designs.  

With around 7 million people, Hong Kong’s most precious commodity is space.  And it was this scarcity of space that give Gray Chang his inspiration to come up with what he calls “Domestic Transformer.”

I like the window and floor finishing –  it makes the apartment feel warm and inviting and the reflections on the mirror on the ceiling and reflective floors further create light and more sense of space.

Truly ingenious.

You can read more about here NYTimes story and check out this video below.

 

 

I love the innovative thinking around this idea of how to introduce TESO to the South Korea market.  In the brand name of HomePlus, TESCO was able to create a presence within South Korea but understand the local way of life and how space, public transport and mobility all play an important part in South Korea citizens pathway. After conducting a study they found that people in South Korea didn’t have much time for shopping for groceries – communing to and from work and the way they commuted was important. TESCO introduce HomePlusn by bringing the shopping experience to their commute home.

Customers use their phones to take picture of QR codes on virtual goods on large display screen and add items to their virtual basket. The items are then shipped to the customers address generally by the time they arrive from commuting.

According to the video, online sales increased 130% and registered users increased by 76%.  More the most important result was TESCO is now 2nd largest offline supermarket.

 

I was watching this vblog from Thomas Power (founder of ecademy.com) who put out this interesting question.

So, lets review some of the key points
  • Facebook will pass Google in terms of traffic over shortly.  Some reports that this has already occured Facebook will apporach billion users by the end of 2012.#
  • Facebook hold most detail personal perferences (eg interests, hobbies, likes, dislikes) of its users (essentilly, I self made CRM system) that
  • Facebook can mine and help its users get deals such as Groupon.
  • Providers like www.prosper.com and www.zopa.com already already provide borrowing exchange services between real people  –  sidesteping the banks to get a better deal.  While www.mint.com and www.smartypig.com offer its members the opportunity to for people to save for specific financial goals like a wedding, a vacation or a flat-screen TV etc
  • It won’t take much for Facebook social-led financial services that combine things like www.zopa.com with mint with Groupon