KEY CONCEPT

While companies, especially larger companies, invest a significant slice of their budgets on R&D, researchers are demonstrating that breakthrough innovation and ideas often come from outside the organization — specifically from communities of product users and amateurs in the field. For Wharton professor of management Ethan Mollick, a leading authority on the topic, Apple’s App Store is the latest example of the power of user communities.

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IDEA SUMMARY

Ethan Mollick, the Edward B. and Shirley R. Shils Assistant Professor of Management at the Wharton School of the University of Pennsylvania, has conducted extensive research on how user communities — product users and informal groups of amateurs — contribute to the development of innovative products. Apple’s App Store is perhaps the most famous example of the collaboration between company and user that Mollick has studied, although there are many other examples.

The App Store, however, is a sterling case because the process could easily have taken a completely different turn. As described in a February 2013 article for Wharton’s Nano Tools platform (see further resources below), the iPhone did not feature an App Store for the first year it was on the market. Users, however, found “semi-legal” ways of creating free apps that could run on the new technology. Instead of diligently prosecuting these “hackers,” Apple decided to allow them to sell their products through the App Store — a decision that with the benefit of hindsight proved vital to the resounding success of the iPhone.

There are other examples, less well-known perhaps than the iPhone but just as effective. For instance, Mollick cites InnoCentive, a spin-off from Eli Lilly that deliberately uses a network of more than 270,000 scientists to find innovative solutions to complex problems. As documented by Mollick and other researchers, the evidence continues to mount that business leaders who ignore the contribution of product users and fans are potentially undermining the future success of their companies.

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BUSINESS APPLICATION

How can businesses successfully emulate companies like Apple and Eli Lilly in leveraging the creativity and engagement of their product users? Mollick offers a series of steps to follow:

• Explore. What’s happening in the user community around your products and services? User innovation often results when end users are unhappy about some facet of the product or service — there are unmet needs or perhaps the product performs unsatisfactorily, for example — and they take matters into their own hands. Conduct the research required to find the problems identified by your user communities, and to uncover, perhaps, the solutions users are putting forward.
• Integrate. Once you’ve identified problems and user solutions to those problems, the next goal is to channel those innovations back into the company. The functions on the front lines — sales and marketing, and customer service — are key. For example, customer service personnel must have guidelines for reporting how users are solving their own problems. In addition, set up formal systems for inviting user innovators into your process.
• Harness communities. Move from passive to active engagement with user communities. Seek them out. Make sure they are in appropriate communication with the best company representatives. Address their needs. Also, guide them to apply their thinking and insights to areas of interest to you (but, of course, their needs must always be respected).
• Open up. In this final phase, there is even closer collaboration between users and the company. The company might offer tools to help users innovate. Perhaps there are even parts of the product development process that product users could be allowed to customize.

The best companies will always have great innovators in their ranks. But that is no excuse for neglecting the creativity, perspective and insight that can come from the dedicated fans of your product or service.

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REFERENCES

Nano Tools for Leaders ®: More and Better Innovation Through Outside Communities. Wharton@Work (January 2013).

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