Monday, June 23, 2008

McKinsey on Online Collaborative Technologies for New Product Development

Global Management Consultancy McKinsey recently published an article the next step in open innovation arguing that the next step in innovation is the use of online technologies to allow companies and outside groups such as customers or suppliers to come together and "co-create" new products and services.

McKinsey write:
If a company could use technology to link these outsiders into its development projects, could it come up with better ideas for new products and develop those ideas more quickly and cheaply than today?
McKinsey discuss a number of case examples, such as
LEGO, for instance, famously invited customers to suggest new models interactively and then financially rewarded the people whose ideas proved marketable . . . shirt retailer Threadless sells merchandise online - and now in a physical store . . . that is designed interactively with the company's customer base.
A number of challenges exist for successful co-creation:
  • Building communities and attracting participants
  • Breaking down complex problems into an appropriate form where members of the community can work on different parts and put them back together
  • Governance mechanisms
  • Maintaining or identifying quality
McKinsey conclude that "companies should experiment with this new approach to learn both how to use it successfully and more about its long term significance."

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