Online communities can serve as a corporation’s R&D lab by offering a broader talent reach and closer contact with consumers’ needs, according to a new McKinsey Quarterly study.
Historically, innovation has started in in-house labs where researchers must proceed through a series of closely-managed steps, write McKinsey consultants Jacques Bughin, Michael Chui and Brad Johnson. But the Internet offers a much wider-ranging approach that allows corporate R&D to tap “suppliers, independent inventors and university labs,” the report notes.
“Suppose that a wireless carrier were to orchestrate the design of a new generation of mobile devices through an open network of interested customers, software engineers, and component suppliers, all working interactively with one another,” the authors write.
There are some examples where an open approach like this has worked well:
- Toymaker LEGO invited customers to suggest new models and has rewarded them financially.
- Shirt retailer Threadless sells shirts online that are designed in part by Web customers.
- Open-sourced software makers such as “LAMP” (for Linux, Apache, MySQL and PHP/Perl/Python) develop their products cooperatively over the Web and sell them to corporations which use them as standard components of their Information Technology systems.
- French car maker Peugeot invited customers to submit new auto designs online and ended up getting four million hits.
Of course there are problems, such as making sure the host company makes the most of the input it gets and rewarding open innovators appropriately. Acknowledging that this approach is a work in progress, McKinsey says such concerns will be corrected over the next few years.
Sounds good, but if I were an open innovator, I’d be careful about giving my ideas away online where anyone else including a competitor or the host company can claim ownership.
