Innovation Evaluation Framework: Use Community
By Jeffrey Phillips
True innovation requires a more expansive evaluation than a traditional business case and needs to be considered with features and attributes that are more qualitative and driven more by emotion than logic. Seven components contribute to innovation success: choice/control, convenience, community, completeness, compatibility, coolness/communication and customer’s cost. These factors, used to evaluate an idea early in the process, can contribute to the success of a new product or service by improving adoption, reducing risk and building trust for the new product or service.
The ability to change behaviors and encourage people to switch products and services is difficult. Given the time commitments required to learn a new product or service, most people are not willing to change unless the offering is significantly better than existing alternatives. Using community to evaluate an innovation can reduce switching barriers for new products and services in at least two regards: 1) a community demonstrates that other people have made the change successfully and 2) a community becomes an advocate for the innovation. For an innovation to succeed, a community must form around the need or the solution. Communities can drive an innovation (such as open source software) or innovations can drive communities (such as YouTube).
Communities are important for innovations because the innovations are shaped by the community, usually for the better as the community attracts new users. An innovation that cannot attract a community is either too narrowly targeted or does not solve a widely recognized need. Communities can also create innovations through their joint interactions.
As business strategy expert Gary Hamel states in The Future of Management:
In a community you are a partner in a cause. In a bureaucracy, “loyalty” is a product of economic dependency. In a community, dedication and commitment are based on one’s affiliation with the group’s aims and goals. When it comes to supervision and control, bureaucracies rely on multiple layers of management and a web of policies and rules. Communities, by contrast, depend on norms, values and the gentle prodding of one’s peers.
Look at Starbucks for an excellent example of a community. Starbucks provides what would seem to be a relatively undifferentiated commodity – a cup of coffee – at a premium price. It does this by building an experience that creates a community. The community is developed to the extent that it has its own language (What, exactly, is a frappuccino?), artifacts, norms and expectations. Innovations that can create a community by building a new language and a new sense of belonging to a group that is formed around a cause or a belief will have a much greater likelihood of success.
Communities Create Innovations
Communities or teams are necessary for innovation. While many people think that innovations are created by scientists in white lab coats working in a skunk works, most innovations are created by teams of people, sharing their ideas and building incremental solutions or extending existing products and services to meet their needs. These communities are often like-minded individuals and become a group of “lead users” for an idea. Open innovation creator and economist Eric von Hippel uses the story of the mountain bike to define “lead users” in his book Democratizing Innovation. Original mountain bikers created their bikes from racing bikes, motorcycle parts and other gear. They were creating one-of-a-kind bicycles to ride off-road. These lead users attracted the interest of a firm that (at that time) manufactured bike components. The firm, Specialized, recognized an opportunity and built the first commercial mountain bikes. The bicycle market today is dominated by mountain bikes, which did not exist 20 years ago. Lead users created the mountain bike and Specialized capitalized on the innovation and created a new market segment.
Innovation Creates a Community
This approach is a bit trickier. Too often product managers and developers create new products or services and expect a market to grow around the offering. Unless the solution is clearly differentiated, it is difficult for an innovation to create a new community. YouTube is a good example of an innovation that grew a community, rather than the other way around. With the success of Flickr and other photo sharing sites, and the increasing number of people who owned video cameras, the need existed to create a site to share videos. YouTube created a framework to allow people to share their videos and a community was built around YouTube. YouTube grew more attractive as its user base increased, generating a network effect.
Communities as a Springboard
Communities can also act as a springboard for a new innovation, driving its perceived value and demand higher. The iPod is an example of a small, focused community (Apple users) who wanted the same great experience with their music that they had with their computers. That small community influenced the frustrated early adopters of other MP3 players who saw Apple creating a “whole product” – player and available, downloadable music – and joined Apple diehards to create a powerful community and strong word of mouth. The iPod community accelerated the acceptance of the iPod and drove incredible sales and profits for Apple. In the case of the iPod, an existing community – loyal Mac users – created the buzz and attracted other consumers.
Communities and Innovation
Clearly, communities are an important component to the success of many innovations. Communities help define and shape innovations, and through word of mouth increase awareness of the innovation and demand for the innovation.
A company must carefully consider the community that exists, or will need to exist, for a new product or service to be successful. Is the innovation defined by an existing community? Can a new community be created (quickly) around the innovation? Communities validate and create a network effect for new products and services. They offer free word of mouth marketing and product advocacy of a type that cannot be bought. As a business designs its new product or service, it must consider the type of community that may exist and how that community can form. What tools or communication devices can a company offer to sponsor the community?
Creating a Community
To create a community, define a problem or challenge and become the solution to that problem. It is especially valuable to create a solution or target a problem that has “meaning” beyond the core problem. Whole Foods created a grocery store targeted at buyers who wanted healthy, local produce grown with no additives or preservatives. Their mantra is “whole foods, whole people, whole planet.” They targeted a stagnant market sector that had had little innovation and defined an offering that spawned a community.
Next, create a differentiated approach. Communities form around solutions that are greater than the core problem. Then, create a new, specific culture, norms and language. Starbucks could have called its servings small, medium and large like other coffee shops, but instead created a new language, to the extent that ordering a coffee requires knowledge of a lexicon.
Great ideas may make interesting new products or services, but communities drive the adoption of the new product or service. Even in an age where mass communication, marketing and advertising are prevalent, word of mouth and trusted sources remain exceptionally important when a new product or service is introduced. When a business evaluates its ideas, consider the opportunities and challenges that exist for building or engaging a community. While the idea may offer significant choice and control, and improve convenience, those factors must be demonstrated to a community of adopters that will become the early champions of the product or service.
About the Author:
Jeffrey Phillips is a vice president with OVO and responsible for marketing and for leading innovation projects with OVO’s clients. Mr. Phillips has extensive experience working in the innovation space, with a wide range of Fortune 500 firms. He has published articles for Harvard Management Update, DigitAll Magazine, Pure Insight and blogs about innovation at Innovate on Purpose. Contact Jeffrey Phillips at jphillips (at) ovoinnovation.com.