Mass Customization & Open Innovation News

RYZwear.com: Applying the Threadless Concept to Footwear

"At RYZ we’ve set out to create a people’s brand – a community of designers, sneakerheads and anyone that cares enough about art, fashion or sneakers to speak up. Together we’ll create sneakers that are designed and chosen, not by some big, faceless corporation, but by you.

Think of RYZ as a stage for designers to showcase their creativity and a forum for people to define what great sneaker design means. In other words, we just make comfortable sneakers – the rest is up to you."

This is how Rob Langstaff announced his new business just one month ago, ryzwear.com The hope of RYZ is to become the Threadless of footwear, connecting people who design custom sneakers with those that vote on the designs and purchase. I am wondering since long what could be good fields where the extremely profitable Threadless idea can be applied to, and footwear could be one option.

Rob Langstaff is not an outsider of the sneaker world. The former Adidas America Inc. president has turned the business model of its former employer upside down, Instead of assigning design jobs to inhouse designers, he is relying on online clusters of consumers to design products and figure out which ones to sell. "In Ryz's case, it's MySpace meets "American Idol," with footwear as the unit of expression", as an online report called the business model.

"The corporate design team is limited by its walls," Langstaff is quoted in the news report, "The corporation shouldn't be dictating what the consumer wears. The consumers should."

This is how RYZ works:

• Each month, Ryz will post a different standardized shoe silhouette on its Web site (a high-top shoe and a low-top shoe were the first two). Users can download the template and, using Adobe Photoshop, illustrate or add images across the shoe.
  
  
• Site visitors can rate and comment on submissions. After a month, a winner will be declared and Ryz will order a run of the winning design -- 100 pairs to start and 1,000 pairs by next year -- from a contract manufacturer in China.
  
  
• The winning designer will get $1000 for the start, plus royalties of $1/piece on ongoing sales, and get their profiles attached to each pair and a listing in Ryzwear.com's Hall of Fame.
  
  
• Two weeks after the contest ends, Ryz will sell the winning shoes on the Web and, for now, in Xebio Co., a leading Japanese sporting-goods retailer that owns a stake in Ryz. The retail price: $75 to $90 a pair.

By 2012, Langstaff hopes to allow users to design the entire shoe, from the shape of the sole to the shape of the eyestay. He also hopes to get into athletic wear. He expects to rely on customers to do most of his marketing.

Rob Langstaff is putting $4 million into his shoe startup, saying there is too great a disconnect between businesses and consumers. He expects to do $40 million in revenue by 2012 (which would be about half the time of Threadless' way to scale, but could work given his larger experience in the market and the higher price tags).

Interestingly, among some of the people helping Langstaff to set to the business is Mikal Peveto, a former footwear executive who started design-your-own shoe site Customatix in 2000. In case you have followed mass customization since its beginning, you should know Customatix. The company got much attention and had one of the best online configurators of its time. But it also did offer too much of a good thing, giving users really zillions of choices at a time when consumers were not really educated in mass customization configurators.

But Peveto believes Ryzwear can succeed where Customatix failed because consumers today are more comfortable interacting and purchasing online from less-established companies.  "Our timing wasn't great. We couldn't get people to buy because they didn't trust the brand," Peveto said. "Now is a completely different time than in 2000 because there are so many different brands that are valid."

So I am curious to see whether Mikal Peveto and Rob Langstaff's predictions come true. They took some serious modifications of adopting the Threadless models for their industry. But Threadless' customers are as much purchasing the membership in a club, a community, by purchasing t-shirts frequently at $15 a pop. I am not quite sure that this will work with $90 sneakers.

To develop however a great (and profitable) underground line of sneakers with a great story, their approach may work will. They may want to take a bit more from the Muji, the Japanese's retailer, and its approach to the model. Muji is not just letting customers vote on new designs, but also asks them to make a small cash payment on the item they really want to have in stores. Thus, they can much better predict what people will purchase later. Such an approach also could benefit RYZ as it would connect the voting much closer with the purchasing of the line.

Context information:

A good article in Oregonlive told me first about RYZ

A recent article in the San Francisco Chronicle on crowdsourcing and user idea competitions is featuring RYZ, Threadless, and a number of other companies.

My previous reports about the CEC User Co-Design Competitionand Open Source Footwear.

NYT on Open Innovation and the Innocentive model of distributed problem solving

The New York Times today had a good new story on InnoCentive and open innovation via distributed problem solving (or "Broadcast Search", as our friend and HBS professor Karim Lakhani calls it). Beyond sharing some information on the state at Innocentive, it names a number of other recent examples where price challenges are set up to work on tough scientific problems.

According to the article, InnoCentive has solved 250 challenges for their clients (meaning that they have posted about 3 to 4 times as many) for prizes typically in the $10,000 to $25,000 range. The achievements include a compound for skin tanning, a method of preventing snack chip breakage and a mini-extruder in brick-making.

Solvers come from 175 countries. More than a third have doctorates, CEO Dwayne Spradlin is quoted in the article, and while motivated by money, they also have a desire to solve “problems that matter.” The outlook? By 2011, Spradlin hopes InnoCentive participants will have answered at least 10,000 challenges.

This demands some serious scaling up of the business model. But I believe that Innocentive is on the right track and a great example of open innovation, using the term beyond a new expression for traditional R&D networks. Karim Lakhani is quoted in the article that

“most laboratories, most R & D endeavors still work on the premise ‘we can accumulate and make sense of all the knowledge that is relevant.’ The open-source models and a model like InnoCentive show that other approaches can help.”

So, fancy some challenges to work on? Here you go: Today, would-be innovators can sign up online to compete for prizes for:

• Landing on the Moon (space.xprize.org/lunar-lander-challenge)
• Inventing artificial meat (www.peta.org/feat_in_vitro_contest.asp).
• The National Research Council recommended that the National Science Foundation, the major government financing agency for physical science research, should offer prizes of $200,000 to $2 million “in diverse areas” as a first step in a major program “to encourage more complex innovations” addressing economic, social and other challenges. (The report is available at http://www.nap.edu/catalog.php?record_id=11816).
• John McCain, the Republican nominee for president, has proposed that the government offers $300 million to whoever invents a battery compact enough, powerful enough and cheap enough to replace fossil fuels.

The article also tells about a great project not know to me before:Researchers at the Howard Hughes Medical Institute and the University of Washington began recruiting computer gamers to an online competition, named Foldit, aimed at unraveling one of the knottiest problems of biology — how proteins fold (http://fold.it).

"The Foldit contest is a volunteer effort. It began as Rosetta@home, a project using down-time of computers throughout the world to do the laborious calculations needed to determine the shapes of proteins, strings of amino acid crucial to the cells of every living thing. The way these molecules work depends on how the strings fold, but calculating the folding is, as the Foldit researchers put it, “one of the pre-eminent challenges of biology.”

In Foldit, players will compete online to design proteins, and researchers will test designs to see if they are good candidates for use in drugs. The researchers who worked to design it say results will also be interesting because people’s intuition for protein folding does not seem necessarily to be tied to formal training or laboratory experience.

“Our ultimate goal is to have ordinary people play the game and eventually be candidates for winning the Nobel Prize,” said Zoran Popovic, a computer scientist and engineer at the University of Washington."

So, in case you are a good computer gamer, chances for a Nobel prize never were larger!

The CEC Co-Design Contest: Open Innovation in the Footwear Industry

A year ago, I reported about the CEC User Co-Design Contest. Now, the results are in and the experiment is over. In the following guest article, Angelika Bullinger and Erik Hansen report about the contest. They are working at TUM Business School and were the project leaders of this contest. Here is their report:

During the last three to four years, we have seen a dramatic surge in interest in the principle of “open innovation”. “Open innovation” means the involvement of customers and other partners in the innovation process. By their creative input, many companies are significantly increasing their ability to source powerful products.

But how to meet with the creative minds outside your company?

For European shoe manufactures, an answer to this question is provided by the “CEC Co-Design Community (CE3C)”, a web-based platform that enables the integration of customers in the innovation process. The platform provides combinable modules for the interaction of the company with its customers and partners. For example, in the “mindstyle module”, customers get an analysis of their preferred style by intuitively selecting pictures out of number of photographs. The manufacturer gets information which trends are currently “hot”.

In another module, “product configuration” those shoes in the collection which can be customized are shown. By the data on individualized shoes, manufacturers are informed about customers’ preferences. Especially in combination, the modules of CE3C provide shoe manufacturers with rich information on their current consumers’ preferences. 

But preferences of current customers are not enough to your company? You want really innovative designs and get to know their creators? In this case, the “idea contest” is your solution. An idea contest is a forum in which passionate contributors from all over the world can exercise their creativity on account of a topic defined by the organisator. Prizes – and the recognition by the company – generate interest and drive participation. Typically, one company organizes an idea contest and submitted ideas are judged by a panel of employees.

The idea contest module of CE3C has already been very successfully tested - the “CEC Shoe Design Contest” was run between October and December 2007 on the platform. To involve customers more closely, a voting functionality allowed users to express their opinion on the submitted shoe designs. User votings were integrated the final decision-making on the winning designs.

The results of the CEC Shoe Design Contest have been very satisfying to the involved shoe manufacturers: In total, 63 highly innovative designs have been submitted. The active community of interested users (and submitters) has about 400 members who stem from nearly 50 countries around the globe. Both the unusual size of the community and the number of high-quality submissions indicate the power of the idea contest module of CE3C. The winning designs are currently manufactured and companies are getting in touch with the creative minds behind the designs.

You also want an idea contest for your company? You would like to meet with the still unknown designers? The CEC CoDesign Community (CE3C) stands ready for adaptation to your company’s particularities – and the established community only waits for the next idea contest on account of a thrilling topic. Let’s thus integrate and innovate!

For more information, contact Angelika Bullinger or Erik Hansen.

Here are some more results of the first contest in form of pictures:

Conference on Open Innovation and the Importance of External Information for the Innovation Process at Zeppelin University

JULY 11, 2008, 2-6pm, Friedrichshafen

Zeppelin University is the rising star among the new private German universities, and they reinforce their status by organizing their first Innovation Symposion around the topic of open innovation.

I am privileged to be invited to open the event with a keynote, but three managers from leading companies will demonstrate how they apply open / user innovation in practice. And in a workshop with all participants, we want to explore how you can profit from an internet based platform for open innovation for your company.

The event is in German language, and so is all other information as well:

 
Das Symposium für Innovation

Das Symposium für Innovation der Zeppelin Universität Friedrichshafen möchte Unternehmer und Entscheider aus dem Innovationsbereich mittelständischer und großer Unternehmen aus der Bodensee-Region und darüber hinaus zusammenbringen, um über dieses bedeutende Thema zu diskutieren.

Anregende Praxis-Beispiele und Vorträge ausgewiesener Experten auf dem Gebiet des Innovationsmanagements verdeutlichen Ihnen die Bedeutung offener Innovation auch für Ihr Unternehmen. Nutzen Sie das Symposium für Innovation, um sich mit Unternehmensvertretern aus Ihrer Branche und anderen Branchen in einem offenen Rahmen auszutauschen und neue Kontakte zu knüpfen.

Zunehmende Bedeutung externen Wissens und offener Innovation

Das erfolgreiche Management von Innovationen stellt heute eine zentrale Herausforderung für Unternehmen dar, um langfristig erfolgreich zu sein. Die zunehmende Bedeutung von Wissen als grundlegender Ressource von Innovationen macht hierbei die Integration externen Wissens (beispielsweise von Kunden, Zulieferern, Universitäten, etc.) zu einem häufig wettbewerbsentscheidenden Faktor für ein erfolgreiches Unternehmen. Das Management offener Innovationsprozesse in Innovationsnetzwerken und anderen Kooperationsformen vermag somit einen bedeutenden Beitrag als Quelle neuer Innovationen für die Entwicklung von am Markt erfolgreichen Produkten zu leisten.

Aus dem Programm:

• „Die Hilti AG und die Einbeziehung von Kunden in den Innovationsprozess“, Elke Baessler, Corporate Innovation Manager, Hilti AG, Liechtenstein
• „Open Innovation in der Automobil-Industrie: Das Network of Automotive Excellence und der Innovations-Wettbewerb 2008“, Herbert Köpplinger, ewf institute, München, Leiter der Initiative Network of Automotive Excellence, eines firmenübergreifenden Zusammenschlusses von Unternehmen aus der Automobil- und Automobilzulieferer-Industrie
• „Outside In: Kundenintegration als Erfolgsfaktor im OEM-Geschäft“, Alexander Lang, Director Marketing & Innovation, Webasto AG, München

Workshop: „Anforderungen von Unternehmen aus der Praxis an eine internetbasierte Plattform für den Einsatz von Open Innovation im Unternehmen“

Download des Programm-Flyers mit allen Informationen als PDF.

Mehr Informationen und Registrierung (60,- Euro Teilnahmegebühr) hier.

Threadless - the full story: Inc. Magazine Feature on Threadless

Max Chafkin, a staff writer the US Entrepreneurship journal Inc. Magazine, has written a great report on Threadless  for the June 2008 issue of the magazine. It is available in a free online pre-press version now.

Max tells the entire story of Threadless, starting with the episode of a meeting at MIT where the Threadless guys gave one of their first public presentations. I had the privilege to be part of this meeting, and it is fun to read about it in paper (especially as I am at MIT in the moment, writing these lines from the same building where we had the initial meeting with Threadless).

Max did a great job in documenting the history and genesis of Threadless, but also reflecting on its future. Here are some quotes of Max' analysis of the case, but head to the website to read the entire article:

On Threadless' Size and Development

This rapid engagement propelled the company through four years of phenomenal growth, beginning around 2004. The user base grew tenfold, from 70,000 members at the end of 2004 to more than 700,000 today. Sales in 2006 hit $18 million -- with profits of roughly $6 million. In 2007, growth continued at more than 200 percent, with similar margins. Though Nickell refuses to disclose the exact revenue number -- perhaps because he now counts Insight Venture Partners, a New York venture capital firm, as a minority shareholder -- it seems fair to assume that Threadless sold more than $30 million in T-shirts last year.

Ask Nickell what he makes of his company's whirlwind success, and he will respond rather sheepishly. "I think of it as common sense," he says. "Why wouldn't you want to make the products that people want you to make?" Indeed, the idea that the users of products are often best equipped to innovate is something many entrepreneurs know intuitively.

And it is supported by a growing body of research. A study published last year in the Strategic Entrepreneurship Journal suggested that the vast majority of companies are founded by "user-entrepreneurs" -- people who went into business to improve a product they used. Meanwhile, studies by von Hippel and others show that in industries as diverse as scientific instruments and snowboard equipment, more than half the innovations generally come from users, not from research labs.

On user innovation and the resistance of traditional companies to adopt it

Some companies actually punish these people by cracking down on unauthorized innovations. Apple has famously "bricked" -- that is, electronically disabled -- iPhones that have been enhanced by their owners. Other companies pay lip service to user innovation but have trouble following through on the concept. "Companies are very good at creating platforms for external input, but they're very bad at using this input," says Frank Piller …

Threadless is an exception to this. "You could say that what Threadless does is trivial, but it's not," says Harvard's Lakhani. In fact, the very triviality of Threadless's product -- something as low tech and as commoditized as a T-shirt -- proves that vibrant online communities can drive all sorts of nontechnical businesses. This should be encouraging news to entrepreneurs. Customer communities have become exceedingly inexpensive to build and manage; blogging software and social network platforms, for example, are now available for free from a handful of start-ups. "We thought that open source could only work in software, and now it's being successfully applied to a product as mundane as a T-shirt," Lakhani says.

On Threadless' Corporate Culture and Work Style

[Today], the company is suspiciously companylike. The go-carts generally stay parked, the buck stays mute, and the Ping-Pong table serves as a gathering place for impromptu meetings. "When I started, we spent half the day playing," says Lance Curran, a bearded 29-year-old wearing a beanie, jeans, and a flannel shirt. "That doesn't happen anymore." This is not to say Curran doesn't like his job. On the contrary, he nearly glows when he talks about his rise from a temporary warehouse worker in 2005 to the warehouse manager in charge of a staff of 18 today. ...

Like Curran, most of Threadless's employees come with no obvious qualifications for their jobs. The oldest staff member is 33, and many are under 25. The employees do, however, arrive with a deep and abiding love of Threadless, having joined the community long before they entered the work force.

Joe Van Wetering, a 21-year-old illustrator who works in the production department, was a frequent visitor to Threadless's offices as a teenager before taking a job in the warehouse in 2006. Ross Zietz had won seven competitions while studying art at Louisiana State University before he took a job as the company's janitor in 2004. He has since been promoted to art director, charged with helping the winning designers get their entries ready for printing. In fact, 75 percent of the company's 50 employees were community members before they were hired.

On other product categories Threadless is exploring

Now, Nickell is set to let his club loose on other businesses. In addition to expanding to children's clothing and retail, Threadless will begin selling prints and posters online. And later this year, the company will add a range of products, including handbags, wallets, and dinnerware, under the brand Naked & Angry. Each item will be adorned with patterns submitted by users, with a new product launched each month. "I think Naked & Angry, if handled properly, has the potential to be way bigger than Threadless, because we have the flexibility to do everything," says Kalmikoff, who envisions moving into high-end clothing as well as housewares. Jeff Lieberman, managing director of Insight Venture Partners and a board member, is even more bullish. "To say it's just a T-shirt company is absurd," he says. "I look at it as a community company that happens to use T-shirts as a canvas."

 
And Max' final evaluation of Threadless' Business Model: A fundamental economic shift

The way Eric von Hippel sees it, Threadless has tapped into a fundamental economic shift, a movement away from passive consumerism. One day in the not-too-distant future, he says, citizen inventors using computer design programs and three-dimensional printers will exchange physical prototypes in much the same way Nickell and cohorts played Photoshop tennis.

Eventually, Threadless-like communities could form around industries as diverse as semiconductors, auto parts, and toys. "Threadless is one of the first firms to systematically mine a community for designs, but everything is moving in this direction," says von Hippel. He foresees research labs and product-design divisions at manufacturing companies being outstripped by an "innovation commons" made up of tinkerers, hackers, and other devout customers freely sharing their ideas. The companies that win will be the ones that listen.

This may or may not come to pass, but the lesson of Threadless is more basic. Its success demonstrates what happens when you allow your company to become what your customers want it to be, when you make something as basic and quaint as "trust" a core competency. Threadless succeeds by asking more than any modern retail company has ever asked of its customers -- to design the products, to serve as the sales force, to become the employees. Nickell has pioneered a new kind of innovation. It doesn't require huge research budgets or creative brilliance -- just a willingness to keep looking outward.

Context:
- My earlier reports on Threadless are here and here.
- The full Inc. Magazin article

Spreadshirt Reveals New Crowdsourced Logo

Remember the Spreadshirt Crowdsourcing contest to get a new logo from its community, the Open Logo Project 1.6 (OLP) ? I was part of the judging panel, and it was a fun activity to do. "We wanted to take this to the community who use, create and live our product, rather than to an agency", Jana Eggers, Spreadshirt CEO, is quoted in a press release.

The results were in at the end of the year, and now finally the winning logo has been placed on the site and all CI materials. Kim Larsen’s ‘Love Tab’ was the winning design, chosen from 2,800 submissions (from 45 countries). Kim is a 23 year old graphic and interactive media designer from Sweden.

"I wanted to make personal branding visually simple and to embed a symbol everyone can relate to.", he says, "The heart resonates with the feeling of love you have for something you’ve created and the stitching with the hand-crafted nature of the product."

Context:
- My previous report about the contest.
- The official contest site
- Press release at Spreadshirt (and I do not know whether being a web 2.0 guru is a good thing or not today).

Update: Fashion Crowdsourcing Project Nvohk Set to Launch on June 5, 2008

Some weeks ago, I reported about nvohk (pronounced ‘invoke’), a company that puts our "collective customer commitment" model into action: Get 5000 members who pay 50$ each of funding, use the money to create an eco-friendly line of clothes, and then sell the clothes to a wider public and share the profits with the original members. Members, as part of their pre-payment, get the right to vote on new designs and co-manage some of nvohk's business decisions.

In a press release today, the company reported that since December 4, 2007, nvohk could recruit 2,800 members worldwide – enough that the company will officially activate membership and launch its brand on June 5, 2008.

I am curious to see how the project will develop and if it reaches its threshold of 5000 members. It seems a bit more difficult then the founders officially expected. In January they were talking about 20,000 people to be recruited. to start the project. Now they are down to 5000, and still 40% away from this target.

Perhaps the founders should just position nvohk in the "pimp my C.V." domain. For just 50$ investment, you honestly can say you run your own eco-business and are investing in the sustainability revolution ...

Context:
- Website: www.projectnvohk.com
- My previous posting about the company

New Open Innovation Marketplace Connects Connects Inventors With the Problems They Can Solve

Planet Eureka started its beta test. Free open innovation service for SMEs.

In its upcoming issue, Information Week reports about a new online marketplace for open innovation. The site is devoted to helping people with solutions find problems. As Marianne Kolbasuk McGee reports in her article, Planet Eureka lets an inventor post an idea in hopes of finding a company interested in using it to solve its own problem or in bringing it to market to solve others' problems. The new site aims to match inventors with small and midsize businesses.

Thus, Planet Eureka turns the idea of Innocentive upside-down (Innocentive posts problems) and is much closer to the conventional patent / invention databases.

"There are thousands of inventors wanting to commercialize their ideas, but it's hard to get a potential manufacturer," says Ken Bloemer, president of Eureka's innovation group.

Many small and midsize businesses also lack deep R&D resources but are looking for great new ideas, he says. Those companies will get first dibs at Planet Eureka. Only small and midsize companies can view ideas during their first 100 days posted on the site. But after that, any company can access them.

Access is free to sellers and buyers. But the company charges for services it provides inventors, such as workshops on how to write descriptions of ideas that tell potential investors quickly what the invention is about without forcing them to trudge through patent abstracts. Inventors can also use Planet Eureka's Merwyn software, which Bloemer says can assess the probability of an invention or idea's success based on its written description.

Planet Eureka isn't the first Web site to traffic in ideas. Open innovation marketplaces have been matching businesses that have problems with people who have promising solutions for several years. Similar services are:

INNOCENTIVE: Connects companies, nonprofits, and government agencies looking for solutions to problems with people and organizations that have answers. Charges $15,000 to post a problem as well as 40% commission on amount paid to the solution provider.

NINE SIGMA: Prepares and posts RFPs for companies and others seeking solutions to problems. Charges fees for all services.

Context: Read the full Information week article here.

Fujitsu Siemens Computers Goes Open Innovation: User Innovation Contest Started

You create the next IT Services for Tomorrow’s Data Center

Fujitsu Siemens Computers (FSC), a large IT infrastructure provider, just started their first community-based innovation contest this week. The contest asks everyone with a clever idea to develop ideas around the Data Center of the future.

They ask the questions how data centers will work in the future, what services will be required by users, and which topics will be of strategic importance for their business.

The contest has been created by a business team within FSC with the help of HYVE AG, a Munich based open innovation accelerator. On the platform, users not just become a source of ideas, but a member of an Innovation Community. This shall enhance their ideas with the help of other contest participants and the internal experts from Fujitsu Siemens Computers.

Every idea can be evaluated and commented by every contestant. As a consequence, ideas become vital elements which can be formed and developed by many spirits and thereby have the chance to gain excellence. While the original spin doctor competes for one of the prizes for one specific idea, the contestant’s activity within the community is rewarded as well.

In order to enable the contestants to actively interact beside the discussions on ideas, several additional functions are available to the participants. Weekly chats with other participants and Fujitsu Siemens Computers Professionals are dedicated to specific topics which are defined according to eminent issues within the pool of ideas. Not to mention the forum and other features.

Every contestant can contribute several ideas. The essence of the ideas is described through a handful of uniform parameters such as target group and basic functionality. The idea can also be enriched by any attachment such as diagrams or mind maps. In order to compare and rank the ideas, the contributions are evaluated along some criteria such as market potential, value to the customer or novelty to the market. Contestants evaluate their own as well as any other idea by these criteria.

The contest consists of different phases:

First, ideas are contributed and evaluated by the community. After two weeks the contest went on, FSC experts will come into play and start the expert evaluation phase were ideas are evaluated along similar criteria as the community evaluated the ideas. A tag cloud helps to explore the pool of ideas intuitively and your favorite ideas can be added to your personal list in order to keep an eye on their progress. And in the end, the winning idea gets 5000 Euro, plus there are several of the latest FSC laptops to win.

So if you are interested in data centers services, here is the opportunity to shape the future of this industry. http://innovation-contest.fujitsu-siemens.com. I am curiuous to see how this company-driven innovation contest works and which people come up to submit ideas.

Conference on Open Innovation in Munich on April 24, 2008

The MÜNCHNER KREIS is a prestigious non-profit supranational association working at the interface of public policy, science, business, and the media on issues of technology, societal and business impacts, and regulation of information and communications technologies. The MÜNCHNER KREIS organizes discussion groups, member conferences, symposia, and congresses.

On April 24, it organizes a rather large conference on open innovation in the telecommunication industries in Munich:
Leadership by Open Innovation in the Telecoms, IT and Media Industries
April 24, 2008, Haus der Bayerischen Wirtschaft, Munich

From the conference announcement:

The telecommunications, IT and media industries are simultaneously facing the challenges of globalization (in emerging markets such as China), convergence (through IP networks) and new value chains (through increased customer involvement and competition). Innovation will be the key to lead in these industries. The important question is: How should firms innovate?

Innovation cycles are shorter and costs are increasing. Could Bertelsmann have created a Google without having a garage in Silicon Valley? Will Kodak and Fuji be the leaders of the digital photos and videos? Will Apple take over EMI? How should firms use inventions of their R&D departments, which do not fit into their current business models? How should firms share, save or protect intellectual property? Is Digital Rights Management advantageous or is a free market model better? Should a mobile operator focus on customers or become a utility company to transport bits and bytes?

Perhaps “Open Innovation” is the magic word to answer these challenges and provide a model for innovation in these industries. Open means on the one hand the involvement of customers, users and clients in the innovation process and on the other hand the opening of the innovation process and sharing of intellectual property with third parties and even competitors. The conference is mainly focusing on the latter aspect, but a few speakers, including myself, will also address the former aspect of user innovation.

Open innovation as a methodology has an impact on business models, on corporate culture, on communication processes with users/suppliers, and on the architecture of the value chain. What do firms need to lead in their markets? Certainly they will need the right innovative products/services, the right business model, the right management and team, and the adequate financial backing. But more and more smart people are living and working outside their corporate borders. Will Open Innovation motivate people to team up, to create and to be passionate across borders or will it lead to strengthen competitors? There are no black and white answers to these questions.

The conference "Leadership by Open Innovation in the Telecoms, IT and Media Industries" will examine and discuss the importance of innovation for the commercial success of new inventions including technology, marketing, business models or a mix of all three.

For more information and registration, have a look in this PDF file (the conference will be in English and German with Simultaneous Translation of German-English language).

Zapfab: User-generated content meets 3D Printing

A new Ponoko-alike company is coming from Manchester in the UK! Zapfab Ltd is a user manufacturing start up that offers a new way of delivering individualized, customized products. As other companies in this field, they are combining the creativity of user-generated content with the power of 3D Printing (fabbing).

In a press release I got today, the company is described as follows:

"User-generated content is ubiquitous throughout the internet, from weblogs to YouTube videos. Zapfab builds on this trend, by providing a website where users can easily generate unique designs for 3D objects.

3D Printing is rapidly gaining ground as a way of creating real, physical objects from 3D design data. Zapfab provides an easy way to access this technology: Once you have generated a 3D design you can choose to have it 3D printed: Zapfab will 3D print the design and deliver the finished object to you.

The Zapfab website has two main areas: the Design Catalog and the 3D Customizer. The Design Catalog contains all the designs on the site and is a repository like Google's 3D warehouse. The 3D Customizer is where the customizing takes place: Each design can be customized in different ways: color, size, pattern, etc. and the 3D Customizer contains simple controls for each of the options. So, once a user has customized a design, she can save it back into the catalog for other people to see. And then they in turn can customize and build on her design.

“We see three main groups of users for Zapfab.com,” said Julie Wood, Zapfab Director, in the press release “First, we have made the 3D Customizer really easy to use, so that anyone can create a unique, customized design in just a few minutes.

Second, there are a range of users with 3D modelling skills, who will be able to upload their designs to the site; and we aim to make it easy for them to add customizations to those designs.

Third, users with programming or scripting skill will be able to create new, highly-customizable designs. And all the designs, from the simplest to the most complex, are customizable through the same easy-to-use 3D Customizer.”

At the moment, Zapfab’s Design Catalog contains over 100 customized designs, ranging from bowls to boxes and bangles. All of the designs can be 3D printed “as is”, or freely customized. It is a nice, but at this stage not too creative collection of things. But I hope to see much more activity on their side, and given that they are located in Europe, I also will try this service by myself in the next weeks and let you know about my experiences.

Open Innovation in the Automotive Industry: NoAE Idea Competition 2008 Has Started

NoAE, the Network of Automotive Excellence, has just opened the second round of its open innovation competition for the automotive industry. NoAE is a German network of more than 100 companies from the automotive industry, including many OEMs (like Audi, BMW, Daimler, Ford, Mazda, MAN, Porsche, and Volkswagen), first- and second-tier-suppliers, and related companies. It is one of the best examples of a non-hierarchical network I know.

For the second year, they also organize an innovation competition where everyone can submit ideas and concepts within three areas:

(1) Health and Wellness in the automobile

(2) Infotainment and Navigation

(3) CO2 Reduction, lightweight constructions, and new materials

The contest itself is a good idea, the execution however follows not the state-of-the-art of open innovation principles: You really have to be motivated intrinsically as you can win nothing than a place on a conference exhibition where the 30 best ideas will be presented. The claim of the organizers is "Ideas become projects, projects become contracts".

Well, many small inventors know that it is a large and difficult path from an invention to a profitable contract in the automotive industry. The structure of the competition still mirrors the hierarchies and traditional structures in this industry.

There may be some value for inventors to get publicity, PR, and an access to auto managers. But in order to really motivate innovation, this may be not enough and sustainable. I believe that in the future, the success of such competitions, and the quality of the ideas submitted there, depends on more than just providing a platform for presentation.

For example, NoAe could

- provide detailed feedback to any idea so that inventors could improve their concepts,

- offer free prototyping capability for inventors lacking this,

- provide networking between the inventors so that some could cooperate to bring their idea on a higher level,

- provide active matching of ideas with potential industrial users,

- pay prize money and honor good ideas and input to the industry.

This incentive structure may also explain why in 2007, almost all winners were companies and no single inventors or "lead users". For a small company, participating in such a competition may have the value of getting an award that can be exploited for marketing purposes. They also may have the skills and capacities to follow up an interested party in a professional way. But for individual actors, I believe there are much better idea competitions to profit from a creative idea.

Important: To submit an innovation, you already should have a patent or design protection for your invention, as participating in such a competition may mean that you have revealed your idea in public and thus you may not be able to protect your idea later. And this industry still is very much about conventional patent protection and not about open source hardware. So submitting a great idea without having IP protection may harm the commercial value as potential users may expect problems of non-exclusivity.

Here is all information about the competition http://www.noae.com/wettbewerb.html However: To participate, you have to understand German as all information is just in German language (but they say in German on their website that they are open for non-German contributions :-)

Great Report on User Manufacturing, Mass Customization, and How a New Infrastructure is Providing New Opportunities for SMEs

Last week, I got a note by Steve King, a research affiliate with the Institute for the Future. This is a non-profit research group based in Silicon Valley. Founded in 1968 by a group of former RAND Corporation researchers with a grant from the Ford Foundation to take leading-edge research methodologies into the public and business sectors, the IFTF today publishes reports to help people and companies to understand what is coming next.

They recently released a forecast report that is part of a series on the future of small business. In this report, they stress that small businesses will actively take advantage and use new manufacturing methods to create mass customized goods.

The report was sponsored by Intuit and can be downloaded on their website: http://www.intuit.com/futureofsmallbusiness/ (download Report #3)

In the report, IFTF writes about a new artisan economy that is the result of new manufacturing technologies, enabling individuals to access similar production technologies as large corporations (crafters using Ponoko, see previous posting, are a perfect example). It is a very nice summary of many of the recent trends that I have discussed here. Fabbing, blogging, user manufacturing, customization, open innovation -- it's all there and brought into a nice and coherent framework.

I especially liked the part about the new infrastructure that is enabling these developments:

"Plug-and-play infrastructures will make small businesses more competitive and successful. The ability of small businesses to take advantage of large-scale infrastructures and leverage new technologies will allow them to enter and compete in industries formerly served only by big business."

As an example, they refer to a great service that is enabling moms to become entrepreneurs, Mom Inventors, Inc.:

"For those who want to avoid teh hassle of assembling these services, firms are available to do everything for an entrepreneur. Mom Inventors Ic., for example, weill develop, manufacture, and sell quality Mom invented products throughout the United States and Europe. The mom (entrepreneur) only needs to come up with the idea, Mom Inventors will do the rest."

So I am expecting to these many more knitted marvels and clever kitchen aids on the shelves, invented by "Lead Moms".

In an e-mail exchange, Steve told me more about the background of the report, and stressed another implication from their research:

"A major issue we are trying to figure out is how small business relates to mass customization and user innovation. This was originally prompted by our work looking at consumer generated media - specifically blogs.

We found that the blogs with the most traffic were not authored by consumers, but by professionals. The professionals tended to fall into two categories: (1) small or independent businesses trying to build a small publishing business; or (2) professionals using blogs to promote either themselves or the goods and services of their company. Looking deeper at the second group, we found that most of them worked for small businesses.

Based on this work (which we did several years ago), we started looking at other categories. We quickly found a similar pattern of small business participation across a broad range of categories, including media (YouTube videos, etc.), open source software, crafts and small scale manufacturing (a lot of Makers at Maker Faire are small businesses, for example), financial services, etc.

Basically, we saw small businesses playing a role in almost every category where niche products and/or services were being built or highly customized. We also found a pattern of category "power users" moving from being hobbyists to starting their own small businesses. We kept seeing "prosumers" turning into small businesses, and we kept seeing small businesses somewhere in the customization value chain."

Accordingly, another area indicated in the report where small businesses will grow in the future is to serve as an innovation lab for larger corporations. Platforms like Innocentive or P&G's connect and develop program will help small businesses to sell their creativity to larger corporations in an efficient way. This may be the next wave of contract research.

Overall, a nice summary of recent trends that is worthwhile reading due its focus on small businesses.

Context: Get the full report here. http://www.intuit.com/futureofsmallbusiness/ (download Report #3)

User-led innovation: New report suggests a framework to structure forms of interactive value creation

strong>"User-led Innovation: A New Framework for Understanding Business and Social Value" is a new report published by the Smart Internet Technology Research Group in Australia.

The report reveals some of the major drivers of user-led innovation and explores how it is affecting organizations' relationships with key stakeholders. It investigates how user-led practices generate business and social value through a major case study of the virtual world Second Life.

A first part by Darren Sharp presents a comprehensive analysis of the structural changes behind the rise of user-led innovation, and develops a model of an emerging ‘User-led Services Ecology’. The second part by Mandy Salomon presents a practical case study of the 3D virtual world Second Life, an important site from which to explore advanced user-led practices, business strategies, and new forms of social engagement.

A nice feature of the report are extensive quotes from interviews with some of the key persons in the user innovation world, including: Eric von Hippel (MIT), Yochai Benkler (Harvard), Jimmy Wales (Wikipedia), Siva Vaidhyanathan (Virginia), John Howkins (Adelphi Charter), Michel Bauwens (P2P Alternatives) and Mitch Kapor (Linden Lab).

The report distinguished between four different fields where user-generated value creation unfolds:

"Widespread convergence of participatory culture, DIY media, collaboration and open exchange, along with decreasing processor, bandwidth and storage costs, have all driven the development of user-led practices across a range of disparate fields. This is leading to the emergence of a post-industrial innovation system that brings with it new production processes, content models, service platforms and licensing agreements.

In contrast to various forms of market-based transactions, user-led practices encompass their own distinctive value systems, motivations and principles governing cooperative forms of social exchange.

This report identifies four ‘user-led niches’ which have become sophisticated enough in their own right to warrant further investigation. Each niche embodies a major driver of the new post-industrial innovation system in the present era of distributed capitalism. These drivers play an important role in shaping the future development of user-led services, and comprise their own unique internal logic, economic model, source of value and objective."

The four user-led niches identified are:
- Social Currency Niche
- Collaborative Niche
- Extractive Niche
- Hybrid Niche

For a summary of the characteristics of these niches, see the picture or read the entire report. I enjoyed the structure and think it provide a nice way to evaluate current developments in the field of interactive value creation. The report is available for download here.

Invitation: European Conference on Sports and Innovation

Are you interested in the future of sports and mass customization in the sports goods industry? Then you should join this upcoming conference.

12 to 14 March 2008 in EINDHOVEN, Netherlands

The conference is an initiative by the European Action Project INNOSPORT.EU. In this project, a number of the core players of the European sports goods industry brainstormed in the last year how to create a better platform for this important industry. I was invited to join the advisory board of this project, as mass customization and user innovation are regarded as some of the key trends in this sector.

The results of this coordinated brainstorming will be presented on the conference. This also is THE KEY EVENT if you are interested in participating in European projects around this sector.

Topics to be discussed on the event:

Sport vision 2015: What social trends are there in relation to sport? What developments are taking place in health and safety aspects? What impact can sport have on the economy? Where are the opportunities for innovation? The Sport Vision 2015 which will be presented at the conference will provide some insight into these issues about trends, needs, aspects and innovation opportunities. The programme also includes a number of workshop sessions and visits to field labs about football, sports promotion, gymnastics, swimming and horse-riding.

European platform: The European Sport Innovation Platform (ESIP) will be launched at the conference. This is a proactive networking platform at European level for high-tech companies, knowledge institutes and government, with the aim of joining forces in innovation and creating new opportunities as a result.

Free company presentation: We are pleased to offer you the opportunity to present your company free of charge during the conference. Please visit the website for more information.

International speakers who have already agreed to take part in the conference are Alberto S. Bichi – Secretary General FESI (Federation of the European Sporting Goods Industry), Antonello Marega – R&D Director of Tecnica, and Philippe Freychat – Vice-president Sporaltec and R&D Director of Decathlon.

Program and registration: For a detailed and up-to-date programme, please visit www.innosport.eu where you can also register for the conference.

Further contact: Marc van der Zande, TNO Science and Industry, marc.vanderzande@tno.nl

Crowd F(o)unding an Eco-Clothing Label: nvohk explores the collective customer commitment method to create a new fashion line

In a press release today, nvohk (pronounced ‘invoke’) announced that it has signed up over 1,250 future members for its crowdsourcing-based business model. Its founders, Brendan T. Lynch and Sergio Salas, claim that it is the "first community-managed, eco-friendly, surf-inspired clothing company."

Their idea places our "collective customer commitment" model into action: Get 5000 members who pay 50$ each of funding, use the money to create an eco-friendly line of clothes, and then sell the clothes to a wider public and share the profits with the original members. Members, as part of their pre-payment, get the right to vote on new designs and co-manage some of nvohk's business decisions. Members, for example, can decide about the logo design, web design, product design, advertising, etc. In addition, nvohk will donate 10% of net profits to environmental organizations selected by its members. In the mid-term, the company wants to recruit up to 40,000 members.

The idea has some appeal. It indeed "fills a gap in the lifestyle brand arena," as the press release says. Nvohk enables consumers to get involved and participate in business decision-making and environmental causes. It also provides consumers with an entertaining platform for making a perceived positive impact on the environment.

But it also is a clever business model building on customer integration. For the 50$, customers will get a special t-shirt and 25% off all nvohk products. They also get kind of a dividend: 35% of nvohk’s net profits will be transferred into reward points that can be redeemed by members to purchase products. This all sounds like a slef-sustaining business cycle.

If you want to invest 50$ as well, go here: www.projectnvohk.com.

Open Innovation in Switzerland: Help Major Swiss Firms to Innovate

The open innovation idea has arrived in Corporate Switzerland (in research, there already have been many activities in this country). And it is not about reinventing their chocolate or cheese ...

Open Innovation GmbH is a new intermediary in Switzerland that is building on idea competitions as a method for open innovation. The company was just launched and is now in its beta stage. Its founders are three young Swiss entrepreneurs, Christian Hirsig (CEO), Reto Aebersold (Software Development) and Mathias Ruch (Business Development). The pilot stage is evaluated by Christian Lüthje from the University of Berne, one of Europe's key professors in the area of user innovation.

And they need your help:

Major Swiss corporations like Swiss Telekom, Mammut Outdoor wear, Google Switzerland, Swiss Postal Services, and many others are opening their innovation processes to the public -- and you can participate in solving their challenges. Have a look on the web site http://pilot.openinnovation.ch for more information and registration.

The participation in this challenge is open to everybody (who is able to understand German, sorry!) and the best ideas are rewarded by cash in good old Swiss Franc. This open innovation projects starts on January 22nd 2008. I will keep you posted on the results of this project.

Crowdsourcing methods are McKinsey's Prime Business Technology Trends to Watch In 2008

In the recent issue of McKinsey Quarterly, the business journal of strategy consultants McKinsey & Co, James Manyika, Roger Roberts and Kara Sprague discuss Eight Business Technology Trends to Watch In 2008. Five of those eight relate directly to the topics of this blog:

Four trends, Distributing Cocreation, Using consumers as innovators, Tapping into a world of talent, and Extracting more value from interactions are sub-sets of the larger Crowdsourcing idea.

(1) Distributing co-creation is just another term for our own "interactive value creation" or Benkler's "commons-based peer production" or Don Tapscott's "Wikinomics". No doubt that this is a mega-trend which has been described widely in the last years but which practical implementation just has started. In consequence, McKinsey estimates that 12% of all labor activity could be transformed by more distributed and networked innovation:

"Outsiders offer insights that help shape product development, but companies typically control the innovation process. Technology now allows companies to delegate substantial control to outsiders -- co-creation -- in essence by outsourcing innovation to business partners that work together in networks. By distributing innovation through the value chain, companies may reduce their costs and usher new products to market faster by eliminating the bottlenecks that come with total control."

Interestingly, however, in the entire McKinsey article is no word on open source or open licensing models ("commons-based") which are a main driver for the efficiency of distributed open systems of value co-creation. This may be perhaps too much for the typical reader of McKinsey Quarterly.

(2) Using consumers as innovators: Well, not really a new trend, Eric von Hippel is saying this since the 1970s, and since the beginning of industrial production consumers are inventing new products. The new trend, however, is that firms are seeing this potential and they increasingly are utilizing the capabilities for innovation. They are not just asking for feedback on their own creations, but they are integrating consumers actively in the creation of something new. MyKinsey is quoting Threadless here, but this is not a correct example for this trend as most the creators at Threadless are no consumers but experts!

A better example, quoted by the iRise Blog in a posting on the McKinsey article, is Dell's IdeaStorm, and, on the B2B front, Salesforce.com. This software company is using an application for users to make suggestions to improve their CRM software. The top ideas from this contest is receiving executive-level visibility.

(3) Tapping into a world of talent is the consequence of opening your innovation and value creation process:. The people reacting on an open call for participation in the " Distributing co-creation" idea are those who are the most talented to do this work (as they have relatively lower cost to fulfill the job):

"As more and more sophisticated work takes place interactively online and new collaboration and communications tools emerge, companies can outsource increasingly specialized aspects of their work and still maintain organizational coherence. Much as technology permits them to decentralize innovation through networks or customers, it also allows them to parcel out more work to specialists, free agents, and talent networks."

This leads to a further consequence, and their next trend: (4) Extracting more value from interactions. The more a company is relying for value creation in its periphery, the higher is its costs for coordination compared to production cost.

"As a result, a growing proportion of the labor force in developed economies engages primarily in work that involves negotiations and conversations, knowledge, judgment, and ad hoc collaboration—tacit interactions, as we call them. By 2015 we expect employment in jobs primarily involving such interactions to account for about 44 percent of total US employment, up from 40 per