Warc Blog

Co-creation, open innovation key for brands

10 August 2010
NEW YORK: Brand owners aiming to meet the challenges of the digital era should focus on co-creation, open innovation and consumer insights, according to a study.

McKinsey, the consultancy, reported there are currently 4bn cellphones, 450m mobile web users and 68m people posting blogs and product reviews online.

One key response to such trends is "distributed co-creation" - or generating ideas for possible new goods, services and advertising campaigns in partnership with the internet audience.

McKinsey revealed that 70% of senior executives believed online communities provided a chance to create significant value.

Procter & Gamble, the FMCG giant, has leveraged this opportunity via its Vocalpoint.com site dedicated to mothers, who can share their views about its brands with friends and other netizens.

"In markets where Vocalpoint influencers are active, product revenues have reached twice those without a Vocalpoint network," McKinsey said.

Building an internal, corporate social network can also pay dividends, and Dow Chemicals has even extended this strategy to include retired employees.

Amazon's Mechanical Turk platform offers "businesses and developers access to an on-demand scaleable workforce" of experts and enthusiasts.

Such an approach to can be applied more broadly, with Bechtel, the engineering firm, having established an in-house "open-collaboration" database of information.

As a consequence, Bechtel found 25% of the material required for new projects actually already existed in most cases, lowering launch costs and reducing lead times.

The notion businesses could become a "full-time laboratory" is another growing trend, given the wealth of insights contained by sources from social media to mobile GPS.

This transition towards "big data" is evidenced by the fact that the amount of available information is doubling every 18 months, allowing companies with suitable analytics software and the flexibility to react.

Amazon, eBay and Google are some of the pioneers in the field, assessing details like where to locate buttons on websites and the order in which content should be displayed to confirm what drives engagement and sales.

Elsewhere, Capital One, the financial services specialist, appointed a team of analysts, IT staff and marketers to segment its customers and develop products, participating in around 65,000 tests a year.

Ford, PepsiCo, and Southwest Airlines all operate systems to monitor the buzz on properties like Facebook and Twitter, helping them gain a real-time appreciation of shopper perceptions and habits.

The evolving climate also means corporations can profit from "imagining anything as a service", McKinsey continued.

This is shown by Alibaba, a B2B exchange in China that has signed up 30m enterprises keen to promote their own capabilities or locate partners.

"Its network, in effect, offers Chinese manufacturing capacity as a service, enabling small businesses anywhere in the world to identify suppliers quickly and scale up rapidly to meet demand," McKinsey argued.

Mixed advertiser-funded, subscriber and "freemium" models have built on similar trends, and photo-sharing site Flickr, music portal Pandora and communications firm Skype show how this delivers results in practice.

Further benefits can come from "innovating at the bottom of the pyramid", a tactic championed by General Electric, which has constructed R&D centres in emerging markets to achieve this goal.

Safaricom, the telecoms provider, has moved into the banking space, giving eight million African customers "virtual cash" on their handsets, as most of this demographic lack the funds or documents to open bank accounts.

Data sourced from McKinsey; additional content by Warc staff

 
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