Using Online Customers in the 'Fuzzy Front End' of New Product Development. The idea that organisations can better design products if they actively involve customers in the development process is not new. The richness of opportunity that online communities offer is of such magnitude that we should view it as a new phenomenon and shed some of our marketing preconceptions. Wikipedia, Loncin (Vietnamese motorcycles), Naver (Korean search engine), Threadless (US T-shirts) are existing examples of co-created products that have disrupted markets, not just refined them. We know it works, we recommend it to our clients, some of them are doing it already... In this post I will discuss 6 salient aspects of 'Social Production', hopefully whetting your appetite enough that you will investigate this adjunct to traditional product development.

1. What is Co-creation / Social Production? The solicitation of product ideas, improvements, refinements from the members of an online community
2. Why use this approach? Because it is more efficient. In Australia there are 2 critical resources that are widely distributed in small chunks; customer motivation and excess computing capacity. In this situation, "...social sharing can outperform secondary markets as a mechanism for harnessing that excess capacity." This is because transaction costs would exceed the value of individual contributions if you tried to manage them uniquely and because customers are motivated to contribute to 'social' projects. Results speak for themselves, but online communities may be the only practical way to tap into these resources.
3. How much resource are we talking about? Hard to quantify exactly for Australia, but enough. With ubiquitous Internet access, 7 million Internet users (a guess), each with 2 spare hours a day - the gross potential resource is 14 million man hours per day. The question is how best to get your share.
4. Why would customers contribute? For this question we are increasingly on solid empirical ground, thanks in part to recent work done by Manfred Krafft et al.
   • Agnostic giving - intended to show the person giving is more important - the mark of gifts in an online community is not the lack of obligation, it is the absence of calculation.
   • Customers have a problem or un-met need and participate because it increases the chance you will do a better job for them
   • Curiosity about the process
   • Interest in innovation generally
   • because you reward them
5. What will it cost me? The Krafft research found that direct costs (rewards to customers) are not productive - if you pay you get more ideas of lower quality. The real costs are attitudinal; a willingness to suspend control, an ability to provide seed ideas and supporting information and a willingness to keep the conversation's subject matter broad. All of these increase the volume and quality of the ideas contributed. But most of all remember that social production (user generated content) has caused a change in taste as well. Active contributors value new and different things in their interactions with media than passive users did. They invite you into their space, to be invited back you have to bring a plate and be an amusing conversationalist. Give it a try next time you have a product to develop.
6. Are there local examples? Yes. At least 3 national organisations that I am aware of, 2 in retail, one in financial services