Open Senior Service Innovation
Integrating senior citizens into newproduct development to improve yourfirm's capability for innovation
DISCLAIMER
No portion of these materials is tobe used or disseminated by any
method without the expressed
written consent of the presenter(s)and the German Institute forJapanese Studies (DIJ).

Frank T. Piller
Chair Professor,
RWTH Technology / Innovation Management GroupTokyo, October 2008
open-innovation.com
p| tim.rwth-aachen.de1

A critical task in new product development (NPD) is to define
a new product concept amidst customer & technology uncertaintyProduct definition critical to new product success (Cooper 1993; Krishnan &Bhattacharya 2002), but challenged by customer and technology uncertaintyUser satisfaction (adoption) increases with degree of fit between users'
users
needs and characteristics of product (e.g., Ulrich & Eppinger 2004).

Conventional approach: Manufacturer tries to understand causal network
withith detailed information via
ia market researchDespite all of today's methodological advances in market research, many
companies
pstill fail to ggather this input
p in an efficient and effective wayy ((Tollin2002; Burke 1996), NPD flop rates continue to rise2

A critical task in new product development (NPD) is to define
a new product concept amidst customer & technology uncertainty
Product definition critical to new product success (Cooper 1993; Krishnan &Bhattacharya 2002), but challenged by customer and technology uncertaintyUser satisfaction (adoption) increases with degree of fit between users'
users
needs and characteristics of product (e.g., Ulrich & Eppinger 2004).

Conventional approach: Manufacturer tries to understand causal network
withith detailed information via
ia market researchDespite all of today's methodological advances in market research, manycompanies
pstill fail to ggather this input
p in an efficient and effective wayy ((Tollin2002; Burke 1996), NPD flop rates continue to rise

Previous research has identified several causes for flops:
Customers face an inherent difficulty in accurately specifying their needs:
Stickyness of need information (von Hippel 1994, 1998; Szulanski, 2003)

Exploding heterogeneity of demand (Piller 1997, 2006; Zuboff & Maxim 2002) is increasing
challenge. Silver Markets and requirements of older consumers are adding alevel of complexity in understanding what customers (really) want.
3

The Hollywood movie "Big" reminds us of this challenge. Only
when the user is the product creator, successful products will arrive.
 In the movie, Tom Hanks is playing a small boy,
Josh Baskin, who wants to grow up.
 Josh Baskin goes to a wish/fortune-telling machine
and wishes that he were "big". The next morning,
he sees a face in the mirror he does not recognize.
Overnight, he has become a 30-year-old man.
 After some trouble caused by the actions of a 1111year-old behaving like a child, but looking 30, Josh
gets a lowly data-entry job at the MacMillan Toy
Company in New York.
 In a memorable scene, he meets the company'sowner, checking out the products at a toy store,
and impresses him with his childlike enthusiasm.
 This earns Josh a promotion to a dream job for akid: testing toys all day long and getting paid
for it. With his insight into what to sell to children,
he quickly rises up the corporate ranks.
 He is product creator and user in the same
person, hence not "lost in translation" (i.e.,facing problem of transferring sticky information).

4Our idea: "Open Senior Innovation": A new approachto reduce the NPD risk and increase NPD efficiency
Objective: To develop a method which enables seniorcitizens to directly transfer their needs into an artifact thathighly corresponds with their needs. This means to shift somespecifications of the product into the domain of the user.

The idea is to isolate the source of uncertainty, i.e. sticky
i finformation
ti aboutb t user needs,d andd tto placelit entirelyti l outside
t id
the boundary of the manufacturer. This is a fundamental
break with the current understanding of the innovation
process (Piller(Pill & von Hippel,Hil 2007).
The idea is not to try to understand what older consumers
may think and want, but to enable them to co-design exactly
what they wantwant.

Open Senior (Service) Innovation Platform: Provide
platform and supporting infrastructure so that seniorconsumers can participate
ti i t iin ddefining
fi i fitti
fitting products
d t ffor ththeirineeds, but also in solving technological problems along theinnovation process.

Picture: Age S
Simulator by duuke HealthCaree Communication

5

The concept of open innovation acknowledges that importantpfor the innovation processpcome from outside the firm.
inputs
Open Innovation: Bringing (a stage of) the innovation process to anundefined (and generally large) network of people in the form ofan open call. Solving the problem can take the form of peerproduction (when the job is performed collaboratively), but is also
often undertaken by sole individuals (Piller 2003, Reichwald & Piller 2008
building on Benkler 2002)
2002).

Open innovation starts at two levels:
Providing better access to need information about thecustomers' preferences.
Providing better access to solution information how totransfer this need into a new product or a new service.

6

Every innovation process requires two kinds of information,influencing the efficiency and effectiveness of the process.
Solution
Information

Doing things
rightsproblem:
getting
access tosolution
information

Need
Information

marketlaunchproduct
development

Ideationconcept
development

Doing the rightthithings

problem:stickynessof needinformation

7

Methods for Open Innovation can be structured around theircapability to access need of solution information.
Solution
Information

NeedInformation

Lhi Customer
C t Launching Lead User Communities

 Idea contests
 Communities

Doing thingsrights
 Toolkits
 LeadL d Experts
Et
 Broadcastingof Problemsp Development
Communities

marketlaunchproduct
development

Ideationconcept
development

Doing the rightthithings

 Lead User
 Idea contests
 Toolkits for user
innovation
 Broadcasting8

Methods of open innovation to gather need information include
the lead user method, idea contests, and screening if communities.
Solution
Information

NeedInformation

 LaunchingL
hi CustomerC t Lead User Communities

Doing thingsrights
 Toolkits
L d Experts
Et
 Lead Broadcastingof Problemsp
 DevelopmentCommunities

 Idea contests

marketlaunchproduct
development

Ideationconcept
development

 Screening ofCustomer
Communities
Doing the rightthithings

 Lead User
 Idea Contests
 Toolkits for User
Co-Design9

BMW has developed successful new mobility services byintegrating its customers deeply in the innovation process.

Customer Idea Contests
10redesignme.org

Co-Design Toolkit in Use-Stage11

Methods of open innovation to gather solution information
include Lead Experts and Broadcasting of Problems (Crowdsourcing)
Solution
Information

NeedInformation

 LaunchingL
hi Customer
C t

 Lead User Communities

Doing things
rights Toolkits
L d Experts
Et
 Lead Broadcastingof Problemsp Development
Communities

 Idea contests

marketlaunchproduct
development

Ideationconcept
development

 Screening ofCustomer
Communities
Doing the rightthithings

 Lead User
 Idea Contests
 Toolkits for User
Innovation

12

Broadcasting of Problems
13

Innocentive has found a very efficient way to solve technicalproblems by integrating external experts.
Firm R&D Labs
Firm R&D Labs
InnoCentive.com

Firm R&D Labs
Firm R&D Labs

R&D Labs of 26 firms, 10 countries,
8 iindustries
d ti

Knowledgeg Broker

140,000,independentp
scientists

Context:
1 R&D Labs inside of major multinationals are not able to solve certain
1.
scientific problems. Their own internal and external experts cannot obtainsolutions.
2. Hope to get solution by going to distributed network of scientists that they do
not know who may have an answer.
14

Research by Karim Lakhani (HBS) shows that Innocentive hasa VERY efficient mechanism for technical problem solving.
Context for posting problems
Firms spent 6 months to 2 years trying to solve problems internally
Offer on average $30,000 for solution
Solutions need to be submitted within ~6 months of initial posting
49 problems (29(29.5%)5%) that had not been solved internally were solved (n=166)!
Participation of external problem solvers shows an striking pattern:
In average,g , 240 individuals examined the detailed problem
pstatement.
In average, 10 solution submissions per problem were submitted.
Winning solvers spent in average only ~74 hours to solve problem
non-winningg solvers 36 hours.
Winning solvers leverage preexisting knowledge (72.5% reuse)
Interest diversity and solver specialization attracted helps to solve problems.
A large group of solvers are older researchers in retirement. Open innovation
provides an efficient way to tap into sunken knowledge source.
15

Nine Sigma is another website that provides access to external
problem solvers --- again many of them retirees.

Broadcasting of Problems16

A dedicated platform for open innovation for products and services
for the Silver Market shall utilize the capabilities of open innovation
as demonstrated before.
beforeSolution
Information

NeedInformation

 Launching
Customer Lead User but
Many tools
and methods for open innovation,
 Communities
 Idea contests

no focus on needs and requirements – andCCommunities
iti
capabilities – of older consumers (on the contrary,
there are 50 sites market
where teenscan co-design t-shirts
Ideationlaunchbutnotonedirected to older users).
)
Doing things
rightsproductdevelopment

concept
development

Doing the rightthings

 Lead User
 Toolkits
Project idea is to create a dedicated platform
Idea contests
 Lead forExperts
open innovation for products andservices
 Toolkits
for user Broadcastingfor the Silver Market. innovationof Problems
 Broadcasting Development
Communities
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Open Senior (Service & Product) Platform shall combine bothmethods to access need information and methods to utilize
di t ib t d solution
distributedl ti
information.
i fti
Open innovation starts
att twotlevels:ll
Providing better
access to needinformation about thecustomers'
preferences
preferences.
Providing better
access to solution
i finformationihhowtotransfer this need into anew product or a newservice.

UsersFirmPartners
OSSICommunity
WebProblemSolvers

18

Such a platform promises a broad set of benefits and advantages –their realization however still has not been shown.
Overcoming the sticky information problem of accessing need information.

Providing direct access of older users to manufacturers and service
providers (firm partners).



Initiation to innovation project can be user community, but also firm.

Id can b
Idea
be generated
t d

Utilizing resources of experienced contributors with heterogeneous set ofexperiences.
Transfer of idea of offline senior expert networks.

Utilization of large untapped labor source (scaling attempts on
corporatet level).
ll)Special requirements of designing platform w/r to usability
and incentive structure.

Special focus on service development.
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Objective of project is to perform a feasibility study to build
understanding of technological and economic constraints andprinciples of senior innovation platforms.
Main objectives
jof project:p j(1) Create proof of feasibility for internet platforms for open senior (service)innovation(2) Understand technical and economic principles.
(3) Build an exploratory prototype of platform and pilot it.
(4) Generate
Gt businessb imodeld l howh
tto operatet platforml tf
sustainable.
t i bl(5) Establish an international research network of scholars andcompanies
i workingki iin th
the fifieldld tto explorelth
the platform.
l tf
We are happy to cooperate with you and get your feedback
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titim.rwth-aachen.dethh d | www.open-innovation.com
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