If you’re reading this, you’re likely keen to find out more about how to successfully manage your open innovation program. Perhaps you’re looking to try out co-creation innovation with your customers but don’t know where or how to start yet. Read on to learn how HYPE’s client Liebherr has harnessed open innovation at their organization to successfully run a co-creation program with their customers.
Types of open innovation
Innovation can apply to a new product or service, or to a process, for example, how a product or service is created and delivered. It can also encompass changes in positioning, meaning how a product or service is introduced.
In terms of the process of getting there, or making the innovation happen, there are many options, depending on your business strategy, the resources at hand, and your end goal.
One way to assess the best type of open innovation for your organization is to look at the stakeholder you’re involving in your innovation program, be it a supplier, a customer, a startup, or society at large.
Here are some examples of the stakeholders our clients have chosen to work with in their open innovation.
What is co-creation with customers?
Co-creation with customers is an open innovation initiative that includes your customer community as a partner into your innovation program.
Typically, companies engage in open innovation with customers to:
- Gain additional insights
- Improve customer experience
- Create brand loyalty
- Engage in new product development
For customers, open innovation initiatives offer the opportunity to:
- Become more closely connected to the organization
- Understand its way of working
- Share insights on a specific topic
Co-creation with customers becomes a way to maintain an ongoing dialogue and also become truly customer-centric organization.
Open innovation with customers is becoming increasingly common. For example, toy manufacturer Mattel has created MyMattelIdeas – a portal where anyone with a new toy idea can share their insights and contribute to new product development; Indian car manufacturer Tata Motors uses crowdsourcing to let the public vote on future mobility solutions; and hotel chain Marriott pursues "Meeting Innovation" through continuous engagement with customers and their needs.
We talked to Liebherr Appliances’ Innovation Manager Bernhard Vierbauch and International Market Research Manager Christina Terenkoff to learn how Liebherr engages its customer community in open innovation.
Liebherr's approach to co-creating with customers
Liebherr Group is one of the world's largest manufacturers of construction machinery. With 16 companies throughout Germany, more than 46,000 employees help shape technological advances in many other industries. Founded in 1949 by Hans Liebherr, the company is still family-owned, something that has always influenced its corporate culture and continues to provide a firm foundation for success. Liebherr prides itself on continually innovating and achieving successful idea management on a large scale:
"We work systematically to keep one step ahead."
The Domestic Appliances division, one of 11 divisions at the Liebherr Group, manufactures more than 3,000 products, including refrigerators, freezers and wine coolers, and is noted for its innovative ideas, modern designs, and well-thought-out solutions.
Being naturally close to its customers, the idea of starting a crowdsourcing campaign in the Domestic Appliances division and involving its customers seemed an obvious choice. Energized by the possibility of using the lessons learned from internal innovation campaigns to work with people outside the company, what was to become known as the "Wine Experience" project focused on bringing Liebherr’s customers deep into the innovation conversation.
The process of co-creating with a customer community
The "Wine Experience" customer crowdsourcing project unfolded in four main phases.
1. Market research online community
The first phase was to create and engage an online market research community. Liebherr built this community around its existing and potential customers.
"We invited people who had bought a wine cabinet not only from Liebherr but also from other brands,"
explained Liebherr’s International Market Research Manager Christina Terenkoff.
Over two months, Liebherr identified significant customer pain points associated with wine consumption and wine storage while using wine cabinets.
This groundwork focused on how customers related to Liebherr products as well as those from other brands. It was important for Liebherr to understand where potential improvements could be made and what sort of workarounds customers were using.
"We asked people to describe the problem,"
"We also asked, “Does everyone have this problem or just a select few?" and “How do you prevent the problem from reoccurring?”"
2. Develop internal idea campaigns
During Phase 2, the Open Innovation Campaign Team (the "Innovation Team") further refined the insights from Phase 1, with the help of other Liebherr employees. Using a mix of qualitative research (daily diary entries, discussions) and quantitative research methods (surveys), the Market Research Team learned a great deal. They gained insights about their customers' habits, their relationship to wine and wine cabinets, and the major problems users faced with wine storage and cooling products.
The Innovation Team also acquired additional insights into the real pain points customers were facing. "We had insights from product management about our wine customers," said Terenkoff. "These assumptions were basically verified or falsified in the first phase." Ultimately, the team created a shortlist of pain points, identifying and prioritizing the most significant ones.
3. Crowdsourcing campaign with customers
The third phase required the team to focus on successfully marketing the project to the outside world. For example, they needed to provide a dedicated landing page, easy mobile access to the campaigns, and a guest view to enable potential participants to preview the content.
Community discussions with customers.
Because this phase involved more people, it required tighter coordination among the different functions, including:
- Launching and maintaining the open innovation platform
The Innovation Team oversaw interactions on the open innovation platform and ensured they involved the right people at the right times.
- Involving the right stakeholders and crowdsourcing their knowledge
Product managers provided background knowledge and comments on customer input and took part in the evaluation of ideas.
"Product management commented on ideas and asked questions to narrow down some specific areas," explained Liebherr Appliances Innovation Manager Bernhard Vierbauch.
- Gleaning technical insights about the feasibility of ideas
“Developers” helped to promote rapid triage. "The developers gave feedback on ideas because we wanted to quickly understand if something was feasible or not," Vierbauch continued. "We had ideas that sounded good but had physical limits. I think it was good that technicians then gave some in-depth feedback."
- Ensuring the ideas can be turned into a reality
Campaign sponsors ensured that the winning ideas had a clear path to execution. "We had two sponsors," Vierbauch noted. "One was the product manager responsible for wine cabinets, and the second was from our e-business department, focusing on digital business models accompanying our hardware."
4. Evaluation of results
The evaluators were a mix of technicians who had previously worked (or were still working) on wine-related projects, and the evaluation itself took place in multiple rounds to ensure that no idea was lost or overlooked in the process.
First, evaluators looked at whether the company had already tried any of the collected ideas. Next, they looked at how technically feasible each idea was, which involved working with product managers to understand each idea’s potential. The final criterion was how well each idea fitted with Liebherr's other domestic appliance product lines.
Each evaluator was selected based on their unique expertise. For example, Liebherr has a team specializing in water and ice solutions, so they were chosen to be the expert evaluators for ideas in these areas.
The outcome of co-creation with customers
After eight weeks of ideation, the "Wine Experience" project received nearly 10,000 page-views, which resulted in 2,300 user sessions.
Of the 174 participants successfully interacting on the platform, 123 were entirely new to the organization.
The project generated an astounding 139 product and digital service ideas, as well as 639 comments. The Innovation Team used a technique called community graduation to promote the best ideas to "hot" status, and eventually shortlist the ideas.
Although open innovation with customers was a new format, the results energized top management. Investing in a new way of working paid off!
Key challenges and lessons learned
Finding the right participants is critical to success
Selecting the right participants is essential to high-quality idea generation. In Phase 1, market research with the online community, the team recruited participants through a special registration form (a “screener”). They also created a dedicated landing page containing all the relevant project information. There was constant communication with the crowd, ensuring that the right people contributed to the right conversations.
In Phase 2, the team used targeted advertising to highlight the project to relevant participants. "Initially, we had trouble recruiting people," Vierbauch commented. "It was not such a smooth process." One month into the project, the team offered guest access to give potential contributors a preview of what to expect. As the metrics revealed, this was a winning strategy.
Motivating the community can be tricky
Motivating stakeholders from outside the company's boundaries to participate in an open innovation initiative can initially be a challenge. Whereas employees have a vested interest in a company's success (they typically identify with the company’s culture and want to contribute to collective growth), external stakeholders usually do not.
For the Wine Experience project, Liebherr made sure that the community was always engaged by interacting with them in an engaging manner (Phase 1) and making sure the crowd received feedback (Phases 2 - 4). For example, the Innovation Team asked the community to describe their relationship to wine coolers as though wine coolers were a person. This unusual approach helped to identify the key pain points customers experience when using their wine coolers.
Additionally, the Innovation Team ensured that participants could have high-quality discussions with Liebherr product managers and developers on the dedicated platform. "There was just no place to talk about wine at such a [high-expertise] level," said Terenkoff, echoing the community member’s feedback. "They really enjoyed having this closed space of people who are qualified."
This way of working gave participating customers a unique glimpse into how new ideas are generated and then transformed into new products and digital services. Finally, the best ideas (those receiving the most innovation points) also received prizes, including the chance to take ideas through to implementation.
Perceiving technology as an enabler
The role of a digital platform in open innovation is particularly important. A platform can help to scale the ideation process and store the results safely. Additionally, it can help to bridge the geographical divide and create transparency around the process of new product development.
"You should not be scared to use technology to get in touch with your customers,"
"In the end, there is always this phase of setting up something (whether online or off). While using an unknown system can be daunting, ultimately, it's a really good solution to get (and stay) in touch. After using it for a while, I think it's not as difficult as some might expect."
Based on Liebherr's experience, co-creating with customers can bring a wealth of know-how (both ideas and best practices) into an organization. If engineered successfully, initiatives such as the "Wine Experience" customer crowdsourcing project can help companies achieve their customer-centricity goals and effectively accelerate new product and service development.
For customers, engaging in open innovation enables them to participate in high-quality discussions on themes they are passionate about. It also gives them an opportunity to understand the intricacies of new product development (from a company's perspective), become part of a community of creative problem solvers, and even receive reward and recognition for their work.
Ready to run an open innovation campaign? Get started today!