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2005 Nov Companies Open Path to Customer Innovation

2005 Nov Companies Open Path to Customer Innovation

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Published by Joshua Gans

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Published by: Joshua Gans on Jul 27, 2011
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07/27/2011

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Companies open path to customerinnovation
  November 18, 2005, The Age
Organisations are going to those they serve in the quest for ideas fornew products, writes Joshua Gans.
 IT WAS only a few years ago that a colleague told me a sorry tale. He andhis eight-year-old son were enthusiastic Lego builders. His son took considerable initiative and came up with some innovative designs for a newLego product. He even carefully wrote out the instructions.Eagerly they were sent to Lego with the hopes, not of money, but of thesatisfaction of making a contribution to the company they had loved for solong. And the reply: a legal letter asserting Lego's intellectual property over all such things and the aggressive response they could expect if they ever tried to profit from these designs.It was against this backdrop that I was thrilled with the news of a seemingseachange in Lego's approach. Lego has announced the first winners of itsLego Factory contest. Eight Lego customers had designs selected for actual production as Lego sets. Not only this, but each received (or shared if their designs were bundled) 5 per cent of the revenue from sales of the sets. Nowthis is more like it.Lego has turned from an inward-looking company to one that actively looksexternally for new ideas. You can even download a 3D Designer kit (for free) to assist you in developing ideas for Lego. In so doing, they bring thewealth of creativity from their own customers to their organisation. And,moreover, these are the very customers who will end up buying products:who better to engage in product design?The phenomenon — whereby manufacturers look to customers or users for  product development ideas — has been termed "user-based innovation" byEric von Hippel. And it is not just toys where this is being employed as anactive strategy. It all began with scientific instruments. Some innovativemanufacturers noticed that scientists built their own tools, used them andthen told no one else! The manufacturers searched for those ideas andcommercialised them. The scientists already had their requisite reward fromsolving their own problem; the rest was bonus.

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