Challenges for Open Business Models

Another article from The McKinsey Quarterly (see previous post) provides very useful insights on the process and challenges of open innovation. Jacques Bughin, Michael Chui, and Brad Johnson provide several examples of organizations following an approach which they call distributed cocreation, characterized by multiple parties collaborating to jointly create new products or services.

The authors distinguish three ways organizations may adopt distributed cocreation:

1. Market the cocreated product or service. Examples range from LEGO providing a platform for its customers to design new products, to participatory marketing, where customers are engaged in creating marketing campaigns.
2. Provide a complementary product or service. This is a common case for many IT companies that provide a service layer on top of an open source software product, such as support and customization.
3. Leverage the indirect benefits of distributed cocreation, such as brand identity, public relations, etc.

The article then goes on to list leadership challenges that need to be managed within an open innovation model.

1. Attracting and motivating cocreators. How do we motivate the participants of online communities to provide contribution? The authors name financial incentives, community recognition, ease or difficulty of contributing, and well-structured paths to coax participants to move from lower to higher levels of participation as some examples of motivators in the distributed cocreation process.

2. Structuring problems for participation. With hundreds or thousands of participants in the open innovation process, it is neccessary to structure the problems that need to be resolved to leverage the contribution of each individual.

3. Governance mechanisms to facilitate cocreation. The governance role is typically handled by some kind of project or community board. This role contains setting the vision and providing leadership, communicating and enforcing rules, setting goals and resolving issues.

4. Maintaining quality. As the products of distributed cocreation need to compete in the market with their traditional counterparts, it is necessary that adequate levels of quality are maintained. The quality management processes may differ from the regular ones, however some studies show that open source products, such as software, may result in greater quality than commercial proprietary products.

The authors share also research results into the motivating factors of online community contributors. These include rewards, fame, fun, altruism, however one of the most important factors is brand affinity and trust. This is quite coherent with the view presented in a few of my recent posts, which suggest that shared principles, values and trust need to be at the core of every online community.

Source: Jacques Bughin, Michael Chui, and Brad Johnson: The next step in open innovation. The McKinsey Quarterly, June 2008.


1 Response to “Challenges for Open Business Models”

  1. 1 N8 Web Designer Trackback on April 23, 2015 at 12:40 am

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