One key theme that emerged from last week’s Web 2.0 Expo event in San Francisco is that winning business models must create more value than they capture. Tim O’Reilly preached this point during his keynote and praised Facebook as being a leader in creating a platform that “has meaning” and is “useful to other people.” Creating vast amounts of external value requires a business to have a keen understanding of what people want. During Eric Ries’ keynote on the Lean Startup, he talked about how many organizations (from web startups to enterprise IT) build technology based on the faith that the user will want them, rather than actual user needs. These “faith-based initiatives” produce products that “fundamentally nobody wants.” Ries lamented, “this is preventable.”
Ries is right. In today’s environment of technology immediacy, we have a conversational medium where people’s expressed interests, desires and opinions on products and services are recorded and publicly available. This provides an incredible opportunity for businesses to listen, dialog and crowdsource products and services. They no longer have to guess what constituents want – they can capture this information quickly, and at scale. Consumers are saying exactly what they want on sites like Twitter.
We are starting to see companies invite customers into the product development process more often. For example, IBM’s WebSphere team created an online community named Project Zero to allow customers, business partners, and the larger Web developer audience to collaborate in the commercial product development of sMash, IBM’s software platform for enabling agile, Web 2.0-based application development and execution. According to IBM’s WebSphere team, the community of developers identified bugs and defects and provided feedback on the source code as the software was being developed. Project Zero proved to IBM that inviting customers, business partners, and other key constituents to provide feedback early in the development process helped the company launch more relevant products that met real world needs. According to IBM, sMash emerged as the number one growth product by 2009, a year after it launched.
During a time when competition for market share is fierce and trust for corporations is low, many businesses that have operated successfully for decades are forced to re-evaluate the value proposition of their products and services. Social technologies enable businesses to crowdsource their customers at scale for ideas on new products and services. It’s not just the private sector hoping to benefit from crowdsourcing. In a bold move, the Republican Party just announced plans to crowdsource its platform for 2010. If political parties are adopting these more transparent ways to exchange value with their ecosystem, then certainly corporations can too.
