Editor’s note: Laura Morris is an account director with U.K.-based research firm Nunwood.

At an international conference on innovation held in London in March 2007 this topic was hotly debated by speakers and delegates alike. They came to the conclusion that in order to succeed in new product development, we must treat customers as partners in the innovation process. It simply no longer cuts it to have a one-way research dialogue with customers and involve them only when a prototype is ready to be researched or when a concept needs testing.

Furthermore, in this new paradigm, innovation is no longer solely the preserve of internal R&D departments. Customers are being invited inside organizations to act as codevelopers of exciting new products and services. This new way is being called open innovation - it is a case of total customer immersion in the product development process whereby customers are genuinely seen as stakeholders in developing ingenious innovations.

The end goal: to ensure the organization comes up with relevant, customer-centric innovations that are positively endorsed by the consumers involved in their codevelopment by the time of launch. It is as much about researching customer needs as it is about fostering customer brand loyalty, and, as evidenced by the global innovation case studies presented to the conference, this new paradigm is helping organizations deliver relevant innovation to consumers - something traditional research methods are increasingly seen as failing to do.

Yet, even in the technology industry, where products traditionally have been developed by internal R&D departments first and then tested with consumers, this new paradigm is taking effect. Adobe’s Lightroom, an image management and processing application designed to assist professional photographers in post-imaging work, was developed exactly in this way. According to Deborah Whitman, vice president of product management for digital imaging at Adobe, “The inspiration for the development of Lightroom beta and the exploration of new directions for Photoshop has come from our customers and ecosystem partners. There has been a flurry of activity in the Lightroom beta forums and it’s exciting for us to watch the beta evolve as photographers help us build an application tailored to their needs.”

Higher pedestal

So what does this mean for market research? Well the research mentality has to change - that is for sure. It is no longer about research of consumers, but research with consumers. Furthermore, customers have to be placed on a much higher pedestal than they have been. In the extreme, think of treating them as evangelists as opposed to respondents or partners. Research adapting to this new paradigm should also be a lot more about continuous dialogue with customers as opposed to one-off monologues. Furthermore, it should be the kind of research that encourages customers to talk to other customers so as to “rally the ecosystem.” This potentially may involve guerrilla market research whereby consumers are allowed to evaluate new products and then pass them on to others to evaluate.

Online panels or customer communities are consequently increasingly popular and important to organizations because they allow all of these things to happen. These kinds of research tools also foster loyalty and a sense of togetherness - a feat that traditional methodologies do not achieve.

A model of open innovation involving research in the form of an online/offline panel and customer community was implemented by Lego when it developed its Mindstorms robotics innovations. In September 2004 the organization created its Lego Mindstorms User Panel (MUP) and initially, five intrepid and active online Lego community members were recruited to help develop the next generation of Lego Mindstorms. The members recruited were sent mysterious and sometimes coded e-mails to pique their interest levels about what Lego was inviting them to be part of. This set anticipation soaring and sent murmurings in the Lego community, leading to huge PR advantages.

Through a series of online and offline get-togethers the original panel members started working on developing new ideas. According to Lego, the “honest, uncensored feedback from the MUP led to significant product developments such as the inclusion of a new ultrasonic sensor to give robot creations ‘eyes,’ and the inclusion of a new 90-degree-angle Lego Technic element that allows users to easily and intuitively build cubes.”

There are now around 100 panellists involved in the codevelopment of Mindstorms innovations and the success Lego has had with this approach has been phenomenal. Not only this, but Lego achieved huge PR advantages as it has effectively brought the Lego community in.

Challenges and risks

There are of course massive challenges and risks involved in being this open with the customer base when it comes to innovation. Prior to Lightroom, Adobe, for instance, was traditionally a very secretive company, only telling customers about new products when they were fully ready. However, opening up the innovation product development process has caused it to have less concern about competitors as customers are on board and involved in the development from day one.

There is also the matter of defining the right group of people to take part. Lego did this by going out to the community and asking the fans themselves who they thought the “masters” were. There is also the communication angle, and managing customers’ expectations. Customers do need to be reined in and given a clear brief of the objectives of product development, otherwise they could go off on a tangent and develop their own pet innovation projects.

The success stories from open innovation are starting to flood through. Fundamentally, there are some key reasons why this is working and why researchers and innovators should stand up and take notice. First of all, this new paradigm really encourages customers to feel invested in the new product development process and, consequently, to be far more likely to endorse it, spread the word and rally behind the innovation launched. Second, innovations achieved via collaborations with customers lead to new products that work the way the customers want them to from day one - no bug fixes are needed. Third, this new way is also a great brand-building exercise. If you involve your fans in developing the next big ideas for your organization, those involved in the process can become brand evangelists.