Crowdsourcing - product development in the 21st century
Crowdsourcing - product development in the 21st centuryIt sounds like the plot for yet another reality TV show on entrepreneurs following the well-worn path of Dragons Den and The Apprentice.
Talented product designers vie to catch the eye of a major corporation, with the incentive to build a £50 million global business if they win.
Yet, even though experts are already hailing this as the biggest thing to have happened to new product development for years, it will not be hitting the small screen.
The idea is the brainchild of the National Endowment for Science Technology and the Arts (NESTA), which supports innovation in the UK and British Design Innovation (BDI), a not for profit group supporting the design industry. What makes it an even more powerful proposition is it has the backing of consumer goods giant Procter & Gamble.
In the Open Innovation Challenge, small companies and individual would-be entrepreneurs are invited to submit ideas after a presentation by P&G. The ideas are then vetted by NESTA and the BDI in order to protect participants' intellectual property rights and a handful of the most promising propositions are put forward and given cash for development.
After final presentations to P&G, the company has 90 days to decide whether to invest in the idea, otherwise the creator is free to take it elsewhere.
What is most remarkable about this new initiative, which was launched last year, is that it represents an incredible shift away from the traditional model of hugely secretive, behind-closed-doors, company-based R&D.
"P&G realises that it doesn't have a monopoly on good ideas and is always looking to connect with innovators and companies around the world to create products that improve the world's consumers," said Mike Addison, P&G's section head.
P&G devotes 3% of its net sales into R&D from twenty laboratories around the world, but last year it announced that it would like to source 50% of its new product developments from outside companies.
The group has already shown its determination to follow this path with a number of initiatives. Last year, for example, it threw open a worldwide challenge to find a molecule to remove red wine stains from clothing.
Instead of turning to its own R&D department, it published its requirements on a website called InnoCentive where scientists from anywhere in the world can look at the problem and come up with solutions.
P&G is one of the first major companies to embrace a trend of speculative outsourcing to the masses, which has been dubbed ‘crowdsourcing'. It is a new philosophy in which companies get amateurs to design products, create content and tackle corporate R&D problems in their spare time.
The inspiration for crowdsourcing is the notion that every business has customers who are sure they could design the products better themselves. It is a concept which has been, perhaps not surprisingly, taken up with gusto by the product development industry.
"P&G has the humility to know that no one firm can employ all of the brightest designers and get the best from them week after week," said David Simoes-Brown, development manager at NESTA. "Development gets constrained by a firm's way of doing things and sometimes that makes it hard for innovation to come from within.
"This project gives designers a blank sheet of paper to challenge P&G's preconceptions."
Even more attractive for P&G, is all of this innovation comes at a fraction of the cost of an in-house team. The fees for the NESTA Open Innovation Challenge come out of funds raised through the national lottery and the only investment required from P&G is in executive time briefing designers in a series of workshops and sitting in on final presentations.
The most promising ideas for those presentations will have been pre-selected by a panel of NESTA and BDI members who award the designers up to £25,00 towards further development before they get in front of the P&G team.
The hope is that among the finalists will be a winning proposition which could eventually be built into a business worth more than £50 million.
What is most attractive for entrepreneurs is they will retain the intellectual property on their ideas throughout the process and then into the future if and when the product takes off.
"This opportunity is a matter of survival for the design industry," said BDI chief executive Maxine Horn. "Designers have been working on a fees for services basis for years and it has been crippling.
"Under this model designers will get fees, licensing rights and royalties. It will encourage more people and more innovation into the process."
Any ideas which are not chosen by P&G in the final rounds, remain the property of the inventor and can be taken elsewhere.
NESTA says it is an opportunity which is bound to be welcomed by the FMCG industry, which is expected to follow P&G's lead in developing external R&D sources. Indeed, the group says it already has interest from a further two major companies interested in staging events.
"Where P&G leads other companies will follow," said John Noble, director of the British Brands Group. "It is increasingly difficult these days to find a competitive edge and to generate enough innovative ideas internally.
"There have been subtle signs for some time that P&G has been prepared to look further and it has not gone unnoticed. Last year it took a stand at a packaging trade exhibition where it was actively encouraging small suppliers to come to them to develop ideas. This year their competitors were there too."
