The Power of Innomediation

Many companies have learned to use the Internet as a powerful platform for collaborating with customers on innovation. They have created customer advisory panels to solicit ideas for new products, fostered online communities to encourage dialogue among customers, and built toolkits that enable customers and engineers to codesign products. By allowing businesses to greatly expand their reach while maintaining the richness of their interactions, the Internet allows them to make customers active participants in the innovation process.1

But direct interactions with customers, while necessary to facilitate innovation, are not enough. Direct channels of communication have several limitations. For one thing, companies may not be able to reach the right customers, because their interactions and perspectives tend to be limited to the markets they already serve. For another, they may find it difficult to reach people at the right time, because customers tend to interact with companies at relatively late stages of the decision-making process. And they may also find it difficult to engage customers in the right context, because customers rarely carry on conversations about their lifestyles and interests on company Web sites.

To fully exploit the Internet as an enabler of innovation, companies need to complement their direct channels of customer interaction with indirect, or mediated, interactions. Those points of contact can be carried out by third parties that function as “knowledge brokers,” helping companies overcome the gaps in knowledge about customers that impede innovation. We call this process of mediated innovation “innomediation” and the third-party actors who facilitate it “innomediaries.”

In our research, we identified three distinct types of innomediary and observed how each type can help companies acquire different forms of customer knowledge. Using case studies, we suggest ways in which companies can begin to think about exploiting the power of these emerging intermediaries. For businesses that learn to use customer knowledge from both direct and indirect sources, the Internet holds the key to a multichannel innovation strategy.

From Infomediaries to Innomediaries

The emergence of innomediaries parallels the development of infomediaries: third parties that mediate between customers seeking to make buying decisions and the companies that want to reach them.2 Infomediaries gather and organize information on products and services for individuals who are considering a purchase; they also organize communities of customers on the basis of common interests or specific industries — CNET.com, Homestore.com, and Edmunds.c

Read the Full Article:

Sign in, buy as a PDF or create an account.

References

1. The involvement of customers as active participants in the marketing process is called collaborative marketing. See M. Sawhney, “Don’t Just Relate — Collaborate,” MIT Sloan Management Review 43 (spring 2002): 96.

2. The term infomediary was coined by J. Hagel and J. Rayport in “The Coming Battle for Customer Information,” Harvard Business Review 75 (January–February 1997): 5–11.

3. For the seminal work on structural holes, see R.S. Burt, “Structural Holes: The Social Structure of Competition” (Cambridge, Massachusetts: Harvard University Press, 1992). Structural holes lead to opportunities for knowledge brokering. For a practitioner-oriented article on knowledge brokering, see A. Hargadon and R.I. Sutton, “Building an Innovation Factory,” Harvard Business Review 78 (May–June 2000): 157–166. For an application of the knowledge brokerage concept to virtual environments, see P. Cillo, “La Creatività nell’economia della Virtualità,” in “Economia della Virtualità,” ed. S. Vicari (Milan: Egea, 2001), 61–88.

4. For a list and detailed definitions of infomediary business models, see “Business Models on the Web,” from the course “Managing the Digital Enterprise,” M. Rappa, North Carolina State University, Raleigh, North Carolina, http://digitalenterprise.org/models/models.html.

5. InnoCentive’s management initially thought they would face resistance from clinical research organizations (CROs) because its innovation marketplace seemed to be a substitute for their services. But CROs have become an important constituency of problem solvers: They can deploy excess scientific manpower during lean periods to solve problems posted on InnoCentive’s site. This unexpected development with an innomediary parallels that of infomediaries, which were originally seen as distintermediating traditional channel intermediaries but are now seen as complementing them.

6.For details of the community-centric model for innovation, see M. Sawhney and E. Prandelli, “Communities of Creation: Managing Distributed Innovation in Turbulent Markets,” California Management Review 42 (summer 2000): 24–54. For analyses of cases of communities in the fashion and motorbike industries, see G. Verona and E. Prandelli, “A Dynamic Model of Customer Loyalty To Sustain Competitive Advantage on the Web,” European Management Journal 20 (2002): 299–309.

7. See D. Leonard and W. Swap, “When Sparks Fly: Igniting Creativity in Groups” (Boston: Harvard Business School Press, 1999).