Avatar-based innovation – Open Innovation in virtual worlds

Emerging virtual worlds, such as the prominent Second Life (SL) offer an inspiring perspective for enhancing open innovation activities through avatar-based innovation. However, pioneering corporate co-creation systems fail to attract a satisfying level of participation and engagement. The experience users have with the co-creation system is the key to make the virtual places a vibrant source of great connections, creativity and innovation. To address this shortcoming, we conducted a number of research studies to shed light on the effective design of the user experience.

The emerging technology of virtual worlds enabling avatar-based innovation
Virtual Worlds like Second Life are computer-generated physical spaces, represented graphically in 3D that can be experienced by many users, or so-called avatars, at once. They may herald the next leap of evolution for open innovation because of two main rationales: First, incorporating the latest technological advances of virtual worlds into open innovation practice enriches existing Web-based customer integration methods by allowing real-time, media-rich and highly interactive collaboration between organizations and consumers. Second, virtual worlds build on a new mode of production where the host firm facilitates unrestrained consumer freedom and empowerment. The playful user-generated worlds resemble engines of creation that provide the freedom to experiment and lead to unprecedented rates of innovation.

Several companies have already tried to leverage avatar-based innovation especially within Second Life and asked residents to engage in different innovation activities along various stages of the innovation process. For example, Osram, a light manufacturer, started an idea contest and invited Second Life residents to contribute ideas on the topic of lightning. Toyota Scion launched a virtual car model and encouraged participants to modify and customize their cars. Another example is the case of Aloft, a new hotel concept from Starwood Hotels. Before the real hotel was built, a virtual mock-up was discussed, evaluated, modified, and further developed in Second Life. Based on the feedback, several changes to the overall design of Aloft’s virtual and physical hotel resulted (Kohler et al. 2009).

Lack of participation and the need to create compelling experiences
Regardless of the promising opportunities provided by avatar-based innovation, one major challenge impeding its development is the lack of interest in corporate projects among avatars and the failure of these platforms to provide a compelling experience for the visiting avatars. The overwhelming majority of avatar-based innovation pioneers is challenged by too few interested participants and, therefore, too few activities that make the place a vibrant source of great connections and innovations. To find out how companies can effectively use virtual worlds for open innovation to collaborate with creative consumers, we launched the Ideation Quest initiative.

The ideation quest in Second Life

Together with KTM and Philips Design we created an interactive idea competition that took place within an immersive virtual world experience within Second Life. The third and most recent project called the Green Ideation Quest attracted 266 participants who spend an average of 85 minutes to discuss a greener future and generate ideas, which were then evaluated by the community of participants. The trailer at http://tiny.cc/eSooS gives an overview on the process users went through.

The studies generated a number of lessons. The first set of implications refers to embracing avatar-based innovation. Using the latest technological advances can help leverage a firm’s innovation process, both by harvesting the medium-related benefits, and by tapping into avatars’ creativity. The second implication relates to the need for open innovation practitioners to fully acknowledge the importance of the co-creation experience. If companies decide to use an avatar-based innovation strategy, they must recognize that an invitation for avatars to actively participate in co-creation is not enough. Present corporate activities in virtual worlds imply that the critical challenge to use the emerging technology is not so much in devising the technological infrastructure but in creating and maintaining a rewarding experience for visitors. Companies need to go beyond implementing the visual presence and instead seek to actively engage customers by recognizing their motivations and delivering benefit to them. The third set of lessons refers to the strategies that promise success in facilitating compelling experiences. By focusing on hedonic aspects, leveraging the social nature of virtual worlds and co-creating the open innovation project itself, companies can enhance their open innovation efforts by engaging and co-creating with avatars – the latest visual representation of their potential or actual customers.

Recommended reading
Kohler, T., Matzler, K. and Füller J. (2009). Avatar-based innovation: using virtual worlds for real-world innovation, Technovation, 29, 395-407.

Kohler, T./Füller J./Matzler K./Stieger D. (2010). Avatar-based Innovation: Consequences of virtual co-creation experiences: HICSS-37, Hawaii, January 5-8.

Kohler, T./Füller J./Matzler K./Stieger D. (Forthcoming), Co-creation in virtual worlds: the design of the user experience, MISQ.

The Art of Displacement

The importance of displacement in relationship to outside innovation
Chesbrough et al argue that the logic supporting an internally, centralized approach to R&D has become obsolete and that open innovation not only has become an important epithet, but a new and important practice in many organizations. Furthermore, it is unquestionable that new information technologies help us to reach remote control and to catch peoples´ ideas and knowledge in new ways. Chesbrough (2003, p 177) writes “If the smart people within your company are aware of, connected to, and informed by the effort of smart people outside, then your innovation process will reinvent fewer wheels, what´s more, your internal effort will be multiplied many times through their embrace of others´ ideas and inspiration”. This might be true, and no doubt about that engaging smart people into your business is important, but what seems to be even more of importance is to master the technology of displacement, a technology that is much older than the concept of open innovation.

Exemplifying displacement in progress
Let me, for a moment, shed light on Louis Pasteur and his work with microorganisms. In the end of the nineteenth century Pasteur´s laboratory turned its attention to finding a preventive to the disease anthrax. As Latour (1983) and Cooper (2002) tell us, Pasteur takes his laboratory to a farm in the French countryside. He and his colleagues are out in the field, learning from the farmers´ knowledge of the anthrax bacillus and how it affects the animals. After a period, he brings his new gained knowledge back in the laboratory. Back in the laboratory he is able to grow the bacillus in isolation and he is now able to simulate anthrax outbreaks in his laboratory. But, as Copper (2003) stresses, it was still necessary to make a further displacement (now in form of a vaccine) to the farm to demonstrate and test it effectiveness.
What this short example illustrates is that open innovation is neither a new way for making top results in a business, nor making possible of thinking in terms of discrete variables like internal and external R&D or indoor knowledge and “smart” people outside the company.

Innovation will always be innovation..
To take advantage in the new age is to set up a laboratory, to displace information, to be humble about the conflation of notions of internal knowledge and “smart” people outside, as internal and external R&D. The winners in the future might not be the companies with the smartest brains or even the organizations that locate the smartest brains in the cyberspace or in the market. The winners are people and organizations that successfully can set up laboratories and practice displacement in large scale. Displacement, however, is not a new idea. One may even argue that Chesbrough´s thoughts and arguments are just old wine in new bottles. Nevertheless – I would say - new bottles are not to be despised. As the market changes, bottles need to change with it.

Recommended reading
Chesbrough, H. (2003). The Open Innovation Paradigm, in Open Innovation: The New Imperative for Creating and Profiting from Technology. Harvard Business School Press: Boston. p. 43-62.

Cooper, R. (1992). Formal Organization as Representation: Remote Control, Displacement and Abbreviation, in M. Reed and M. Hughet (eds.) Rethinking Organization. London: Sage.

Latour, B. (1983). Give me a laboratory and I will raise the world, in K. Knorr-Cetina and M. Mulkay (eds.) . Science observed: Perspectives on the Social Study of Science. London. Sage Publication.

Researching Open Innovation through Social Media—Part II: Exploration

In Part I of this article series we argued that in order to understand companies’ on-line presence and ongoing conversations with various stakeholders and how companies respond, and ought to respond, to social media and open innovation, we must first understand what it means to be social. We also suggested that managerial response to social media could be grounded in practical theories of pragmatics, emphasizing action and communication that make assumptions about how communication works and how it ought to work.

Fundamentally, the social world is created and recreated through human actions. Most actions are social: “That action will be called social which in its meaning as intended by the actor or actors, takes account of the behavior of others and is thereby oriented in its course” (Weber, 1978, p. 4). This suggests that a social action has both social grounds and social purposes. As claimed by Mead (1934, p 6) “the behavior of an individual can be understood only in terms of the whole social group of which he is member, since his individual acts are involved in larger social acts, which go beyond himself and which implicate the other members of the group.” It is thus essential to look both for social grounds and social purposes when studying actions. Social grounds form the history of an action. Social actions are thus interactive where several inter-related actions constitute patterns of actions related to each other by initiatives and responses (Linell, 1998). One single action can be both an initiative and a response. A human being intervenes in the world, by performing actions, in order to create some differences in their environment—to achieve ends. An important distinction can be made between the result and the effects of an action (von Wright, 1971): while the actor is in control of the immediate results of their actions, the long-term effects may be hard to predict.

The philosophical orientation of pragmatics puts attention to peoples’ use of language and the knowledge about interaction in solving basic problems of communication. This means a focus upon meaning, action, and coherence. In ordinary interaction these are managed through constraints participants impose on their interaction through linguistic and non-linguistic means, especially as these frame allowable contributions to ongoing activity (Levinson, 1979). Constraints arise as participants shape their actions to contribute to a purpose and interpret others’ actions relative to that joint purpose (Levinson, 1979). Constraints include who can participate and what identify they can project, the allocation of turns and types of turns, topics, and so on (Drew and Heritage, 1993; Levinson, 1979). Purpose can be joint goals, or shared identities, that vary in explicitness and formality as in the way chat, business meeting, negotiation, and a judicial hearing differ from each other (Drew and Heritage, 1993; Levinson, 1979).

Constraints can also be an object of intentional design as people create and re-configure the ways they meet and gather and as technologies and procedures are developed to support various kinds of communication. In the history of work and management, for instance, the nature, role, and relationship of types of meetings workers have with each other and with management have been an important part of management (Yates, 1989). Meetings, encounters, and the activities these are to produce are the object of design in many theories of organizational design. These micro-matters are the space where disruptive technology creates shifts and thus struggles over the role and nature of encounters and meetings in the workplace (who should be involved, what should be discussed, topic, relevant contributions, how to solve differences, and the like).[quote]

The uses of social media, and other IT, to engage various stakeholders provide accordances and constraints for interaction between an organization and its stakeholders. These technologies are actable—that is, they are tools for stakeholders to act relative to the organization and each other. Of course, the technology only supports certain actions and fosters certain forms of interactivity. It is in the design of these technologies that organizations signal their relations to stakeholders. The design of the technology and what action it makes possible (or impossible) reveals practical pragmatic theories for organizational communication. The design of the technology, and especially what it presupposes about organizational communication, can be a source of innovation and struggle. Pragmatics provides grounding for understanding this aspect of organizational communication as it relates to open innovation through social media.

We put forward the following concepts, drawn from Aakhus (2002) and de Moor and Aakhus (2006), to guide the empirical task of reconstructing the practical pragmatic theories evident in managerial responses to social media:
• Exigence: Activities exist relative to some exigency which is the framing of the “something needed to be done,” the audience, and the constraints on the situation.
• Purpose: Activities have some overriding purpose (or hierarchy of purposes) that address (or have the potential to address) the exigence as conceived.
• Orchestration: Activities have aspects that can be characterized in terms of features of interactivity. This includes features, such as:
o Types of contributions
o Sequencing of contributions
o Roles and participation status
o Networks and the input‐output relationships among ‘conversations’.
• Rationale: Activities have a rationale that links the ostensible means‐ends relationship between the process and product of interaction. Whether that link is actual or symbolic matters but for a variety of instrumental and non‐instrumental reasons.

Researching the role of social media in open innovation calls for diversity in the application of research methods (Langley, 1999; Romano, 2003). A research programme based on the concepts laid out above is seen as a pragmatic means for empirical and design oriented research into open innovation through social media. Such research would be highly influenced by studying different instances of interactions related to the disruptive nature of social media by considering the elements that make up a social media infrastructure (e.g., in addition to the technology, the policy statements, interviews, news accounts, agreements of different kinds, such as non‐disclosure agreements, explicit and informal work agreements and arrangements between groups and organizations) as well as blog commentaries.

We are currently in the process of systematically collecting actual cases of managerial responses to social media and analyzing these by use of the pragmatic approach discussed here. We aim to develop further our explanatory mechanism that distinguishes how managerial responses vary to include why these responses vary. We assume that has to do with practical theories about how interaction processes lead to outcomes, such as new innovations. The ambition is to develop practical theories for informing organizations in their task of developing an attitude and strategies for using the potential of social media in their interaction with various stakeholders. Our hope is that such an orientation will generate relevant empirical data and help develop a reflective attitude towards open innovation through social media by people taking part in such interaction. The results of this endeavor will hopefully appear in the near future as Part III of this article series.

Recommended reading
Aakhus, M. (2002). Modeling reconstruction in groupware technology. In F. H. van Eemeren (Ed.), Advances in pragma-dialectics (pp. 121¬–126). Newport News, VA: Vale Press.

de Moor, A. & Aakhus, M. (2006). Argument Support: From Technologies to Tools. Communications of the ACM, 49(3), 93–98.

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Researching Open Innovation through Social Media—Part I: The Problem

Internet, as a technology and medium for connecting people, has had profound effects on organizations, both on internal and external relationships. With the emergence of user-generated content through social media, the Internet is commonly seen as a marketplace of information, constantly updated and always on top of the most recent developments in society. This new marketplace raises a number of issues. For instance, knowledge workers may engage in knowledge creation that (potentially) exposes company sensitive information to the outside world. On the other hand, it also means that their organizations can benefit from outside knowledge contributions. Different platforms and solutions for enabling people to get in contact and share information are being developed at an ever-increasing speed.

Open innovation initiatives and platforms are closely interlinked with the social media phenomenon. It is by leveraging Web 2.0 technologies that, for instance, Dell and Starbucks have managed to open up their innovation processes and provided structures for involving customers more directly in their product development through what has become known as crowdsourcing (Howe, 2006). These platforms go beyond mere call for feature requests as they provide for users (i.e. customers) to actively propose, discuss, evaluate and rank ideas and solutions. Other companies, such as Moog Music and IKEA, utilise user forums to achieve some of the same benefits. In these cases customers are allowed freely (albeit moderated by the company) to discuss issues related to the company’s products. This sometimes results in feature requests being proposed although the main purpose of such forums seems to be customers’ taking care of customer support by helping each other to solve product related problems. Yet some companies, such as Lego, has taken a step further and released (parts of) their product portfolio as open source, thus letting their customers into the core of product innovation and design (Ågerfalk & Fitzgerald, 2008). Certainly, conversations similar to those in the company-controlled forums also happen in other corners of the social media space. Examples include third-party consumer information and product ranking sites, such as Pricerunner, non-company specific forums, such as KVR Audio, and independent image and video sharing services, such as Flickr and YouTube, not to mention Twitter, Facebook and the blogosphere were just about everything gets scrutinized. Thus, we can distinguish at least four modes of open innovation through social media with varying degrees of stakeholder interaction: opensourcing, crowdsourcing, discussion forums, and public discourse. These modes may be controlled by the company itself, by a third-party or be user-led.[quote]
Given the many alternatives for how to tap into and harness the Web 2.0 “wisdom of the crowd”, it is not surprising that many organizations are struggling with how to respond to the social media phenomenon in order to reap its benefits (according to Gartner a top ten strategic priority of organizations currently). In fact, several organizations have experienced serious inconvenience because of social media exposure brought about by creative, and sometimes displeased customers. In some of these cases, the company used the very same media to respond successfully to diverse incidents (e.g. The Domino’s Pizza case). In other cases, companies responded more or less with ignorance (e.g. the attempt to ban mobile phones at US college football games and the United Breaks Guitars case). Social media create new possibilities for interaction. In so doing, these media invite innovations and struggles over how stakeholders ought to interact with each other. Yet, the models for how all these stakeholder should stand in relation to each other and interact (or not) primarily arose with the large hierarchical organizations of the 20th century. These models are now being challenged. What then, can we as researchers do to help remedy this situation? By understanding better managerial response to social media, we would argue.

The emergence of open innovation through social media is similar to earlier disruptive innovations (Bower and Christensen, 1995), yet different in some key respects. First, to most organizations social media as such do not form part of the core business (if they are not software manufacturers). Rather, these technologies have evolved along with the development of service-based Internet infrastructures to become a threat or an indispensable asset for companies to communicate and interact, internally and externally. Second, the impact of social media on an organization is not based on market demand. Rather, as pointed out by Lyytinen and Rose (2003), disruptive information systems innovations tend to be based on pull strategies rather than push. That is, they emerge from within the organization. Third, it seems that social media become disruptive as they are adopted through a boot-strapping approach which builds momentum primarily due to an increasing number of users of the specific media rather than inherent features in the technology itself. Thus, they are “infrastructural innovations” (Lyytinen and Rose, 2003) but with an emphasis on social momentum as a driver for disruption rather than a giant leap in underlying technology.
In order to understand how companies respond (and ought to respond) to social media and open innovation, we must first understand what it means to be social and how such an understanding can help to recognize how social media shape companies’ on-line presence and ongoing conversations with various stakeholders. We assume that managerial response to social media can be grounded in practical theories of pragmatics, emphasizing action and communication that make assumptions about how communication works and how it ought to work (Aakhus, 2007). We will explore further these assumptions and their implications in Part II of this article series—Stay tuned!

Recommended reading
Aakhus, M. (2007). Communication as design. Communication Monographs, 74(1), 112–117.

Ågerfalk P. J. & Fitzgerald B. (2008). Outsourcing to an Unknown Workforce: Exploring Opensourcing as an Offshore Sourcing Strategy, MIS Quarterly, 32(2), pp. 385–409.

Bower J. L. & Christensen C. M. (1995). Disruptive Technologies: Catching the Wave, Harvard Business Review, 73(1), 43–53.

Howe, J. (2006). The Rise of Crowdsourcing, Wired Magazine, 14(6).

Lyytinen, K. & Rose, M. G. (2003). The Disruptive Nature of Information Technology Innovations: The case of Internet Computing in Systems Development Organizations. MIS Quarterly, 27(4), 557–595.

What is open innovation software?

[quote]Despite that it is widely acknowledged that technologies are of key importance in open innovation practices (Chesbrough, 2003), little research has studied how various technologies can be strategically used to enable and support open innovation practices (Dodgson, Gann, & Salter, 2005). For example, Chesbrough (2003) argues that new technologies can support open innovation, but do not explore how, for what reason, and to what extent different information technologies can be used when innovation is desired (Dodgson, et al., 2005).

Drawing on the above, in Hrastinski et al. (2010), we explored how current open innovation software (OIS) are designed, by whom they are used and reflect on their potential to support open innovation processes.

The current focus is on idea collection

We classified a sample of 51 systems and found that most OIS are not very innovative in themselves because they provide similar features. Typically, users are asked to describe an idea or the management specifies a problem to be solved. Then, a phase that includes problem solving and evaluation in collaboration follows. In successful cases, these processes lead or contribute to an innovation.

Our review reveals that a vast majority of OIS focuses on the front end of open innovation through an emphasis on the collection of ideas or problem solutions requested by the management of technology industries.

Four types of open innovation software

When scrutinizing the reviewed OIS, few attempted to take a step towards OIS that support more than the collection of ideas. Drawing on the reviewed software, we suggest a classification, which includes four types of OIS. The four types of OIS can be used by organizations to reflect on how they are using IT to support open innovation, and most importantly, how they could use IT to support open innovation in new and innovative ways in the future.