Grassroots Innovation

Microsoft is the latest company to capitalize on the “customer-made” trend. According to the Mercury News, any game enthusiast can now create video games for the Xbox 360 video console. 

 “(Microsoft) will make available a stripped-down version of its game development tools for $99. The XNA Game Studio Express software will have everything someone needs to make a working video game…. The strategy is part of a plan to make the Xbox 360 more attractive by putting consumers in control of the content, much the way that consumers are taking to grass-roots entertainment on YouTube or on their iPods…”

There’s a lot being written about this trend that Trendwatching.com calls “Customer-Made," but larger companies have been slow to embrace the idea. According to Trendwatching, “tapping into the collective experiences, skills and ingenuity of hundreds of millions of consumers around the world is a complete departure from the inward looking, producer- versus-consumer innovation model so common to corporations around the world.”

Why is this trend a big deal? In a nutshell, product development becomes a profit center.  Customers pay Microsoft for the ability to create games for Microsoft’s Xbox platform. And by getting the tools into universities with game development programs, they’re building platform preference among future professional game developers.

Companies that jump on the customer-made bandwagon can provide incentives through contests (like Electrolux Design Lab), visibility (like LegoFactory) or royalties. In Microsoft's case, aspiring game developers are motivated to produce quality games because of the visibility, reputation, career and even revenue opportunities provided by this initiative.

With the tools, gamers can create their own games on Windows PCs and upload them into Microsoft's Xbox Live network, which could theoretically sell them to console gamers via download. Pete Moore (head of Microsoft's game business) said that game creators could share their work with others, for free or for purchase. "We're very excited to enable game development at the consumer and hobbyist level,'' said Moore. "For $99, you can create Xbox 360 games. My dream is that a high school student will get a royalty check from Microsoft some day for a game that sells on Xbox Live.''

Whether it’s called grassroots innovation, customer-made or co-creation, this trend is a win-win for companies and customers alike.

Comments

[Brian King]

I'm experimenting in the creation of a 'customer-created', i.e. social media site at beetoobee.com. I'm finding there is a Power Law of Participation, with a core 10% doing most of the posting, and the rest lurking. I've read that for Wikipedia, 500 people, or 0.5% of editors, account for 50% of the page edits. Not everyone has to be highly engaged. A core community can take hold to drive creativity.

[Jayakumar Hariharan]

And finally, a different kind of "Customer Made" trend wins the Nobel Peace Prize, and Tom is dancing in the kitchen!

http://ideaburger.blogspot.com/

Jay, from Bangalore

[Jeff Larche]

Jennifer, I agree with Tim Lapetino that much of this customer innovation is simply an extension of their affection for that particular brand. What's fascinating is how this effort by the minority can make the majority experience so much richer. By that I mean, perhaps 99% of those who are members of SecondLife, a metaverse, use the standard environments, or the more elaborate places and items built by the other 1%. And that 1%? These are the "developer fans."

If you think it would be useful to the dialog, here is my two cents on SecondLife and the motivations of the most zealous users:
http://www.digitalsolid.com/2006/05/28/bored-lets-put-on-a-metaverse/

[Tim Lapetino]

I wonder if this is really an innovation as much as it is a logical extension of brand love. Older gaming platforms (Atari 2600, NES) have development tools available that enable afficionados of the platform to continue the console's lifespan out of sheer love. For some insight into this, check out what some serious fan programmers are doing with the Atari 2600, which launched 29 years ago! http://www.atariage.com/development_list.html

[Mike]

Microsoft has already done this with Windows. Anyone can develop software for Windows. Using this strategy with Windows helped Microsoft achieve near monopoly status.

[Yes, pre-loading Windows on every PC didn't hurt, but the proliferation of aftermarket products -in the form of 3rd party Windows applications- also drove demand. An aftermarket can be a huge part of a long-term, sustainable competitive advantage. Thriving aftermarket ecosystems are incredibly difficult for competitors to duplicate.]

It's not surprising to see Microsoft pursue this strategy with the xbox. They're obviously, and I suppose, rightfully, interested in achieving another platform monopoly. Let's not forget ... and it's easy to forget ... that the xbox, of course, runs Windows. In that way, there really isn't much difference between a PC and an xbox, except of course, the xbox is a platform that Microsoft controls. I would intepret this development as the type of paradoxical self-interested generosity for which Microsoft is famous.

[GrahamHill]

Jennifer

It may be a profit centre for Microsoft (although I am not so sure that that is really the case without looking at hard numbers), but it won't be for most companies.

Why not?

Because the costs of setting up a co-creation environment that extends outside the organisational boundary of the company, of locating the right customers (or non-customers) to co-create with, or managing the co-created products through to the market and of managing the internal organisational upheaval that inviting "customers inside" causes are significant.

There is much that we do not see behind Microsoft's, Eletrolux's and Lego's co-creation activities.

So is co-creation worth it?

Individual companies will have to work it out for themselves. There is no simple answer. We are still learning what capabilities a company requires to make co-creation work profitably. That the potential for much better innovation is there is not really in doubt. But as so many things in life, the devil is in the co-creation details.

Graham Hill