By Nick Johnson - December 6th, 2011

Already Dell is using social media to define its new products with the help of the social networks its customers are a part of. How far will this level of consumer interaction influence future prod...

Already Dell is using social media to define its new products with the help of the social networks its customers are a part of. How far will this level of consumer interaction influence future products and services?

It’s probably not a coincidence that social media is growing up alongside socialised business models. Mutually reinforcing, these trends reflect directed demands from customers that challenge business to create the best products possible.

“Ideas are really a network,” says Bill Johnston, Dell’s Director of Global Online Community,  “So an idea in isolation isn’t valuable and isn’t going to mature or evolve.” Johnston runs Dell’s Ideastorm, one of the first portals run by large companies to co-create products. Dell’s Ideastorm was launched in 2007. It has 16,000 active users today, has produced 10,000 ideas for Dell – 500 of which they have actually implemented.

Audience interaction

The concept has been hugely successful and profitable to boot: says Johnston, Dell realised “that real everyday tactical value comes through these small incremental advancements” realised through their customers.

Co-created products are also useful for those at the production end: Finite Films got started as a socialised company because they were having writers’ block. Co-founder Michael Tucker had to write a script but he was stuck. Tucker gave his friend (and future co-founder) Alex Calleros a list of things that had to be in it and using those ‘constraints’ they put together the script with the collaboration of their audience.

“It was like putting together a puzzle,” Tucker says. Together with Calleros and another friend, Ryan McDuffie, they knew they wanted to make films and decided to open a production company. “Well this constraints thing is really cool. What if we made a website where other people submitted the constraints and we made movies out of them? That would let us interact with the audience and let us have the website be something that’s unique, but also let us make movies.”

And so Finite Films was born. They make one film a month based on a list of constraints submitted by the audience.  Active since August, they have seen their audience double in that time. They are completely audience supported, in ideas and finance.

That reflexive process, the constant back and forth is what makes ‘made by us’ product development and marketing so compelling. According to Adam Brown, PR manager at “When you’re buying something on Etsy there’s that added value of that personal relationship with the product… like having a conversation about the product and learning something about the person making it.”

Etsy has recently revamped its site to allow for more interaction between customer and maker. Etsy regards the ability to use social media as the key factor to success for its makers, regularly providing education around using social media to increase business for makers.

Focus group 2.0

How is this social media approach different from user testing? It is and it isn’t, according to Johnston: “All of that’s complementary… it’s one of those things in a portfolio of activities that smart companies do to give feedback to close expectation gaps with their customers and prospects to make better products and services and frankly be more competitive.”

“There’s a time and place for usability testing,” says Johnston, but with purposed social media platforms like Ideastorm, “…you can really tap the extended network and interesting but conflicting points of view that you wouldn’t get doing a sample size of eight or sample size of 20.” And then the community takes over: Dell’s Ideastorm 2.0 will have loads of new features including the ability for the community to mature an idea together, either by multiple authorship or iteration.

Before 2007 it was normal for companies to have customer service points, places where people could write to complain. Smart companies have always used user evaluation to test products before they went to market. But the speed and ease with which the communication between end user and producer happens have increased because of digital communications technology, giving companies access to repeated user testing over the life of the product.

Social media allows makers and customers to communicate, real-time and the kicker, says Thomas Ramge, co-founder of Marke-Eigenbau, a German Etsy competitor, make better, more specialised products. “What’s the point of producing highly personalised products if you don’t have the clients for them?”

Ramge sees the market for highly personalised products as the frontier of business sustainability, “People who are involved in small scale production with very tight ties with their customers will tend to produce stuff that should last longer and overall, that’s something our consumption should be built on.”

The only way it works, of course, is if companies remember that social media is all about the people. That’s a lesson that Dell learned with Ideastorm: as they staffed Twitter and Facebook and other customer communication touch points with employees from Ideastorm and felt the consequences.

For the corporate world attempting to develop closer relationships across the social networks they have a presence on, inviting these groups to actively participate in product or service development isn’t a new business model, but one that has evolved as the social web has delivered communications platforms that has turned consumers into business partners.

Johnston concluded: “With ideation communities specifically… there has to be a level of readiness and attention by the company to assess and implement ideas that are suggested by the community. There’s not a clear value exchange there.”

And that’s the challenge for the future: valuing the exchange of ideas and then turning these into valid business models.

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