Interesting article, thanks for the read! I definitely agree Neighborly could utilize open innovation for project updates and add-on services to customers – but I think this would largely be to create additional loyalty amongst customers so that they continue to use Neighborly and get valley from free services. I don’t think Neighborly could utilize open innovation projects for revenue-generating services. I think their core product is niche and serves a great unmet need. However, Neighborly doesn’t seem to have a lot of moat or loyalty with consumers & businesses that would protect them from someone else coming in, offering a similar service, and undercutting them in pricing / fees. Neighborly could use open innovation generated project ideas to create these additional services, and thus win over consumers from superior valuable add-on services. Certainly Neighborly should focus most of their resources on their core service – and growing their customer base there – which as you noted will require a lot of human touchpoints and resources ex-open innovation.
I think you hit the nail on the head in your last question – will LUXURY pieces lose value? I think yes. Part of luxury is its inaccessibility, craftsmanship, and differentiated quality. I think 3D printing could ultimately get there on the quality but I think it will hurt the first two important parts of this value-creating triology in the luxury market. However, I think outside of luxury 3D printing could be very valuable in mass watch production – in mid-level to aspirational brands but not high luxury. Differentiated technology could create extreme cost-cutting that could flow through to consumers and create additional demand for these products. Manufacturers will need to think carefully about how accessible they wish to make their products – understanding how it will tarnish their standing in the luxury market. I expect watch-makers to utilize this technology on their lower mass-market products and less on their luxury items in order to preserve their value through both craftsmanship and limited attainability.
Lol to your last pun. Thanks for an interesting article.
I think Bidgely’s reliance on utility companies is a risk – but it is also a competitive advantage if they were able to lock-up exclusive access. In order to retain this access Bidgely will need to create the highest quality product that actually effects change. As you pointed out consumers hardly think about their electricity bill (unless you are my father, who posts energy consumption on the fridge every month to brag about how low his consumption is), and Bidgley’s is only valuable to both consumers and utility companies if it effects changes in consumer behavior. Offering knowledge isn’t enough. In order to cause this Bidgely needs to become more consumer-focused. They should have monthly, weekly, daily reports that offer suggestions to consumers on how to change their behavior. They should have notifications and use AI for projections of what their bill / usage could look like if users did ‘xyz’ changes. And ultimately they should go into hardware to forcibly effect change (with consumer sign-off of course) but having lights set to off, Air set to change, etc. is ultimately what Nest was aiming to do – but without the link to energy consumption insights that would offer the hard data to incentivize these changes. A partnership (perhaps with Nest) would offer real impact for Bidgely in the home by allowing them to move from just information to action.
Thanks for the piece. I think this innovation at GE will be crucial to their future profitability. They need to move into technology to not be left behind – in an aging and competitive industrial landscape where GE has taken significant reputational damage recently they need to differentiate themselves with their business consumers. One significant way for GE to do this is to offer machine learning insights and technology-enabled platforms. Given GE’s unique position in the market they have – as you mentioned – access to highly valuable data. In order to keep this data proprietary and in-house GE should invest in machine-learning within their organization and not outsource development. With outsourcing I worry they will not create a differentiated product for consumers nor will they continue to improve upon it. Without constant improvement their formidable competitors, Google, Amazon and other industrial companies, will take market share.
Great piece, thanks for sharing. Some of the examples you mentioned – Facebook, Uber – with suboptimal customer experience and platforms that have thrived in the market are fascinating because they illuminate the ever-changing and perplexing mind of the consumer. Consumers do not, in fact, always want the best product. They will not follow just quality. And are incredibly resistant to change once something has entered their habitual lives. You see this outside of software often – in the win of VHS over superior technology, DVDs over superior technology, Apple iPhones over superior technology (at least in the US and globally for a long period). It is interesting to see the both positive and negative effects this has on innovation and companies themselves.
For example, as you mentioned FB and Uber have been able to absolutely dominate their fields of social media and car-services respectively. However, by entrenching themselves so deeply and refusing to incorporate open innovation in their external products it appears to have transmitted to their internal cultures as well. The closed innovation mindset of FB and Uber has prevented them from creating any meaningful products outside of their core markets. FB is ONLY social media. Uber is ONLY car-services. While both have attempted to expand and have a broader impact on consumers lives – they have been unable to change their perception or creatively enter any other market. Their closed innovation has completely hampered any diversification or new market potential for either player.
In opposition, Amazon, Salesforce, Google, and Square are all examples of open innovation focused companies that have been able to continually layer onto their core offerings – and in the case of AMZN and GOOG veer entirely left from their core. By aligning their initial user products with open innovation and never compromising this to build economic moat they have fostered this innovation within their own development teams – and as a result they have been able to move into completely new markets with extremely high quality and creative products. I think this provides a huge advantage to open innovation platforms – they have not only diversified and derisked their revenue streams but they have continually created the highest quality products for consumers. Time will tell – but I think this long-term competitive advantage of open innovation platforms will allow them to outlast and out prosper closed innovation companies. I wouldn’t be surprised to see a few “network” effect companies lose their edge, lasting value has to be created through quality and constant improvement.
Thanks for a really interesting piece – healthcare is, in my opinion, the most interesting field to watch in our lifetime – however, as you mentioned the FDA has become a significant bottleneck for bringing scientific advances to the public. The speed of innovation and scientific discovery in healthcare in the last decade has far exceeded the FDA’s ability to process these drugs and the clinical process remains extremely onerous. But these are necessary evils to protect consumers from drugs that could prove to be more harmful than the ailment they are attempting to address. I think printed organs could be a huge advantage for preclinical trials. Especially because so many trials remain in the FDA approval process before treatments can reach consumers – the requirements in preclinical are much more flexible and leave room for a ‘slightly less than perfect’ product that could similarly prove minimal toxicity and safety requirements. I think Organovo has a significant opportunity before it but needs to focus entirely on FDA approval of their printed organs in preclinical trials at this point. Small biotech firms have extremely limited resources and I fear shifting their focus internationally or to cosmetics would constrain them from being able to gain FDA approval in their core product. Currently the majority of drug development remains in the US and cosmetics testing is a limited market with a much smaller budget to spend on testing – the TAM in US preclinical trials is the highest potential For Organovo and I would love to see them continue to focus here – not to mention they would have a huge social (as well as economic) benefit to society by speeding up the incredibly slow FDA process!