Juul Labs: Transforming Vaping through Open Innovation

In greater public scrutiny and regulation risk, Juul needs to use Open Innovation to create healthier and safer vapor products.

Introduction to Juul

Juul has taken the e-cigarette market by storm over the last couple of years. It is by and far the most dominant e-cigarette manufacturer and has been one of the fastest growing startups throughout the history of Silicon Valley. Juul has helped create a vaping device of which many sources expect to be 95% healthier than traditional combustible cigarettes.1 In a Georgetown oncology professor report, the study concluded that 6.6 million lives would be saved if 10% of smokers switched to e-cigarettes each year in the next ten years.2 Many experts describe “combustible cigarettes as a wolf in sheep’s clothing, where vaping is a sheep in wolf’s clothing” based on current public perception.

Current Shortcomings and Challenges

It is critical for Juul to employ Open Innovation to utilize their proprietary vaping technology for healthier use cases and to curb underage use. According to a CDC annual National Youth Tobacco Survey, e-cigarette use has surged 75% over the last year, representing ~3 million or 20% of high school kids who have tried e-cigarettes.3 This is completely unacceptable, and unless Juul is able to better leverage their technology and devices for healthier alternatives, the company will not survive regulation moving forward. The FDA has already started to ban the selling of flavored Juul pods, and countries outside the US have prevented certain nicotine strengths, and some countries have banned the device altogether.4 Given Juul has a patented delivery mechanism through vapor intake technology; it should consult with other industry experts and crowd source innovative ideas for safe and alternative products to nicotine-based ones. Open Innovation can help shape the direction of Juul to better understand the questions and concerns that both users and non-users have about the product and what new types of products Juul can create.

Juul’s Current Strategy

Juul’s management has been in contact with many healthcare companies to better understand the pros and cons of vapor delivery. This type of intake involves no combustion which also means it doesn’t contain any burning or combustion that produces tar and chemicals that are associated with combustible cigarettes. Vapor delivery is the quickest form of uptake by the body as opposed to digestion or absorption. There are incredible opportunities to leverage this technology to ultimately deliver vitamins, energy, and medicine in the future. Given vapor delivery technology like Juul is relatively recent to other forms, Juul’s management is also working and conducting tests to better understand any side-effects of intaking substances through vapor delivery as opposed to the most common forms of digestion, absorption, or intravenously. In the medium term, Juul is planning to roll out their devices to hospitals and other labs to conduct controlled studies with people to test the short-term and long-term benefits and harms of vapor intake of medicine and other drugs.

Recommendation

One thing I would encourage Juul to do is to better use open innovation with its current users. Given Juul’s distribution model is largely through convenience stores and small retail shops, Juul has very little data on how their current customers are behaving with the product. Juul should spend more time and resources to conduct focus groups with current customers to see what they would like to see how the product could improve in its current state. Then, I would also conduct research with people that are vehemently against Juul and better understand why they would never use a product like Juul in its current form of delivering nicotine. I would also ask if the same people would have reservations about using the product if it instead delivered medicine, vitamins, or energy to understand the pain points from a user perspective and how Juul could go about solving these issues. By being holistic and garnering feedback from both your users and non-users, Juul can then better innovate on the products that consumers want and need.

Open Questions

Regarding Juul, there are a few questions that I have pondered. Juul is obviously an extremely controversial company given their nicotine-based product is used by teenagers that are underage. I wonder if Juul will ever be able to overcome the public perception that is currently perpetuated by the media that only teenagers use the product and that the company is fundamentally evil. Will it be able to overcome negative public scrutiny even if Juul is able to innovate and create healthier products?

(727 Words)

References

  1. Brose, L., McNeill, A., Calder, R. and Hitchman, S. (2018). Public Health England. [online] Assets.publishing.service.gov.uk. Available at: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/733022/Ecigarettes_an_evidence_update_A_report_commissioned_by_Public_Health_England_FINAL.pdf [Accessed 6 Nov. 2018].

 

  1. (2018). Bitter news for Juul fans: The FDA is banning flavored e-cigarettes. [online] Available at: https://qz.com/1458730/the-fda-plans-to-ban-flavored-juuls-and-other-flavored-e-cigarettes/ [Accessed 12 Nov. 2018].

 

  1. Smoking and Tobacco Use. (2018). CDC – National Youth Tobacco Survey (NYTS) – Smoking & Tobacco Use. [online] Available at: https://www.cdc.gov/tobacco/data_statistics/surveys/nyts/index.htm [Accessed 12 Nov. 2018].

 

  1. Tolentino, J. (2018). The Promise of Vaping and the Rise of Juul. [online] The New Yorker. Available at: https://www.newyorker.com/magazine/2018/05/14/the-promise-of-vaping-and-the-rise-of-juul [Accessed 9 Nov. 2018].

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9 thoughts on “Juul Labs: Transforming Vaping through Open Innovation

  1. Thanks for the article – great read. I think another area that open innovation can be used would be to understand how to cut down e-cigarette usage in minors. This would help not only in transitioning users from traditional combustible cigarettes, but also in preventing minors from picking up the habit.

    That being said, I agree that Juul should find alternative methods for using their vapor delivery technology. I think that Juul would stand to benefit by creating a sub-brand for these other offerings – I’m not sure it’s worthwhile for the company to build up the Juul brand name since the product is already so closely associated with e-cigarettes. Traditional tobacco companies like RJR/Phillip Morris have previously diversified their holdings with a similar mindset.

  2. Very well written, the idea of delivery of vitamins and other nutrients through vapour-based system was an eye opener for me. I like your idea of advising Juul to have open innovation with consumers. In my previous organization, while conducting deep interviews, we met not only loyalists users but also a host of aware-but-non-trialists and particularly, lapsers. Understanding what is not working well is important, but so is understanding what is working well and which aspects to further improve on.
    I agree that negative publicitiy is an issue. In order to erase their negative image, the positioning of Juul has to be around the negative effects of cigarette smoking and Juul’s relative advantage, and not around the positive effects of vapour based nicotine intake. A close data-driven tracking of people switching from cigarettes to Vape needs to be publicized, and they should promote only that, not entry of new users (non-smokers) into the category. Advertising should promote that while it is safer than cigarettes, they strongly recommend that non smokers do refrain from using it.

  3. This article had a lot of interesting points to supplement what you’ve already summarized.
    https://cornellsun.com/2018/02/05/e-cigarettes-a-shiny-alternative-to-smoking/

    Not only are teenagers trying vaping at a very high rate, some people speculate that if we ran true public health campaigns about vaping that even more young people may decide to try it (due to it being safer in reality than currently feared).

    There was also this really intriguing quote from Former CEO Tyler Goldman in reference to their desire to avoid new (primarily youth) users if possible:
    “[We have] actually stopped trying to create new users by leaving some stores purposefully out of stock of the vaporizers. It sells only refill cartridges to those stores, so people who use JUUL and switched off cigarettes can stay switched,” Goldman said.

  4. This article is really interesting and timely as the news just came out today that Juul has suspended sales of its flavored e-cigarette pods in retail stores and is discontinuing its social media promotions as teenagers are starting to get more addicted to e-cigiarette smoking. https://www.nytimes.com/2018/11/13/health/juul-ecigarettes-vaping-teenagers.html

    I think in order for Juul to succeed long-term, it will need to seriously re-think its strategy and obtain a customer base that is older than its current one. Hopefully, it can continue to apply open innovation in its processes and re-position itself in the market.

  5. Interesting article – you mentioned getting customer feedback but I wonder what other open innovation approaches might work for Juul. For example, would a contest for idea generation or a poll for idea selection be beneficial? Would setting up a VC fund to invest in innovative periphery ideas help Juul’s own product development? The biggest issue for Juul right now is proving to the Food and Drug Administration and the public that the company will be able to curb underage usage of its products (ideally without too much disruption to their legal customers). This is an extremely difficult strategy/marketing/design issue that I don’t think they have solved and maybe a really creative idea could come from the crowd.

    With regards to the pivot to health, in this regulated industry, individuals won’t be able to legally test or produce vapor medicine or other products until controlled studies are conducted so perhaps the best way to leverage the crowd right now is just to solicit high-level ideas regarding medical, vitamin, and energy applications.

  6. Very interesting article – given that Juul is a consumer product distributed via retail convenience stores, I’m curious what your vision is for the specific channels for open innovation. Most other instances of open innovation seem to be other kinds of companies such as web platforms, professional services, etc.

    Perhaps one way to do this would be a QR code on the back of the packaging that auto downloads a mobile app with ways that users can engage with the product and company (and be used to collect other user data, as well as an interface to control a “connected” Juul by changing dosage, flavors, child lock, etc).

  7. Very objective article on an admittedly controversial subject. I agree with your suggestion the Juul needs to use more open source innovation to interact with their client base. First, it should decide it’s target market: does it want to get current cigarette smokers to switch onto their device as you allude to, or capture a new market who no longer think that cigarettes are “cool”, but may be interested in this product. Once they have their target group, I agree with your recommendation about asking the end user about what they want to see in their product. I think you also touched on an important topic about the supply chain. As you mentioned, most e-cigarettes are sold at bodegas and small stores. Perhaps Juul can work with larger stores and major distributors to innovate their product in a way that makes it acceptable to be sold in larger, more mainstream stores (with legal implications in mind).

  8. Interesting Article!

    Using the concept of open innovation, I would include not only the user of the app to further understand pain-points and explore other possibilities of consumption, but I would also try to involve people in finding a solution to control the use between teenagers. I imagine not only customers interested in the product, but also retailers, parents, and other people that are not the direct Jull’s consumer have a lot to contribute to the idea. Creating better methods to control product access between teenagers should be more effective than the idea of promoting different uses for Juul. Before doing this, I would conduct a more careful assessment if the concept of open innovation in e-cigarette could create a bad reputation for the firm since it’s such a controversial topic.

    1. I enjoyed this timely article. Given that many of the users that are currently using Juul are minors, I am interested in what you are thinking might be channels for open innovation. Anonymous inputs on an online may be helpful, but perhaps a more structured study would be more definitive and credible.
      I think it is possible for Juul to transition from its current negative perception to a positive more “medicalized” image. For example, though recreational use of marijuana is still controversial among the American public, medical marijuana is significantly less controversial; Marijuana for medical use (e.g. nausea from chemotherapy) is now in general seen in a more positive light (compared to the historically negative association with recreational use.) I believe Juul must conduct legitimate research on uses such as delivery of vitamins etc, and then must deliver data to the public about how Juul can be used as a wellness treatment or health aide if it wants to attain legitimacy in the public’s eyes.

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