Bob the innovator, “Stories from the Wild West frontier of the Crowdfunding”.
This article begins with a story. I would like to introduce you to ‘Bob’. Bob considers himself an entrepreneur, passionate about new and innovative ideas, in the technology and business sector. He keeps up with the trends in the Maker Movement like 3D printing, Arduino electronics, and open manufacturing, as well as the new ways to fund these ventures such as crowdfunding.
As a matter of fact, Bob avidly monitors Kickstarter, the largest reward crowdfunding portal, to see which Product Design projects are going to be successfully funded. He noticed that the proposals with high percentages of over-funding (e.g. the Pebble project – $10 million in 2012) are effective in communicating the design’s value proposition in a clear, logical fashion.
Bob wants to become one of these innovative Product Makers by initiating a project himself. He believes his brilliant idea can progress from a concept to a manufactured product, which will be delivered to the doors of his idea backers. A successfully funded project would become Bob’s physical proof that he is a Maker, one of those innovators that can succeed in finding demand and money for new disruptive technologies.
Success! Bob has achieved a pledge goal greater than ever expected. Not only has his product idea been overfunded, Bob now has market proof that a demand exists for his product innovation. Now the challenge is understanding the difference between seeking product investment, and being able to produce the new product.
After the pledging deadline has passed, the hard work of demand fulfilment really begins. For example, Kickstarter’s Pebble project had completed its funding since mid-2012. The Product Maker, Pebble Technology, forecasted that production and deliveries would begin by September 2012. However Pebble production actually began in early 2013, which frustrated their 69,000 crowdfunding backers.
Bob’s product investors are now relying on him to fulfil the now-global market demand for his funded innovation, which at that point is still a prototype. As an amateur artist/designer, Bob is used to producing a few works of art, but now he has to figure out how to manufacture units in the hundreds, even thousands. Kickstarter makes it clear to both the Maker (Bob) and the Investor that the site takes no responsibility for funded projects that fail to deliver.
Bob now realises that there are no risk-free guarantees in product commercialisation. He needs to get his design prototype into production and fast.
So how can Bob mitigate the risk?
To fulfil his backers’ orders, Bob may have to get equipment to build it himself, or hire a contract manufacturer to make his product, or even team up with someone to share the workload. To help Bob decide on which step works best for his situation, there are business coaches in his specific sector that can guide him on how to reduce the related risk variables.
How are risk variables analysed?
By bringing their exposure to different product types and applying specific diagnostic tools, these business coaches can test the viability of bringing the product to market. Management disciplines are then applied to each process involved in the new venture.
What is an innovation management process?
Innovation management is the process of finding out who your customers are, what they truly want, how to make it for them, and how to deliver it to them. Sometimes a third person is required with knowledge of the field to test drive these ideas against reality to see if they’ll fly.
What do these diagnostic tools do?
These project-adaptive tools use test scenarios to measure any problems that may occur at different stages of the process.
How are the tools project-adaptive?
The tools allow the flexibility to develop the innovation process, based on Bob’s desired level of involvement or existing capabilities (core competencies). For example, Bob’s crowdfunded project may not have in-house manufacturing facilities nor distribution channels, so buy, build or partnering would be viable options to consider.
Why is a flexible innovation process important?
New ventures in product innovation can vary from selling a concept to starting a new business. Business models can range from selling a product only, to selling a service that is supported by a free, value-adding product (e.g. mobile phones).
Conclusion:
A flexible innovation process can adjust to unexpected changes, so reduces commercial risk. This allows both Product Makers (Bob) and potential Investors to be more confident in early-stage product development. The process provides a sound basis for a return on investment within realistic timeframes.
Roland Nicholas is a Product Strategy Consultant at MyBestFoot.co.uk, with over 18 years of new product development (NPD) experience, working as a mechanical engineer, product designer and portfolio manager.
