Hack This Product, Please!

Dell's new IdeaStorm is just one example of how forward-thinking companies are making their customers co-creators

by Don Tapscott and Anthony D. Williams

Everyone knows about Dell's troubles of late. The hardware maker's once industry-leading "build-to-order" supply chain systems are now the norm, and it's fallen behind in design—areas where competitors such as Apple (AAPL) and Sony (SNE) excel. Customer service has deteriorated since it was outsourced to India so that customers can no longer rely on timely and informative service.

Yet visiting with CEO redux Michael Dell, he looks like a new man and is pumped about the challenge of building what he calls "Dell 2.0." And what was his first action? Asking his customers for advice on how to improve Dell (DELL) products in hopes that their collective wisdom will offer some unique insights that will help turn the company around.

Launched on Feb. 16, Dell's IdeaStorm (www.dellideastorm.com) looks and feels a lot like Digg.com, the popular tech news aggregator: Users post suggestions and the community votes, so that the most popular ideas rise to the top. Just five days after launch, the site boasted 1,384 ideas that have been voted on 122,388 times and generated 2,189 comments. Admittedly, not every idea is great. And some communities speak louder than others.

Beyond Customer-Centricity

A large open-source contingent, for example, is demanding preinstalled Linux and Open Office, among other things. As of Feb. 21, this was the most popular suggestion, with some 67,000 votes. Above all, the comments on the site reflect some real passion. As one contributor says, "This forum is a great idea to get Dell back to No. 1. What I'd like to see is new and innovative styling across the board on notebooks and desktops. Dell's product line looks 5 yrs old and needs a total refresh."

Michael Dell told us that he sees customer-driven innovation like this as the linchpin of his strategy for Dell 2.0. "We need to think differently about the market and engage our customers in almost everything we do," he says. "It's a key to us regaining momentum as a technology industry leader."

Initiatives like IdeaStorm are a starting point. Most companies still equate "prosumption"—the process of making consumers an active part of the creative process—with "customer-centricity," in which companies set the basic elements and let customers modify others, such as choosing options for a new car. In our view, customer-centricity is pretty much business as usual. In the new model, customers participate in the creation of products in an active and ongoing way. They do more than customize or personalize; they add value throughout the product life cycle, from ideation and design through aftermarket opportunities. Increasingly, customer-driven production is at the heart of some of the most innovative products and services around—from the user-generated content on MySpace, flickr, and YouTube to customer-created advertising campaigns to virtual communities such as Second Life, in which "players" create all of the game content, own their intellectual property, and even provide volunteer customer support.

Capitalize on Amateur Innovation

The idea that the people who use products should have input into their design and production is not really new, as scholars such as Massachusetts Institute of Technology professor Eric von Hippel have shown. His research has proved the import of the role that hobbyists and "amateur" creators have played through the ages. A flip through the pages of a 1950s edition of Popular Science, for example, reveals myriad amateur innovations in fields ranging from electronics to scientific instruments to mechanics.