CONSULTANTS TO THE AFTERMARKET

Bill Wade

 

The Wiki-Alternative to Traditional New Product Innovation for the Aftermarket

By Bill Wade

Historically, the vehicle aftermarket has been the birthplace of important new product innovation for passenger cars and heavy trucks. Huge advances in OEM design were first recognized on the garage floor or from the truck driver’s seat.

Product/service innovation is the result of bringing to life a new way to solve the customer’s problem. Strangely however, the term “aftermarket innovation” seems like an oxymoron. After all, doesn’t the aftermarket just fix or “reverse engineer” OEM vehicles?

Many of the ideas, technologies and products emerge from far corners of this remarkable extended supply chain. Rear view mirrors, windshield wipers, oil filters and wheel seals are everyday examples of user inspired innovation.

Paccar carefully crafts the plans for its vehicles … but component suppliers make (and own the intellectual property for) many of the innovations. A new truck from any of the big North American builders includes hundreds of parts invented, tested and manufactured by companies around the world.

Component suppliers often understand the technology and manufacturability of their parts better than the OEMs. They are closer to the end user than the OEM over the life of the vehicle. Therefore, supplier specialization and OEM collaboration create a formidable force on behalf on truck users. A vehicle assembler’s suppliers can make better filters at lower cost than the OEM can, because specialization promotes focus and innovation.

Recently supplier consortia have even begun participating in joint ventures for individual products or marketing packages. Collaboration with university labs or specialists is rapidly increasing, with the prize for being early in the product lifecycle opening many to insights and ideas gleaned from any source.

In the Aftermarket, It Is Critical to Be First.

Customer collaboration now extends in many directions …from websites and Internet poling, call centers, POS data, traditional focus groups and field sales forces.

The online wonder example of Wikipedia suggests that aftermarket companies could take even greater advantage of specialization by ceding more control over decisions about the content of products to networks of expert participants (suppliers, customers, or both) who interact with one another.

Many other examples of distribution directed development processes are now under way. One of them, sometimes referred to as "participatory marketing" (which encourages customers to help create marketing campaigns), can actually be much more than just a new tactic to attract attention.

Approached in the right way, it is a field-sensitive opportunity to start developing products. Last year, for instance, Mattel’s Hotwheels invited SEMA Show attendees to submit car designs online. They attracted millions of page views on their site.

The company built demonstration models of the winning designs to exhibit at automotive marketing events and partnered with software developers to get them included in video games.

Innovation Comes in Many Flavors

Aftermarket innovation can be divided into four categories:

  1. Customer Oriented Innovation

    Customer oriented innovation refers to all aspects of corporate-customer interaction, including: Marketing, sales, delivery, customer service and everything in between. This comprises a diverse range of activities from advertising to after-sales service.

    As there is less and less to differentiate one product line from another, customer oriented innovation is one area where a firm can demonstrate a real, long term and sustainable lead.

    Moreover, every act of product or strategic innovation generally requires distributor oriented innovation to ensure innovations are successfully delivered to the functional customers.

  2. Product Innovation

    When most people think of corporate innovation, they think of launching that stunning new product that brings in billions of dollars (or Euros or pounds or yen). However, it is important to support incremental product innovation. Small improvements in product are not only easier to come by, but are easier to sell and generally do not require big changes in the base business.

    But when that big idea for a radically new product – that will knock the competition’s socks off – comes, be sure you have the means of recognizing it.

  3. Process Innovation

    Process innovation may sound comparatively dull, but it is the bread and butter of corporate invention. In most large companies lots of people are involved in internal processes that allow the company to run smoothly and legally.

  4. Strategic Innovation

    Strategic innovation is rare because it’s about fundamental changes in how a company operates. And in a large company, that’s about the most difficult task of all. Strategic innovation requires an innovative CEO with vision and determination.

Numerous Payouts (and Pitfalls) … Welcome to the Edge!

Companies have at least three ways to win by adopting Installer/Distributor Assisted Product Development (IDAPD). First, they can capture value from the product or service itself, by merchandising good ideas gleaned from the end user customer response network.

Second, companies can capture value by providing a complementary product or service based on their ‘street level’ experience and contacts. Lastly, they can benefit indirectly from the development process—for example, through participation-enhanced branding.

There are no formulae and few answers that can currently be gleaned from past success from this process in the aftermarket! The clues will become clear only as companies gain greater experience with various open-innovation approaches, including distribution distributed development. But a few challenges are already apparent:

  • Structuring Problems for Participation

    To allow contributors to participate effectively in an ‘expert product development community’, problems should be broken down to facilitate work in parallel on different pieces. This will encourage a critical mass of participants to cooperate effectively. A variety of new Internet-based tools to can help coordinate the work
  • Finding and Motivating Development Partners

    Before attempting to provide the right incentives to the right players, understanding of what talented contributors find valuable about interacting with an ‘expert community’ is essential. Financial incentives may be no more effective than social mechanisms like peer recognition.

    Barriers to participation, such as the ease of contributing and the time required to do so, must be breached. In addition, implementation of well-structured paths to coax participants to move from lower to higher levels of participation is a must.
  • Management Mechanisms to Facilitate the Development Process

    Communities (like meetings) are normally only productive when they have clear rules, clear leadership and transparent processes for setting goals and resolving conflicts.

    The leadership must maintain a cohesive vision, since there is always a risk that community members will ’borrow’ intellectual property and use it to develop their own product or service if recognized progress is not apparent to all participants.
  • Quality Standards and Peer Expectations

    Managers trying out the idea of an online aftermarket development community assume that “crowds” know more than individuals and can therefore create better products. The countervailing wisdom is that "committees edit - they don’t create".

    Again, lets look at this virtual Wiki-process. A study published in the journal Nature concluded that Wikipedia’s entries on scientific subjects were generally as accurate as those in the Encyclopedia Britannica.

    While the general thesis that IDAPD created products will be higher in quality is difficult to prove, many computer/software companies are increasingly willing to rely on them for mission-critical business processes.

Simple Organization Evolution Is a Big Part of the Process

Companies do not have to completely shuffle the deck of their marketing systems to start experimenting with distribution driven product innovations.

While there is no question that the concept of Installer / Distributor Assisted Product Development does seem promising, it isn’t entirely clear what capabilities companies will need (or how they will organize those capabilities) to make the most of it.

Certainly the first step is to identify where it may already have spouted within the company. The sales force, in conjunction with customer service, a distributor advisory group and product managers often form an existing ‘seed pod’ for development efforts, especially when it comes to line extensions and extended applications of existing product.

Although it is still too early to develop useful universal frameworks for success with these techniques, they will no doubt emerge over the next few years. This, therefore, simply outlines about how to proceed in either the consumer or the professional aftermarket customer bases.

Finding the Spark. What Causes Breakthroughs?

Several recent research studies confirm that everyone has creative abilities. The more training and the more diverse the training, the greater potential for creative output.

  • The average adult thinks of 3-6 alternatives for any given situation. The average child thinks of 60.
  • Research shows that in creativity, quantity equals quality.
  • The longer the list of ideas, the higher the quality the final solution. The highest quality ideas tend to appear at the end of the list.
  • Groups are best for idea selection rather than idea generation. Creativity is an individual process. Traditional brainstorming has been proven ineffective, primarily due to fear of social disapproval.
  • Individuals create. Teams innovate.

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