Product innovation is alive and well and living in Canada.
The company is called Cambrian House, a software company that is putting teh “crowdsourcing” version of peer production (aka paid contributor content) to the test. By fully integrating the end user in the entire process of product design and production they are “evolving” a host of product ideas developed with the market in “real-time.”
To get a feel for their plans, accomplishments and culture, I have posted videos under the navigation headings “Product Co-Creation” and “Case 4 Change” so you can hear them tell their story and get a feel for the “wild west” culture they embody.
A Business Model by the People for the People
CH calls itself “a community of people with broad talents and interests to create web-based products that the world wants, markets those products, and shares in the profits.” They cater to people with no time to pursue new ideas or anyone with a vision and motivated to submit ideas. Currently boasting an online community topping 10,000 members, these people discuss ideas and vote for the best in a monthly “IdeaWarz” slugfest.
Here is how it works from the community members POV.
Individuals register and create a profile of their capabilities. They can participate by initiating ideas, seek funding for existing concepts, or co-develop an approved product concept. Everyone participates as peer-reviewers at select “decision gates” along the way. There are no limit to number of projects you can join.
A reputation management system measures individual contribution based on peer evaluation by other community members engaged in the project – a kind of 360 feedback.
CH staff create a “brochure site” to test the winner’s popularity and usability within the community. If the idea survives, members contribute their talents (writing code, marketing, project management,etc) to bring it to life. CH’s first product (a video game) emerged from the community forums and seemed popular, so CH risked $8,000CAD on a preliminary website to promote the game. It sailed through the “market test” selling hundreds of pre-orders at half-price ($9.95CAD) in a single weekend. That response emboldened CH to invest more for the next development stage.
CH’s eventual goal is to turn each project into a separate, independently funded firm, but only after it has been market-validated.
Who represents the “crowd” in the CH community?
Creatives – concepts, campaigns, media
Developers – production of product design, test prototypes
Entrepreneurs – suggest plan strategy, evangelize to get people to help or buy/sell, champion a product team
Investors – offer feedback on a business plan, counsel entrepreneurs on funding pitches, buy into a product
Marketers – provide pitch feedback, create good copy and creative input to campaign, direct creative for product site, blog, media,etc.
CH exceeded its first year Q2 goals of 100 members and 1000 ideas with 4000 members and 1500 ideas. So far, CH has only one project earning revenue: Prezzle.com, a service for sending virtual best wishes and gift certificates.
This month (March 2007), CH is to release its first all-peer product, a video game called Gwabs. From concept to finished product, it took the volunteer team six months and cost $200,000CAD. CH estimates that producing it with in-house staff would have taken 50% longer and cost three times as much.
CH forecasts a modest revenue of $1 million for 2007, but expects that to leap to $5 million in 2008, and its community to surpass 100,000.
Later this year CH plans a big gamble: opening up its platform so anyone can propose a crowdsourcing project outside the firm’s formal development structure.
What’s in it for the Community of Volunteers?
Core incentives to participate include payment in cash or royalties defined and mutually agreed-upon by product champion and contributor. Each community “idea contributor” in a project (typically, about 30 in all) receives “royalty points” worth a share of the project for as long as it generates revenue (likely about five years). CH takes 50% off the top for project management, sales and marketing.
Why does co-creation models work?
Massively distributed talent collaboration versus traditional command and control model.
A pyramid that shapes and refines (subject matter experts, staff and end users).
Gates to evaluate and decide “winners.”
A process with steps, guidelines to ensure efficient collaboration, quality and execution.
So simple even a caveman can do it…….