Using Social Media for Innovation — Different Rules for New Markets

By: New Markets Advisors

Recently, leading companies have been eager to tout how they are using social media for innovation — articles have appeared about firms as diverse PepsiCo, Ford, and Dell. 

Yet there is a common limitation in these efforts: they focus heavily on using social media to generate line extensions and sustaining innovations, not disruptive innovations that can create new markets.
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Social media is an excellent way to tap into passionate communities of a product’s users to understand their key issues, solicit ideas, and gain quick feedback on innovative concepts. There are watch-outs, to be sure — unhelpful comments, intellectual property issues, competitive signalling, and more. But these concerns can be outweighed by the reach, immediacy, and interactivity of social media. It is a great tool for many kinds of innovation.

Unfortunately, disruptive innovations and new markets tend not to have these passionate user communities — they are new! To the extent the communities do exist, they may not be representative of the potential mass market, but rather be composed of leading-edge adopters who are less risk-averse, less convenience-motivated, and more forgiving of the flaws common in new offerings. They can provide feedback about must-fix issues but not a roadmap for long-term growth.
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Moreover, social media lends itself to asking people what they want, yet in new markets potential customers often cannot articulate their needs or may think that new concepts are a bit weird. I was present for some of the first concept tests of flat screen TVs and DVDs — people just did not grasp the benefit, and thought the idea of a TV hanging on a wall to be really a bit odd. Concept testing of new markets requires a different kind of interaction — more in-depth interview, observation, and interaction with simple prototypes, with less quick reaction.
For disruptive innovations and new markets, social media has different uses including:

• Finding latent needs — Groups of similar users, from mechanical engineers to disease sufferers, can grouse about issues they face in their daily lives. There is much to sift through, but occasional nuggets of golden insight. These users can also provide quick feedback on open-ended questions. They will usually not provide deep thinking in this setting, but their comments can open avenues of inquiry.
• Enabling fast adoption — New markets often struggle to find their first customers, who will provide testimonials about a new offering and lower the barriers for broader adoption. Social media can enable marketers to recruit those first customers through starting word-of-mouth campaigns, creating hyper-targeted ads, and linking early adopters to wider groups of potential users.
• Circumventing established channels — Sales channels are a frequent innovation-killer. They see limited upside for themselves in new offerings, and much liability in the form of salesforce training, customer education, dealing with complaints, and the like. For early efforts at market development, direct efforts can be most effective. Social media are a good way of leading potential customers to these direct channels, which can always yield to a channel-oriented approach as a market becomes more established.

It is encouraging to see firms shift so rapidly to using social media for innovation. If they vary their approaches according to the sort of innovation sought, the results will be compelling.

Story by Steve Wunker.