Earlier this week, I attended SAP’s TechEd ’07 event in Las Vegas [full disclosure: SAP paid my travel expenses and they are a client]. While the conference extended for several days, my primary goal was to attend Community Day, a sort of pre-conference get together for the members of SAP’s numerous communities, chiefly SDN (SAP Developers Network) (now pushing 900,000 members) and BPX (Business Process Experts) (about 200,000).

About three days before I was set to leave for Tech Ed, I also got a call from the Canadian Marketing Association, asking if I would be interested in speaking at their ROI Conference in November. The topic? The ROI of social networks (thanks to Bill Sweetman for the referral, BTW). So the timing on this trip and resulting post couldn’t have been better.

I’m going to cut straight to the chase on this one. There are, of course, thousands of different shapes and forms that communities can take, so making blanket statements is (as with most things) not advisable. However there is one primary ROI that all firms who do this well experience, regardless of whether they are leveraging the collective knowledge of their loyalists, users, vendors or employees: competitive advantage through accelerated innovation.

In SAP’s case, they describe their work with SDN, BPX and the various other networks as creating “communities of innovation”, recognizing that successfully harnessing and directing the collective intelligence of the organization and their ecosystem (think of all that brain power) they can realize real organizational benefits in terms of product or business process development. Of course, without active participation this kind of stuff just doesn’t work, and as Tim O’Reilly aptly put it in his Community Day keynote – successful communities are successful because they are useful but ultimately because they harness self-interest. That also means (and this is really important) that overly restrictive IP terms will limit the desire and ability of partners outside of your company to engage (which means you may end up just talking to yourself – or not at all).

From a strategic perspective (and this makes all the sense in the world) SAP has also recognized that engaging in this way with their partners and users really helps them make sure that the products they’re developing are actually wanted by the community. This concept can be applied to any company in any space. The trick is making sure that you have a process for getting that business intelligence back into the enterprise; of course it’s fabulous that your very active community will basically tell you what product they want to buy or how you can fix the products you do have, but if you can’t tell the engineers this in a meaningful (and timely) way, it ain’t gonna happen.

Ultimately (and this has nothing to do with ROI beyond enabling it) an important bit of soul-searching needs to take place when you step into the co-innovation space. Firms have to recognize that there is just so much innovation, that the speed of change is so accelerated, that they cannot possibly hope to control or own it all. There’s just no way. My best advice? Use social networking technology to ride the wave that’s already forming, rather than make it yourself. You’ll end up ahead of the game, with far less energy, capital and resources spent.

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  1. Maggie,
    I’ve just read democratizing innovation by Von Hippel, and I’d urge you to read it if you can put down Edmund B.
    I rambled on a bit about it here.

  2. Communities can identify areas for innovation, offer insights into the techniques, and even occasionally contribute to the development process.

    For companies to take advantage of this they need more than communities however – they need the management processes to see suggestions are integrated into products or processes.

    This is more than seeing the community as a source of ideas or even recognising contribution, it’s developing an organization that is open to innovation.

    As John Hagel points out http://edgeperspectives.typepad.com/edge_perspectives/2007/10/institutional-i.html
    innovation can occur at multiple points in the company.

    Communities can expose opportunities – management has to recognize and act on them – both to benifit from the insights and to demonstrate the value in contributing to the community.

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