Forbes Cover Article Features Flagship Portfolio Company Affinnova
Flagship founded Affinnova in 2000 to bring the concepts and techniques of Darwinian Evolution to product design. The company's patent-pending technology, IDEA(TM), leverages the Internet as a medium to combine the real-time input of thousands of consumers to select iteratively from among thousands or millions of possible designs. The designs in turn are generated by proprietary software based on genetic algorithms. In its February issue cover story titled "Have It Your Way", Forbes Magazine features Affinnova as a leading example of consumer-centric innovation. The technology is currently in use by several leading consumer packaged goods, specialty retail, and pharmaceutical companies. Noubar Afeyan, Flagship Managing Partner, currently serves on the Affinnova Board.
On The Cover/Top Stories
Have It Your Way
Melanie Wells, 02.14.05
Whether they are selling cars, toys or fast food, companies are tapping consumers as never before to help them create new products.
When the Hummer H3 rolls out this spring, it will feature some distinctive touches from an unusual source of inspiration: a bunch of everyday drivers. General Motors, under pressure to create a midprice blockbuster sport utility with the look of a macho Hummer, relied on input from 481 people summoned to a building on an empty fairground in southern California in June 2001. Visitors were asked to critique six early renderings of the SUV. They came in five groups over three days. As they reacted to sketches of the exterior and interior, four GM designers listened from behind a curtain, scrawling changes on paper. "We wanted to see how much we could stretch our design," says Jon B. Albert, a design manager at GM.
Too much, according to the critics, who were selected because they already owned a Jeep Cherokee, a Chevrolet Blazer or the like and expressed interest in the Hummer. The front of the vehicle, they thought, looked too "cute" for a take-no-prisoners military truck. Some said its grille resembled a Jeep's-a red flag for GM, which was being sued by DaimlerChrysler for knocking off the Jeep's signature grille on the H2. The designers prepared revisions for each new group. "A process that now takes several days could have taken several months," says A. Jim Lochrie, GM's director of market research.
When the H3 hits the market at upwards of $30,000, buyers will see some of the changes that reflect the interaction between consumers and designers during those intense days. Its grille has shrunk to make the H3 look more solid-and less Jeep-like. Headlights are flatter to help the sedan-size vehicle seem more imposing. The doors have some detailing to appear less nondescript and flat, another consumer insight.
No telling whether customer input can reverse the decline in Hummer H2 sales, which, says J.D. Power & Associates, sagged 28% last year. But it made believers out of some executives who distrusted the idea of meddling by consumers. Now GM hopes this approach can eventually shave six months and millions of dollars off the journey from drawing board to dealership.
Should companies let a bunch of amateurs design their products? Up to a point, yes. But they're doing it, letting customers put in their two cents on cars, insurance products, fast food, toys and appliances. Maybe it's an act of desperation, but they have concluded that instant feedback is one way to cope with the pressure for shorter product cycles and with the high failure rate of new products. Of the 36,000-plus new products that will hit the shelves in the U.S. this year, 80% will fail, says New Product News.
Feedback-influenced design is scarcely new, as seen by the appearance of Charles Dickens on our time line (see p. 84). But it has never been so easy, thanks to the Internet and to the rise of small firms that act as midwives to the process. These consultants screen respondents and develop prototyping software that lets consumers create or modify designs, allowing companies to sort and evaluate the data instantly. Focus group meets the digital age. In our own version of this consumer game we asked FORBES subscribers, selected from our e-mail database, to pick their favorite cover design from among three (reproduced on the second contents page). They selected the one you see. Why didn't they like the one with the Hummer, preferred by the editor of the magazine? Possibly because the wording was a little cryptic. (Note to editors: Don't get too cute with cover headlines.)
Whirlpool Corp. wants to plug into an online community of consumers who, using their PCs, would be able to make changes to digitized renderings of new designs for home appliances and send their suggestions to the company. Joan Smith, president of Smith-Dahmer Associates, a St. Joseph, Mich. consultancy for Whirlpool, expects to trim research time by a month and expenses by at least 30%.
Dannon USA, a unit of Groupe Danone of Paris, turned to consumers in August 2003. Its reduced-fat Light 'n Fit yogurts were getting squeezed by rivals offering slimmer fare. Patricia Pirro-Feldberg, director of market research at Dannon in White Plains, N.Y., needed a quick read on what features were must-haves. She called in Affinnova, a Waltham, Mass. technology company, which e-mailed 40,000 men and women and asked them to click on a link to help create a new product and get a shot at winning $10,000. It got an 11% response rate; 705 people qualified for the test. (Dannon was looking for diet-conscious yogurt eaters who were responsible for grocery shopping in their household.) Affinnova presented a series of yogurt containers in such a way that respondents could evaluate different combinations of name, package design, nutritional labeling and size. There were 11,268 possible combinations, but each player in this game was asked to choose among only a few. A statistical algorithm recombined features to highlight frequently selected elements. The test changed as more people took it, and the program determined the most popular configurations.
All that Web activity took six days. By the end of the project Affinnova had determined that the new yogurt should be called Carb Control, come in a red container, sold in a four-pack of 4-ounce cups and highlight "80% less sugar" and "3 grams of carbs" for the dieters. Pirro-Feldberg had the new product on store shelves six months after the test ran. "The product took off very quickly," she says. For the 52 weeks ending Nov. 28 sales hit $70.5 million.
Toymaker RC2 Corp. took a different approach. For years the Oak Brook, Ill. company made miniature Nascar models for adults but added toys for children and infants starting in 1999. To learn more about tots, it is putting prototypes into the hands of kids and their moms, who make up a panel of advisers managed by Communispace Corp. of Watertown, Mass. This year women like 34-year-old Nidhi Tandon of East Brunswick, N.J. will help RC2 make as many as 250 decisions about toys and retail programs. In 2004, the first year RC2 worked with a group of consumers, they vetted 25 new products. They helped design Click Bricks, to arrive on store shelves in July. This toy consists of magnetized building blocks for boys. After a group of 150 women electronically critiqued color illustrations of Click Bricks last February, the company used their ideas to build 3-D prototypes, which were sent to 30 moms.
That group had sons aged 2 to 4. They were required to keep a daily diary for two weeks, detailing when, in what ways and how often their boys played with the plastic blocks. RC2 also sent disposable cameras, asking the women to take and send pictures of their children playing with the toys. The company requested suggestions for names, prices and packaging ideas. Tandon thought the colors weren't bright enough. "If the shades are dull," she says, "parents won't pick them up in the store."
RC2 made those changes-and more. It added more shapes, textures and bricks, all mom suggestions. The company shaved eight weeks off the time it would have taken to do conventional research. "In the old days-a couple of years ago-we would have built this before we tested it," says RC2 Chief Executive Curtis W. Stoelting. "We'd have pushed the product out there without as many insights, and we would have made more mistakes."
But is the customer always right? GM market research manager Jeffrey Hartley recalls that Jerry P. Palmer, former design chief, thought that reaching out to consumers was an idiotic idea. "Why don't you just put a f—ing crayon in their hands?" he told Hartley. Palmer reluctantly agreed to an "exploratory" project.
Higher-ups at Unilever weren't thrilled about letting young guys vet print ads for Axe body spray before they appeared in magazines. Esther Lem, a vice president for the company's deodorant business, routinely draws on that group for new fragrance ideas. Unsurprisingly, the young men loved a raunchy campaign featuring a hairy armpit as its central character. "I heard from the president of marketing of Unilever. I heard from the COO," Lem recalls. "I had to say, 'Okay, you need to stay out of the way. What matters to me is what the guys say.'" And that stuck.
Sometimes, though, customers take you in a completely different direction. Taco Bell, a division of Yum Brands, recently turned to fast-food eaters to help create a hot-selling burrito-hopes were high for a "truly healthy" one. Relying on Socratic Technologies of San Francisco, the chain sent out 10,200 e-mails. The final 1,155 participants chose from among 10 categories of fixings, including 3 kinds of chicken and 11 sauces, and watched as an animated program assembled and cooked their concoctions. Socratic identified the most popular combinations-did people who liked chipotle chicken also want lettuce?-and passed the results to Taco Bell in a few weeks.
The dieticians at Taco Bell got a little jolt. Instead of a low-cal item, most respondents clamored for a three-cheese-soaked "indulgent" burrito, and they were willing to pay extra to get it. "We were looking at a $2 burrito. Our findings suggest we might get 20 cents more for it," says Debra Kassarjian, Taco Bell director of consumer insights.
Like canaries in a mine shaft, consumers can sometimes head off disaster before it happens. State Farm Insurance recently heard back from its new online community about the idea of offering reduced rates for safe drivers who were willing to have "black boxes" installed in their cars. Customers were wary of the devices, which would have monitored where and how they drove. "Our panel did not like that idea at all; they thought it would be a real invasion of their privacy," says Nancy Armstrong, research administrator at State Farm.
"Massive consumer insight is more important than ever," says David Andonian, chief executive of Affinnova. A self-serving point, to be sure, yet one he is willing to qualify: "There are some limitations."
Feedback fatigue is one. Get too many surveys in your e-mail box and you tune out. How to keep the masses engaged? Applied Marketing Science of Waltham, Mass. is working with MIT's Sloan School of Management on a Web tool that turns idea-generation into a challenging game, where players are rewarded for building on the suggestions of others and earn points that translate into cash or prizes. The program recently helped Mark Andy, a specialty printing press maker in St. Louis, solicit suggestions from customers about how to improve, for example, presses for shrink-wrapped labels.
One fear: Suppose a respondent tries to claim ownership of an idea, product or service that emerges from a feedback session? "Hire a good lawyer and make sure these people sign agreements about intellectual properties," advises Olivier Toubia, assistant professor at Columbia University's business school. Most companies already do.
But don't let the remote threat of a lawsuit get in the way of a good idea. Chris M. Bradley, founder of 2ndEdison, a product development company in San Francisco, says he's working with producer Michael Hoff on a TV show that would allow the audience to help companies come up with product solutions for everyday problems. Hollywood is said to be dabbling with movies that let fans choose the ending, much as the TV networks let viewers weigh in on the fate of characters in series such as NBC's Law & Order. If Dickens had had access to e-mail, he could no doubt have done a lot more with reader feedback, too.
© 2005 Forbes.com