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In-Housing: Hiring your customers

(April 18, 2008)  Many smaller companies lack the resources to hire their own research and development staff. How can such firms keep their products on the cusp of quality and innovation?

Some organizations have taken advantage of an under-utilized resource: their customers.

"A Perfect Mess: The Hidden Benefits of Disorder" by Eric Abrahamson and David Freedman (Back Bay Books: 2007) offers the example of Valve, a computer gaming company. "Modders" - game users that hacked into their game's codes and added features to them - were getting their own fan base, and at first the company was disturbed. But then they decided to "in-house" - hire - one of the "modders", who produced a separate product for the company. The "jobs" page on Valve's website says "The people who work at Valve are multi-talented, with expertise in one or two particular areas. We don't have managers or producers of any kind. We tend to hire senior people who have shipped several titles before arriving here. And we have also hired a few people right out of school when we've been impressed by an interesting game, mod, or level that the candidate built."

Another example of "in-housing" in the book is Van's Aircraft, a company that makes airplanes as "kits" that buyers can assemble in their garages. Van's has carefully cultivated its customers so that the company can integrate their suggestions for improvements and additions to their aircraft. Some of these creative customers have been "in-housed" by the company. The customers' design suggestions have been, in effect, auditions for jobs at the company.

Van's cultivates its relationship with its customers through its free, unusually substantial, 6-issue per year newsletter, which is full of tips from other customers on assembling and customizing the airplanes. The connection is further enhanced by "Van's Air Force", regional "wings" of the planes' builder-owners, which hold events regularly.

The astounding speed at which new products are developed and cheaply produced in the global economy today demands that companies look outside traditional sources for creative talent. The book quotes David Audretsch, director of the Institute for Development Strategies at Indiana University, and author of "The Entrepreneurial Society": "You're going to have to live off having a new idea that other companies around the globe don't have." "In-house" can mean mining the research and development potential in your company's existing staff, across the boundaries of job descriptions, as well as culling talent from among customers.

Abrahamson and Freedman warn about the risks of turning a company's clients into its R & D department. It can be a messy affair. To motivate customers to offer product suggestions, the company must give up a certain amount of control. And customers will offer many more ideas that are useless than are useful, requiring a lot of time to sort the good from the bad. But customers who are loyal enough to the company to be willing to offer suggestions, and who get some kind of recognition that keeps them engaged, can become a treasured hiring pool.

By Jim Burklo

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