Netflix Uses Publicly Open Innovation Strategy
Netflix Uses Publicly Open Innovation Strategy
The American company, Netflix, embraces a publicly open innovation strategy to handle complex problems and encourage development of its products and services. Netflix Prize is the innovation challenge that Netflix used to encourage the general public to compete in generation of a suitable filtering algorithm that would improve user series or movie suggestions by about 10 percent. Precisely, the competition was open for every person other than those who were professionally linked with Netflix. Accordingly, Netflix would offer a grand prize of one million USD for the winner.
In less than two years, more than 40, 000 teams from at least 186 nations had participated in the competition. Subsequently, Netflix found the most effective solution within 3 years after participation of 51,051 contestants. Besides, two teams provided suitable solutions but only one won the prize. However, Netflix opted to utilize an alternative solution that attracted and improvement rate of 8.43 percent since adoption of the algorithm of the grand-prize winner was too costly. Therefore, Netflix emerged victorious by using talented programmers from a wide pool of individuals in the public domain.
Even so, the participants in the project embraced the use of teams to facilitate better creativity and inn ovation. Professional programmers gained synergy for developing and refining their algorithms by working in teams. Luckily, the relatively large number of contestants suggests that the publicly open innovation strategy enjoys contributions from a wide array of professionals. Besides, Netflix managed to acquire an appropriate solution on time because contestants had the freedom to choose their most preferred partners.
Serko
Serko is a New Zealand firm that relies on intercompany innovation strategy to facilitate development and resolution of problems. In July 2019, Serko sought support and contributions from FaceMe to develop a digital travel assistant. The two companies teamed up to develop better solution for handling travel services. Luckily, each firm made vital contributions following their expertise and competence in their different areas of specialization. Serko strives to develop the most appropriate solutions for handling corporate travel and management of expenditures. On the other hand, FaceMe focuses on digital human technology. Consequently, the team created a digital, visual representation of a human assistant.
Serko used its original online travel booking platform called Zeno as the baseline for the new development. According, the innovation would effectively work with the existing infrastructure. Fortunately, the digital human assistant communicates and interact with travelers in a human-like version. Specifically, FaceMe’s Intelligent Digital Human platform powers and improves Zeno’s functionality. Thus, the team emerged successful by developing the first digital human travel assistant that offer personalized booking services.
Hence, it could be impossible for either Serko or FaceMe to develop a working digital human travel assistant since each firm has unique capabilities. That is, the innovation demanded contributions from a firm with advance skills and knowledge in Artificial Intelligence (FaceMe) as well as that in the tours and travel industry (Serko). Accordingly, Serko offers Zeno, a next-generation online booking tool that processes over 20,000 bookings per day with lots of efficiency and accuracy.
Effectiveness of Netflix’s Publicly Open Innovation Strategy
Netflix realized its target goal of developing a suitable algorithm for filtering recommendations by its clients. Moreover, the company reached out to numerous persons, thus expanding its popularity. Thus, the publicly open strategy could serve as a marketing tool for firms that target at the general public. However, Netflix is not a hundred percent successful because it (Netflix) chose an algorithm that compromises with privacy of customers.
Effectiveness of Serko’s Intercompany Innovation Strategy
Serko’s intercompany innovation strategy is highly-effective because it resulted in the development of a digital human travel assistant that integrates well with its existing online booking platform. Besides, Serko’s corporate clients are enjoying seamless booking services and better interactions and communications. Likewise, FaceMe enjoys an improved reputation following its contributions on matters about Artificial Intelligence. Moreover, each firm finds hidden expertise in their partners. Serko could probably not understand and appreciate FaceMe’s expertise in AI if not for the engagement. Similarly, FaceMe could probably not apprehend and acknowledge Serko’s expertise in online booking systems if not for the joined venture. Fortunately, the two companies gain synergy by exploring their collective knowledge.
Moreover, Serko enjoys high-financial prosperity with an operating revenue growth of 28 percent. By the end of 2019, Serko was working with an operating revenue of $23.4M.
References
https://digital.hbs.edu/platform-digit/submission/the-netflix-prize-crowdsourcing-to-improve-dvd-recommendations/https://www.pymnts.com/news/b2b-payments/2019/serko-faceme-digital-human/https://cdn2.hubspot.net/hubfs/4389989/Serko%20-%20Investor%20Centre/Reports/FY19%20Full/Full%20Year%20Results/2019-annual-report-final.pdf
